Unused Merchandise Drawback Under 19 U.S.C. 1313(j) Explained

Key Points

• Unused merchandise drawback refunds 99 percent of the duties, taxes and fees paid on imported goods that are exported or destroyed under CBP supervision within five years of importation without being used in the United States.
• Under direct identification you claim on the very goods you imported; under substitution you may claim on different goods in your possession that are classifiable under the same eight-digit HTS subheading.
• The notice of intent to export, destroy or return (CBP Form 7553) must be filed before the export or destruction unless the claimant holds a waiver of prior notice.
• Section 232 duties are not drawback-eligible, while Section 301 duties are.
• Testing, cleaning, repackaging, inspecting, sorting and refurbishing are not "use," as long as the operation does not amount to a manufacture or production.

On this page

1. Direct identification under 1313(j)(1)
2. Substitution on the eight-digit HTS number under 1313(j)(2)
3. What counts as "use" and what does not
4. Notice of intent, claim filing, and timing
5. What importers should do
6. Key references

Unused merchandise drawback lets you recover 99 percent of the duties, taxes and fees paid on imported goods that you export or destroy under CBP supervision within five years of importation, provided the goods were not used in the United States. You can claim on the imported goods themselves (direct identification) or on other goods in your possession that share the same eight-digit HTS subheading (substitution).

The links in this article go to the primary documents: the statute, the regulations, and official CBP and tariff schedule pages themselves. Read the source. This guide covers only the unused-merchandise path; for the full program see the customs duty drawback overview.

Direct identification under 1313(j)(1)

Under 19 U.S.C. 1313(j)(1), drawback is available on imported merchandise that is exported or destroyed under CBP supervision within five years of importation without having been used in the United States. The refund is 99 percent of the duties, taxes and fees paid.

Direct identification is the straightforward version. You must be able to tie the exported or destroyed goods back to a specific import entry. Typical fits include:

• Returned or rejected goods sent back to the foreign seller or another foreign party.
• Overstock shipped to a foreign affiliate or customer.
• Goods destroyed under CBP supervision because they are unsalable.

Direct identification depends on records that trace the goods from import entry, through your inventory, to export or destruction. If your records cannot show that the exported unit is the imported unit, substitution may be the better route.

Substitution on the eight-digit HTS number under 1313(j)(2)

Substitution under 19 U.S.C. 1313(j)(2) removes the tracing requirement. The exported or destroyed merchandise does not have to be the imported merchandise. It must instead meet these conditions:

• Same classification: it is classifiable under the same eight-digit HTS subheading as the imported merchandise.
• The "other" rule: when the eight-digit article description begins with "other," the goods must share the same ten-digit number, and that ten-digit number's own article description must not begin with "other" (see 19 U.S.C. 1313(j)(5)).
• Possession: the substituted merchandise must be in the claimant's possession.
• No prior use: it must not have been used in the United States before the export or destruction.

Check each subheading against the current Harmonized Tariff Schedule rather than relying on memory. The description text at the eight-digit and ten-digit levels decides whether the "other" rule applies.

How the refund is calculated

For substitution, the refund is 99 percent of the lesser of two figures: the duties paid on the import, or the duties that would apply to the substituted merchandise if it were imported. The result is also limited by 19 U.S.C. 1313(l). In practice, this means a substituted export can never produce more than the duty actually paid on the import.

Which duties are in play

Section 232 duties are not drawback-eligible. Section 301 duties are. When you size a claim, separate the duty lines on the import entry and include only the eligible ones. For broader recovery options outside drawback, see customs recovery: four ways to get overpaid duty back.

What counts as "use" and what does not

The "unused" requirement is narrower than it sounds. Under 19 U.S.C. 1313(j)(3), incidental operations are not "use." These include testing, cleaning, repackaging, inspecting, sorting, refurbishing and similar operations. The condition is that the operation does not amount to a manufacture or production.

That line matters for returns programs. A refurbished unit can still qualify, but a unit that has been assembled into something new or processed into a different article is a manufacturing question and falls outside the unused path. Document what was done to the goods, and by whom, before you file.

Notice of intent, claim filing, and timing

The procedures sit in 19 CFR part 190, and CBP explains the program on its drawback page.

Notice of intent to export, destroy or return

The claimant files the notice of intent on CBP Form 7553 before the export or destruction, so CBP has the chance to supervise or examine the goods. The exception is a claimant that holds a waiver of prior notice. Without a waiver, exporting first and filing later risks losing the claim. Details on the form are in our Form 7553 guide.

The drawback claim

The claim itself is filed electronically in ACE. The drawback entry is covered in our Form 7551 guide. Claimants who qualify may also use the accelerated payment privilege under part 190, which allows payment before CBP finishes liquidating the claim.

The five-year window

The five-year period runs from the date of importation. Count it from the import date of each entry you rely on, not from the date you decide to export. For substitution claims, confirm that the imported merchandise you designate is still within five years on the date of export or destruction.

What importers should do

• Map your import entries to your export and destruction events by eight-digit HTS subheading, and flag any "other" subheadings that need the ten-digit test.
• File Form 7553 before the goods leave or are destroyed, or confirm that your waiver of prior notice is in place and current.
• Keep records showing the goods were not used in the United States, including any testing, cleaning or refurbishing performed.
• Calendar each entry's five-year date and separate Section 232 duty lines from eligible duties before calculating the claim.

Key references

• 19 U.S.C. 1313: the drawback statute, including subsections (j)(1), (j)(2), (j)(3), (j)(5) and (l).
• 19 CFR part 190: drawback regulations covering claims, notice of intent, waivers and accelerated payment.
• Harmonized Tariff Schedule: the official source for eight-digit and ten-digit article descriptions.
• CBP drawback page: agency guidance on filing drawback claims in ACE.