$100,000 Recovered on Imported Goods Using Duty Drawback

One Manufacturer’s Experience

by Beth Gitlin, President
Global Passages, LLC
Office: (321) 266-7340

Are you importing merchandise into the US that will possibly be exported out of the US at a later date? Have you ever imported a component or material into the US, used it in your manufactured product, and then exported that product to a foreign country? Did you know that in both of these situations, you can apply to US Customs for Duty Drawback – a refund of your duties paid on your imported materials?

Duty Drawback is an underutilized program sponsored by the CBP (Customs and Border Patrol) under the Tariff Act of 1930 in which a company can receive a refund of duties paid on any imported materials that are contained in the products that they are exporting.

Companies that take advantage of drawback are able to compete more effectively in foreign markets. Since drawback reduces the cost of imported materials, cash flow and profits improve substantially. Each year thousands of companies continue to overlook potential duty refunds while their counterparts recover millions of dollars.

Global Passages recovered $100,000 for a customer in duty drawback on pumps that were imported from China into their US manufacturing facility. These pumps were part of a total package that included an above ground swimming pool and additional component parts that were made in the USA. The whole swimming pool package was then exported to a customer in Canada. In this case, the manufacturer was able to apply for duty drawback on the pumps as they had entered the US from China, but were exported with the rest of the package to Canada. The drawback was applied after the import and export transactions had happened. You can do this as long as you apply within 3 years after the transaction has occurred.

What can you do to determine if you may be eligible for duty drawback? Follow the 5 simple steps below and you will be on your way to increasing profits and cash flow while remaining competitive in the global marketplace:

Determine total amount of duty paid minus any fees. Talk to your Customs Broker or Accounting Department.
Find out percentage of annual sales that are exported. Talk to your Sales Department.
Find out percentage of import components used in exported goods. Talk to your Materials Manager.
Calculate potential duty drawback amount. Potential Duty Drawback = (Annual import duties X Annual sales exported) X Percentage of imported components used in exported goods.
If you find that your potential duty drawback is a worthwhile dollar figure, speak immediately to a duty drawback specialist to recover your amounts from the previous 3 years and to implement a duty drawback program going forward.

About the author: Beth Gitlin is President of Global Passages LLC, an international trade consulting firm that provides hands-on outsourced executive management skills and training for manufacturers, importers and exporters that need assistance with import/export program start-up and expansion. Global Passages Connects people and companies world-wide to Exchange goods, services and ideas in order to Discover new opportunities and common purposes in business.