Unused Merchandise Drawback: Drawback on imported materials or finished products exported in essentially the same condition.This provision allows for an extensive list of incidental operations, such as testing, cleaning, and painting. As a result, significantly more products will be eligible for unused substitution drawback. 1313(j)(2) is the alternative substitution standard rule set forth in (d)(1), claims under this subpart may be paid and liquidated if: (i) The claimant specifies on the drawback entry that the basis for substitution is the alternative substitution standard for wine; and. 1313(j)(1) or under the substitution provision under 19 U.S.C. Here’s the exact language of … Section 313(j)(2) of the Act, as amended (19 U.S.C. When imported duty-paid, duty-free or domestic material of the same kind and quality (SKAQ) as the imported duty-paid designated material is used to produce the exported product, U.S. import duty may be recovered. (iv) Review by CBP. The new rules ease the requirement for unused substitution drawbackby allowing a match to the 8-digit tariff classification (of the 10-digit classification) to the imported article. Under this procedure, a company may recover a 99% drawback of duties paid on imported merchandise, if, within three years, it exports “fungible” domestic or foreign merchandise. HQ H174276; Jul 03, 2012 ; Type : Drawback • HTSUS : Related: 228580; H048135; H122535; H090065; H030097; H074002; H106515 OT:RR:CTF:ER H174276 PTM J.W. Unused merchandise drawback is outlined in subsection (j) of the drawback law 19 U.S.C. For many companies, this initial recovery of duty can be quite substantial. J1: Direct Identification J2: Substitution Lot Number, Serial Number, or Drawback Accounting Method Match like Merchandise within time frames. This simplified timeframe replaces a variety of timeframes for Unused Merchandise, Manufacturing, and Rejected Merchandise Drawback. In the case of an article that is destroyed, subject to paragraph (b)(3) of this section, the total amount of drawback allowable will not exceed 99 percent of the lesser of: (i) The amount of duties, taxes, and fees paid with respect to the imported merchandise (after the value of the imported merchandise has been reduced by the value of materials recovered during destruction as provided in 19 U.S.C. § 190.32 Substitution unused merchandise drawback. It is important to note that, under the provision, the imported duty paid material does not have to be exported if the substituted merchandise is. (2) Destruction. At the same factory, there are also duty-free motors that were manufactured in the Caribbean. Claimants under manufacturing drawback may, if approved, file retroactively, provided that the drawback claims are filed within three years of the date of export. (e) Operations performed on substituted merchandise. Section 190.32. L. 114–125, § 906(j)(1), substituted “A drawback entry shall be filed or applied for, as applicable, not later than 5 years after the date on which merchandise on which drawback is claimed was imported.” for “A drawback entry and all documents necessary to complete a drawback claim, including those issued by the Customs Service, shall be filed or applied for, as applicable, within 3 years after the date of … Drawback not allowed Yes Yes Has substituted merchandise been used in the United States? The predecessor or successor must certify that the successor is in possession of the predecessor's records which are necessary to establish the right to drawback under the law and regulations with respect to the imported and/or substituted merchandise. drawback claims • 1313(j)(2) substitution unused merchandise • 1313(b) manufacturing substitution • §190.51(a)(2)(ix) • The 10-digit HTSUS classification for the imported merchandise and would be applicable for the substitute merchandise along with the unit of measure must be reported (a) General. This application is called a “Commercial Interchangeability Determination” (CID). Note: Unused substitution drawback (under 1313(j)(2)) on exports to Canada or Mexico is not available. 190.32 Substitution unused merchandise drawback. In 1980, drawback was permitted on the exportation of imported merchandise if the condition of the merchandise was unchanged and it was not used in the U.S. In substitution manufacturing drawback, any other merchandise, whether imported or domestic, of the same kind and quality as the imported merchandise, may be substituted for the imported merchandise. If imported merchandise is exported or destroyed under customs supervision within 5 years of import without being used inside the United States, then drawback is available. Even if you don’t do both, you may still be able to qualify as long as but importing and exporting happen along your supply chain. Substitution Same Condition/Unused Merchandise Drawback: This drawback is also another amendment, from 1984, that allows “fungible” goods (items considered mutually interchangeable) to be exported to recoup taxes and duties. (ii) The assets and other business interests of a division, plant, or other business unit of such predecessor, but only if in such transfer the value of the transferred realty, personalty, and intangibles (other than drawback rights, inchoate or otherwise) exceeds the value of all transferred drawback rights, inchoate or otherwise. There are two options for claiming Unused Merchandise – Direct Identification under 19 U.S.C. If you or your business imports and export goods to and from the United States, it’s possible that  you may qualify for duty drawback, which is a 99% refund on goods imported into the United States that are subsequently exported . Additional information required for drawback compliance program: 20. Unused Merchandise Drawback USC 1313 (j) A refund of duties on imported merchandise exported in essentially the “same condition”. Copyright © 2020, J.M. (1) Alternative substitution standard. For any drawback claim for wine (as defined in § 190.2) based on 19 U.S.C. 1313(s), a drawback successor as defined in paragraph (f)(2) of this section may designate either of the following as the basis for drawback on merchandise possessed by the successor after the date of succession: (i) Imported merchandise which the predecessor, before the date of succession, imported; or. There are other forms of Drawbacks available under this section: Successorship 1313 (s) (i) Records of predecessor. (ii) Merchandise not otherwise designated. § 190.32 Substitution unused merchandise drawback. 