Rejected Merchandise Drawback: 19 U.S.C. 1313(c) Claim Guide

Key Points

• Rejected merchandise drawback under 19 U.S.C. 1313(c) refunds 99 percent of the duties, taxes, and fees paid on imported goods that are nonconforming, shipped without consent, defective at importation, or sold at retail and returned.
• The goods must be exported or destroyed under CBP supervision within five years of importation.
• The goods do not have to be sent back to the foreign seller.
• The claim is filed in ACE under 19 CFR part 190, after a notice of intent on CBP Form 7553.
• Retail-return claims depend on records linking the import entry, the sale, the return receipt, and the export or destruction.

On this page

1. What rejected merchandise drawback covers
2. The four qualifying situations
3. Refund amount, time limit, and export or destruction
4. Filing the notice of intent and the ACE claim
5. Records for e-commerce retail returns
6. What importers should do
7. Key references

The links in this article go to the primary documents: the statute, the regulations, and CBP's own pages. Read the source.

Direct answer: Rejected merchandise drawback is a duty refund under 19 U.S.C. 1313(c). It is available when imported goods do not conform to sample or specifications, were shipped without the consignee's consent, were defective when imported, or were sold at retail and returned. You get back 99 percent of the duties, taxes, and fees paid, as long as the goods are exported or destroyed under CBP supervision within five years of importation.

What rejected merchandise drawback covers

Drawback is the refund of duties on goods that do not stay in U.S. commerce. Most people think of manufacturing or unused-merchandise drawback. Section 1313(c) is different: the goods are not used in manufacturing and are not matched with substitute goods. They are simply rejected, and the refund follows the rejected goods out of the country or into supervised destruction.

This makes it one of the more direct recovery routes. There is no need to identify a manufacturing process or a substitute article. The core of the claim is proving that the specific goods came in on a specific entry, qualified under one of the statutory grounds, and left or were destroyed under CBP supervision. For the general drawback process, see how to file customs duty drawback under 19 U.S.C. 1313.

The four qualifying situations

Nonconforming goods

The merchandise does not conform to the sample or specifications on which the purchase was based. The importer needs the order, specification, or sample, plus evidence of how the goods differ.

Goods shipped without the consignee's consent

The seller sent goods the consignee never agreed to buy. Purchase orders, correspondence, and shipping documents showing no authorization are the natural proof.

Goods defective at the time of importation

The defect must exist when the goods were imported. Damage that occurs later, such as in a U.S. warehouse or during customer use, does not fit this ground. Inspection reports, photographs, and quality records help show the defect predates importation.

Goods sold at retail and returned

The statute also covers merchandise ultimately sold at retail by the importer or its distributor and then returned. This is the ground most relevant to e-commerce and consumer-goods importers. The goods can be in any condition on return, but the sale and return must be documented.

Goods that do not fit any of these four grounds may still qualify under another drawback provision. One example is unused merchandise drawback under 19 U.S.C. 1313(j).

Refund amount, time limit, and export or destruction

• Amount: 99 percent of the duties, taxes, and fees paid on the merchandise.
• Time limit: the goods must be exported or destroyed within five years after the date of importation.
• Destruction: it must happen under CBP supervision. Destroying goods on your own without CBP's involvement leaves you with no claim.
• No return to the seller: the goods need not be returned to the foreign seller. You can export them to a third party or destroy them under supervision.

The five-year clock runs from importation, not from the date you discover the problem. Importers with older entries should check dates before spending effort on a claim.

Filing the notice of intent and the ACE claim

The procedures are in 19 CFR part 190. Two steps matter most.

1. Notice of intent. Before exporting or destroying, file CBP Form 7553 so CBP can decide whether to witness the export or destruction. Do not move or destroy goods until you have followed the notice process. See CBP Form 7553: notice of intent to export or destroy.
2. Drawback claim in ACE. After the export or destruction, file the claim electronically in ACE, identifying the import entry and the goods and supplying proof of export or destruction.

CBP's drawback page is the starting point for current filing guidance. Brokers and in-house teams should confirm how their ACE access and drawback permissions are set up before a claim is due.

Records for e-commerce retail returns

Retail returns are where claims most often fail, because high volumes of small returns make it easy to lose the chain of documents. Part 190 expects records that tie the returned goods back to the import entry. For each claim, an e-commerce importer should be able to produce:

• The import entry: entry number, entry date, HTS classification, and the duties, taxes, and fees paid on the goods.
• The sale: order record showing the item, the date, and that the importer or its distributor sold it at retail.
• The return receipt: proof the customer returned that item, with date and condition.
• The export or destruction: export documents, or CBP-supervised destruction records, for the same goods.

Linking units to entries

The harder question is identifying which import entry a returned unit came from. Inventory systems that track lot, SKU, and receiving date make this possible. If your system cannot trace a unit to an entry, set up a consistent, documented method for allocating returns to entries before you file. Apply the same method every time and keep the supporting data.

What importers should do

• Track the five-year deadline from each entry date, and review aged entries with defective, nonconforming, or returned goods first.
• Do not export or destroy rejected goods until the Form 7553 notice process is complete.
• Build a return record file for every claim: entry, sale, return receipt, and export or destruction proof.
• Match inventory and returns data to import entries so that each returned unit can be traced to the duties paid on it.

Key references

• 19 U.S.C. 1313: the drawback statute, including subsection (c) on rejected merchandise.
• 19 CFR part 190: drawback regulations covering ACE claims, notices, and records.
• CBP drawback page: agency guidance on filing drawback claims.
• Customs duty drawback filing guide: overview of the drawback process.
• CBP Form 7553 guide: how the notice of intent works.