US duty drawback: types, eligibility and records

Title text 'US duty drawback explained: types, eligibility and the records you need' over a composite of a cargo ship, aircraft and container trucks with a city skyline

Duty drawback is a refund of 99 percent of the duties, taxes and fees paid on imported goods when those goods, or goods made from them, are exported or destroyed under CBP supervision. The statute, 19 USC 1313, has three main routes: manufacturing drawback (the imported input is used to make an article that is exported), unused merchandise drawback (the imported good leaves in the condition it arrived, apart from incidental operations), and rejected merchandise drawback (the good was defective, not to specification or shipped without consent). Every claim must be filed within five years of the importation of the goods it designates, and the manufacturing and unused routes allow substitution of other goods classified under the same 8-digit HTSUS subheading.

Whether a particular duty can be recovered depends on the program that imposed it. Ordinary duties, MPF and HMF are eligible. Antidumping and countervailing duties are not, and most of the additional duties imposed since 2025 were expressly excluded, with a narrow manufacturing-drawback opening for some Section 232 metal duties since April 2026 (dated details below).

Route	Statute	What happens to the import	Substitution allowed?
Manufacturing, direct identification	19 USC 1313(a)	Used to make an article that is exported or destroyed	No
Manufacturing, substitution	19 USC 1313(b)	Same-8-digit merchandise used to make the exported article	Yes, same 8-digit subheading
Unused merchandise, direct identification	19 USC 1313(j)(1)	Exported or destroyed without use in the US	No
Unused merchandise, substitution	19 USC 1313(j)(2)	Other goods of the same 8-digit subheading exported or destroyed	Yes, same 8-digit subheading
Rejected merchandise	19 USC 1313(c)	Defective, not to sample or specification, or shipped without consent, then exported or destroyed	No (separate rule for retail returns)

The statute was rewritten by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), enacted on 24 February 2016, and CBP’s regulations for it are in 19 CFR Part 190, “Modernized Drawback” (83 FR 64997, 18 December 2018). Older claims were governed by Part 191.

Which route fits which situation

The question that separates the two main routes is whether a manufacture took place in the United States.

If the goods leave in the condition they arrived, the route is unused merchandise drawback. A distributor that imports 5,000 units and later sells 800 of them to a buyer in Canada or the Gulf, a brand that withdraws stock from the US market and ships it to Europe, or an importer that destroys obsolete goods under CBP supervision all fall here. The statute allows incidental operations: under 19 USC 1313(j)(3), operations such as testing, cleaning, repacking, inspecting, sorting and relabeling, which do not amount to manufacture, are not treated as a use of the goods.

If the import is consumed in making a different article that is then exported, the route is manufacturing drawback. A mill that imports yarn and exports woven fabric, or a plant that imports motors and exports pumps, is the usual case. Manufacturers claim under a general manufacturing drawback ruling or a specific manufacturing drawback ruling (19 CFR 190.7 and 190.8).

If the goods were wrong when they arrived, the route can be rejected merchandise drawback. Under 1313(c), merchandise that did not conform to sample or specifications, was shipped without the consignee’s consent, or was defective at the time of importation qualifies when it is exported or destroyed within five years of importation. The statute also covers goods sold at retail by the importer and returned by the customer.

A claim filed under the wrong provision is not always lost: 19 USC 1313(r)(2) and 19 CFR 190.12 let CBP treat it as filed under the provision it qualifies for. But it is better to settle the route before filing, because the records each route needs are different.

Substitution: where classification decides eligibility

Before TFTEA, substitution required goods to be “commercially interchangeable” or, for manufacturing, of the “same kind and quality”. The current statute replaces those tests with a tariff classification test. Under 1313(j)(2), the exported goods must be “classifiable under the same 8-digit HTS subheading number” as the imported goods, and 1313(b) uses the same standard for manufacturing substitution.

Three classification rules follow from the statute:

The 8-digit match is between legal classifications. If the import entry used the wrong subheading, the match is built on an error, and the claim can fail once the classification is corrected.
The “other” rule in 1313(j)(5) blocks substitution when the 8-digit description begins with “other”, unless both goods share the same 10-digit statistical reporting number and that 10-digit description does not itself begin with “other”. Many basket provisions are excluded by this rule.
Under 1313(j)(6), a claimant may use the first eight digits of the 10-digit Schedule B number of the exported goods to show the classification. Schedule B and HTSUS share their structure for most goods, but they are not always identical at 10 digits, so check both.

