Duty drawback allows companies to recover up to 99% of paid customs duties, taxes and/or fees on qualifying imported products. While duty drawback rules are quite complex, it can create tremendous savings opportunities for claimants. Our team has compiled the most critical information regarding duty drawback recordkeeping rules to help claimants successfully manage the process.

Good duty drawback recordkeeping is crucial, but what exactly does that mean for claimants? It means that there are certain duty drawback rules mandating claimants to keep specific documentation on file as U.S Customs and Border Protection (CBP) can request access to the documentation for an allotted amount of time after the claim is filed.

Regardless of the type of drawback, record retention requirements apply. Strict recordkeeping requirements have been in place since the beginning of the federal government. Dating back to July 4, 1789, recordkeeping rules have forced claimants to retain cargo manifests, entry documentation, invoices and bills of lading.

What Documents to Keep for Duty Drawback Recordkeeping

Duty drawback claimants are required by law to keep certain records related to the import, export, manufacturing or warehousing of a product. Some of the specific documents include:

• Import Documentation
  • CBP Form 7501 (Entry Summary for the Customs Clearance)
  • Commercial Invoice
  • Packing List
  • Purchase Order
  • Bills of Lading
• Manufacturing Documentation
  • Bills of Material or Formula
  • Waste Records
• Warehouse Documentation
  • Warehouse inventory in records
  • Warehouse inventory out records
  • Tracing of all relevant movements and storage
• Export Documentation
  • Commercial Invoice
  • Packing List
  • House and Master Bill of Lading  
  • Cargo Manifest
  • Air Waybill
• Additional Documentation (if applicable)
  • Substituted Merchandise Supporting Evidence
  • Laboratory Records
  • Transfer of merchandise kept in the normal course of business
  • Mexican Pedimento or Candian B3
  • Waiver Certifications
  • Small package carriers labels and proof of delivery
  • Destruction Evidence
  • CBP Form 7553 Notice of Intent to Export or Destroy
  • Additional certifications or forms could be required as well, depending on the type of drawback

Proof of Exportation

In addition to the above documents that must be retained, there are additional items that will help prove the product was exported. While these data elements are typically included in the commercial documentation of the export shipment, claimants should double-check that these records are kept in order to qualify for duty drawback, as you must be able to fully establish the date and fact of exportation for drawback purposes.

• Name of Exporter
• Date of Export
• Description of Goods
• Quantity and Unit of Measure
• Schedule B Number or the HTSUS Number
• Country of Ultimate Destination

How Long to Keep Records

As a general rule, import or export records should be kept for five years from the date of entry or departure. However, official duty drawback rules specify that documents must be kept for three years from the date of liquidation or longer if required by law.

Importance of Stringent Recordkeeping

In addition to the duty savings, there are risks related to the duty drawback process that importers and claimants should be aware of.

• Verification of Drawback Claims – Simply put, CBP has the authority to verify all drawback claims, which is another reason to ensure proper recordkeeping practices. If CBP chooses to verify a claim, liquidation of the claim will be postponed until a report is issued. If a considerable amount of errors are found, CBP can postpone liquidation for all related claims of a product line or even all claims made by the claimant.

• Liability of Drawback Claims – Another important reason to maintain compliant recordkeeping is related to liability. Claimants will be fully liable for the amount of the drawback claim. Additionally, importers could be liable for any drawback claim made on their imported merchandise by another person.

Who says duty drawback rules have to be complicated? We certainly didn’t. Contact our team to learn more about our duty drawback solutions.