Understanding the Basics of Duty Drawback: A Guide for Small Businesses
Learn the fundamentals of duty drawbacks and how your business can qualify for these often-overlooked refunds that could significantly improve your cash flow.
Evana Team
Duty Drawback Specialists
Understanding the Basics of Duty Drawback: A Guide for Small Businesses
For small businesses importing goods, duty drawbacks represent valuable cash flow—yet they’re frequently overlooked. This guide explains what drawbacks are, who qualifies, and how to capture them.
What is a Duty Drawback?
Duty drawback is a CBP refund program returning up to 99% of duties, taxes, and fees paid on imports when merchandise is later exported or destroyed under supervision.
The program prevents double taxation and keeps U.S. companies competitive when goods leave the domestic market.
Types of Duty Drawbacks
Four main categories cover most scenarios:
- •Direct Identification: link specific imports to specific exports.
- •Substitution: export goods commercially interchangeable with imports (same 8-digit HTS under TFTEA).
- •Manufacturing: recover duties on imported inputs used in exported products.
- •Rejected Merchandise: claim refunds on goods returned or destroyed for not meeting specs.
Who Qualifies?
You may be eligible if you pay duties on imports and later export, destroy, or sell to exporters. Drawback rights can transfer with proper documentation—you don’t need to be both importer and exporter.
Industries That Commonly Benefit
Manufacturing, automotive, aerospace, electronics, pharmaceuticals, chemicals, food processing, textiles/apparel, and metals/mining frequently leverage drawbacks.
The Duty Drawback Process
Typical steps:
- •Identify eligible import/export (or destruction) transactions.
- •Gather documentation linking them.
- •File a drawback claim with CBP.
- •Respond to CBP inquiries if needed.
- •Receive the refund.
Because tracking is complex, many businesses partner with specialists like Evana to manage documentation and filings.
Common Challenges
Documentation demands, five-year time limits, regulatory complexity (especially post-TFTEA changes), and limited internal resources can hinder claims.
How TFTEA Modernized Drawbacks
TFTEA reforms simplified substitution to 8-digit HTS, extended filing deadlines from 3 to 5 years, standardized payment timelines, automated processes, and broadened eligible fees and taxes.
Financial Impact
Benefits include recovering up to 99% of duties, claiming retroactively for five years, improving cash flow, lowering import costs, and enhancing competitiveness—often yielding thousands to millions annually.
How Evana Simplifies the Process
Evana assesses eligibility, handles documentation, prepares/ files claims, communicates with CBP, and disburses refunds—all on a success-based fee model so you only pay when you’re paid.
Getting Started
Initial steps:
- •Review import/export history for opportunities.
- •Evaluate record-keeping links between imports and exports.
- •Estimate potential refunds to ensure ROI.
- •Consider working with experts like Evana for efficient recovery.
Conclusion
Duty drawbacks are a legitimate, underused tool for importers. With the right guidance, the process becomes manageable and the recovered funds can materially boost your bottom line and competitiveness.
Ready to reclaim more?
Get started with Evana today
Talk through your import duty refund opportunity with our specialists