For manufacturing substitution, 1313(b)(3) requires the claim to include a “bill of materials or formula” listing the 8-digit HTS number and the quantity of the imported merchandise used. That turns the classification of every input into a drawback question. Records that show how each classification was decided are therefore part of the drawback file, and since the 8-digit level is national, how national tariff lines go beyond the six HS digits is worth understanding before a program is designed.

Substitution also caps the refund. For unused merchandise substitution, 1313(l)(2)(B) limits the refund to 99 percent of the lesser of the duties paid on the imported goods and the duties “that would apply to the exported article if the exported article were imported”. For manufacturing substitution, the comparison under 1313(l)(2)(C) is with the duties that would apply to the substituted merchandise if it were imported.

How much can be recovered

The statute sets the refund at 99 percent of “the duties, taxes, and fees paid” on the imported merchandise (1313(l)(2)). 19 CFR 190.3(a) lists what is eligible:

ordinary customs duties, including estimated duties on unliquidated entries and duties tendered later, such as in a prior disclosure;
marking duties under section 304(c) of the Tariff Act;
internal revenue taxes that attach on importation;
merchandise processing fees;
harbor maintenance taxes.

19 CFR 190.3(b) excludes antidumping and countervailing duties, and 190.3(c) excludes agricultural products paid at the over-quota rate of a tariff-rate quota, except under 1313(j)(1) and for qualifying tobacco. For MPF, CBP’s drawback page carries separate “Instructions for Calculating Merchandise Processing Fees for Drawback”. The fee is set per entry with a floor and a cap (the mechanics of the MPF minimum and maximum are explained separately), so work the refundable MPF out under those instructions. The full list of fees on an import entry shows which other charges can appear on the designated entries.

Additional duties and drawback, as of October 2026

This is the part of drawback that changes most, so it is collected in one place.

Section 301 duties on products of China. CBP’s Section 301 FAQ (page last modified 11 September 2023) states, citing CSMS 18-00419: “Section 301 duties are eligible for duty drawback.” Check any newer Section 301 action for its own terms.
Section 232 duties imposed from 2025. Proclamation 10896 on steel (10 February 2025, 90 FR 9817) says in clause 13: “No drawback shall be available with respect to the duties imposed pursuant to this proclamation.” The same sentence is in Proclamation 10895 on aluminum (90 FR 9807, clause 13), Proclamation 10908 on automobiles and parts (26 March 2025, 90 FR 14705, clause 10) and Proclamation 10962 on copper (30 July 2025, 90 FR 37727, clause 10), and CBP’s guidance on the 14 January 2026 semiconductors proclamation (CSMS 67400472) states that no drawback is available on those duties.
The 2026 change for metals. Proclamation 11021 of 2 April 2026 (91 FR 18201), which restructured the steel, aluminum and copper duties for entries from 6 April 2026, allows manufacturing drawback under 1313(a) and (b) on its duties in one case only (clause 13): the article is in an HTSUS provision listed in its Annex I-B or Annex III, is not subject to an antidumping or countervailing duty order, is a product of a listed Trade Agreement Partner (the United Kingdom and the European Union are among them), and its metal was smelted and cast, or melted and poured, in a partner country. Clause 14 bars every other drawback claim on those duties. Read the proclamation that applies to your goods, including later amendments.
IEEPA duties. The 2025 IEEPA executive orders excluded drawback; Executive Order 14195 on products of China (1 February 2025), section 2(f), for example, says “No drawback shall be available with respect to the duties imposed pursuant to this order.” In Learning Resources, Inc. v. Trump (20 February 2026) the Supreme Court held that IEEPA does not authorize the President to impose additional tariffs. Recovering IEEPA duties already paid is a separate question from drawback and is outside this article.
Antidumping and countervailing duties remain ineligible by regulation (19 CFR 190.3(b)).

These additional duties are reported through separate HTS Chapter 99 lines, so a drawback claim has to treat each duty line on the designated import entry separately: one line may be refundable and the next may not.

Deadlines

The five-year period appears in three places:

Unused merchandise (1313(j)) must be exported or destroyed “before the close of the 5-year period beginning on the date of importation”.
Rejected merchandise must be exported or destroyed within five years after importation (1313(c)).
Every claim must be filed, and completed, within five years after the date the designated merchandise was imported (1313(r)(1); 19 CFR 190.51(e)). A claim not completed in that period is treated as abandoned. An extension of up to 18 months is possible only for a declared major disaster (190.51(e)(2)).

Because the clock runs from importation, not from export, an entry from five years ago can drop out of a claim while the goods are still in the warehouse. Older entries are the first to lose value.

The records each route needs

A complete claim under 19 CFR 190.51(a) is an electronic drawback entry with the required certifications, the notices of intent where required, the import entry data and the evidence of export or destruction.

