Unused Merchandise Drawback allows for the refund of import duty on merchandise exported product in essentially the same condition. This provision allows for an extensive list of incidental operations, such as testing, cleaning, and painting. Essentially any value-added process short of a manufacturing process, as defined above, is allowable under unused merchandise. However, the merchandise cannot be used in the United States for its intended purpose prior to exportation.
Provisions: 19 USC 1313(j)(1) and 1313(j)(2)
What is Unused Merchandise Duty Drawback?
Unused Merchandise Drawback Services
Unused Direct Identification
Provision:19 USC 1313(j)(1)
The export is traced back to the import with Direct Identification using lot number or serial number matching. If lot or serial numbers are not present, then the claimant must use one of the accepted accounting methods, such as FIFO or LIFO.
Substitution of Unused Merchandise
Provision: 19 USC 1313(j)(2)
The export is matched to the import using HTS level substitution. To qualify for substitution matching filing unused drawback, the 8-digit HTS or 10-digit HTS cannot be classified as “Other.” The export destination cannot be to a USMCA or US Territory, such as Canada or Mexico for example. If either is the case, Direct Identification matching must be used.
Direct Identification defined - The Direct Identification matching method uses lot number or serial number tracking to match an exported product with its exact importation to claim drawback. However, in the absence of lot or serial number tracing, a claimant can instead utilize one of the acceptable accounting methods.