What is Duty Drawback?

Mainly, there are three kinds of Duty Drawbacks:

Manufacturing drawback: if a manufacturer imported items that would be used in producing products. When these products are exported, the manufacturer can claim a Duty Drawback on the imported items. Since these items were not sold in local markets and were used in the production process of a final product that was then exported, the manufacturer will be able to get a refund. For example, an automobile manufacturer imported engine parts that were used in producing cars. If the cars were exported, the manufacturer can claim a refund of the customs duties that were paid on these engines.

Unused merchandise drawback: if a manufacturer imported items, then exported some of them in the same unused condition, the manufacturer can claim a Duty Drawback on the exported quantity. For example, an automobile manufacturer imported wheels that were used in producing cars, but 50% of the imported quantity was not used at all and was exported in the same unused condition, the manufacturer can claim a refund of the customs duties that were paid on these wheels.

Rejected merchandise drawback: if a manufacturer imported items but these were locally rejected by the standards and laws applied in the country. These items can be exported back under the supervision of the customs department, and the manufacturer can claim a Duty Drawback over these rejected items. For example, an automobile manufacturer imported glass panels to be used in manufacturing car windows, but these panels do not correspond to the applicable standards of the country, then they can be exported back, and the manufacturer can claim a refund of the custom duties that were paid on these glass panels.

There is also an extension to this type which is damaged merchandise. This is the case when items are rejected from entering the country and can’t be exported back, so the manufacturer can apply for Duty Drawback upon damaging these items under governmental supervision.