1313(j) (2). Section 1313(j)(2)] is a 99% refund of duties paid on imported goods when other “commercially interchangeable” domestic or foreign goods are exported. MANUFACTURING DRAWBACK. It is possible that the dishwashers contain all domestically produced motors of the same “kind and quality as the imported motors, or Umbrella cannot tell which motors were installed into dishwashers due to their manufacturing and inventory process. 1313(j)(2), the total amount of drawback allowable will not exceed 99 percent of the duties, taxes, and fees paid with respect to the imported merchandise, without regard to the limitations in paragraph (b)(1) or (b)(2) of this section. 1313(x)); or. Description of the business relationships between the parties involved in the import and Manufacturing Drawback provides for “Direct Identification” USC 1313(a) and Substitution under Subsection (b). Determination of HTSUS classification for substituted merchandise. substitution under the same 8-digit subheading of the HTSUS rather than “same kind and quality” substitution for manufacturing drawback). Bills of Material must contain the HTS numbers for ALL components used in manufacture, 99% of the lesser of the amount of duties, taxes and fees paid with respect to the imported components and the amount of duties, taxes and fees paid that would apply to the components if the components were imported, Claim attachments identify part number and quantity used in manufacture, Claim attachments identify merchandise used in manufacture by 8 digit HTS number. List of Recommended Items Needed for Substitution Drawback Application . Prior to exportation Customs must be advised of an export shipment in order to afford them the opportunity to examine the export shipment. J.M. open/close. Description of the business relationships between the parties involved in the import and Unused; Substitution; Time limits for Statute of Limitation Unused Merchandise Substitution Drawback When unused material, which is commercially interchangeable with the imported duty-paid material, is exported, U.S. import duty may be recovered. The new rules ease the requirement for unused substitution drawbackby allowing a match to the 8-digit tariff classification (of the 10-digit classification) to the imported article. prev | next. J.M. Substitution unused merchandise drawback. In substitution manufacturing drawback, any other merchandise, whether imported or domestic, of the same kind and quality as the imported merchandise, may be substituted for the imported merchandise. In instances in which assets and other business interests of a division, plant, or other business unit of a predecessor are transferred, the predecessor or successor must specify, and maintain supporting records to establish, the value of the drawback rights and the value of all other transferred property. The three-year time limit for the merchandise to be exported or destroyed under CBP supervision begins on the date of importation of the imported merchandise. (3) Required certification. drawback claims • 1313(j)(2) substitution unused merchandise • 1313(b) manufacturing substitution • §190.51(a)(2)(ix) • The 10-digit HTSUS classification for the imported merchandise and would be applicable for the substitute merchandise along with the unit of measure must be reported LAW AND ANALYSIS: Substitution, unused merchandise drawback is provided by 19 U.S.C. Section 1313(j)(2)] is a 99% refund of duties paid on imported goods when other “commercially interchangeable” domestic or foreign goods are exported. Substitution same condition drawback/unused merchandise drawback [19 U.S.C. Unused merchandise drawback can be claimed under the direct identification provision of 19 U.S.C. Substitution Manufacturing Drawback: U.S. import duty may be recovered when imported duty-paid, duty-free or domestic material of the same kind and quality as the imported duty-paid designated material is used to produce the exported product. Unused; Manufacturing; NAFTA/USMCA; Duty drawback tracking methodologies. (c) Determination of HTSUS classification for substituted merchandise. For substitution unused merchandise drawback: (1) The claimant must have had possession of the exported or destroyed merchandise at some time during the 3-year period following the date of importation of the imported designated merchandise; and. Section 313 (j) (2) of the Act, as amended ( 19 U.S.C. Substitution Unused Merchandise Drawback (19 U.S.C. As a result, significantly more products will be eligible for unused substitution drawback. Rodgers Co. Inc specializes in customs brokerage, duty drawback, freight forwarding and freight management with a focus on high-tech and high-touch solutions. (ii) The amount of duties, taxes, and fees that would apply to the destroyed article if the destroyed article had been imported (after the value of the imported merchandise has been reduced by the value of materials recovered during destruction as provided in 19 U.S.C. ) and substitution under 19 U.S.C been used in the United States recovery of duty can be recovered when unused. Is unused merchandise – Direct Identification substitution Determination of commercially interchangable, significantly more will. 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