Record	Unused, direct	Unused, substitution	Manufacturing	Rejected
Import entry summaries for the designated entries (HTS number, duty by line, date)	Yes	Yes	Yes	Yes
Proof of export or CBP-supervised destruction (19 CFR 190.72, 190.71)	Yes	Yes	Yes	Yes
Notice of intent to export or destroy, CBP Form 7553, at least 5 working days ahead, unless waived (19 CFR 190.35, 190.91)	Yes	Yes	Where required	Where required
Evidence the goods were not used in the US	Yes	Yes	n/a	n/a
Evidence of same 8-digit classification of imported and exported goods	n/a	Yes	For substitution	n/a
Manufacturing ruling and bill of materials or formula (8-digit HTS, quantities)	n/a	n/a	Yes	n/a
Evidence of the defect, nonconformity or lack of consent	n/a	n/a	n/a	Yes
Business records showing transfers between parties (1313(j)(2), (b)(2))	If transferred	If transferred	If transferred	If transferred

Proof of export must show “the date and fact of exportation and the identity of the exporter”, with the description, quantity, Schedule B or HTSUS number and country of destination (19 CFR 190.72(a)). Acceptable evidence includes carrier documents such as a bill of lading or air waybill and records from a CBP-approved electronic export system.

Do not treat the notice of intent as a formality. CBP decides within two working days whether to examine the goods; if it says it will examine and the goods leave without being presented, “any drawback claim, or part thereof, based on the Notice will be denied” (19 CFR 190.35(c)). Claimants with a waiver of prior notice under 190.91 do not file it.

Records supporting a claim must be kept for three years after the claim liquidates, or longer if another law requires it (19 CFR 190.15).

Who can claim, and when the money arrives

For unused merchandise, 1313(j)(1) gives the right to claim to the exporter or destroyer. For manufacturing, the exporter (or destroyer) is entitled to claim, but it can assign the right by certification to the manufacturer, producer, importer or an intermediate party (19 CFR 190.28). Since TFTEA, transfers of merchandise between the importer, the manufacturer and the exporter can be shown by business records kept in the normal course of business; the old certificates of delivery are no longer required by the statute. Anyone who files a claim is liable for the full amount, and an importer can be liable for another party’s claim up to the duties it authorised to be claimed (1313(k)).

Refunds are normally paid when CBP liquidates the drawback claim. A claimant approved for accelerated payment under 19 CFR 190.92 receives estimated drawback “before liquidation of the drawback entry”, against a bond that covers the amounts outstanding. CBP decides on applications within 90 days.

Exports to Canada and Mexico follow special limits under USMCA; 19 CFR 190.0a deals with claims under NAFTA and USMCA, and those rules should be checked before including such exports in a claim.

A worked unused-merchandise claim

A distributor imports 2,000 industrial valves classified in one 8-digit HTSUS subheading (not an “other” provision), pays $18,000 in ordinary duty on the entry plus MPF, and within two years exports 500 valves of the same subheading to a customer in Brazil. It filed a notice of intent five working days before shipment, and CBP waived examination.

Direct identification: if the exported valves can be traced to the import entry, the claim is 99 percent of the duty attributable to 500 of the 2,000 units: 0.99 x $18,000 x 500/2,000 = $4,455, plus the MPF worked out under CBP’s drawback MPF instructions.
Substitution: if the exported valves came from domestic stock of the same 8-digit subheading, the distributor can still designate the import entry under 1313(j)(2), subject to the lesser-of cap in 1313(l)(2)(B).

If the same valves had also paid a Section 232 duty, that line would not be refundable on this claim (the 2026 metals proclamation opens only manufacturing drawback, and only in narrow cases), while the ordinary duty and MPF lines would.

Questions people ask

Can a company that did not import the goods claim drawback?

Yes. An exporter can claim unused merchandise drawback on goods it bought in the US, provided it can tie them to a duty-paid import entry (directly or by 8-digit substitution) and show the transfer through normal business records. The importer’s cooperation is still needed for the entry data.

Does India have the same system?

No. India’s duty drawback works under the Customs Act, 1962 and its own rules and rates, and Indian exporters also use schemes such as Advance Authorisation and RoDTEP, outlined in this guide to Indian export duty savings schemes. An Indian exporter selling to the US benefits from US drawback only where its US buyer or importer re-exports and claims.

If your drawback program depends on 8-digit substitution or a bill of materials, the classification behind each line is where I would start, and I work on questions of that kind through the contact page.

Sources

This article explains the law and practice in general terms. It is not legal advice on a specific product or shipment; for that, check the current official sources or ask a qualified adviser.