Recordkeeping - The Key To Drawback Compliance!

July/August 2002 Dutycalc Dispatch Article

Recordkeeping - that painstaking process of keeping pounds (or bytes) of documents surrounding your importing, manufacturing and exporting activities - is a critical aspect of your drawback program. Four questions come to mind when thinking about the records one must obtain and retain for a drawback program to be compliant.

Why?
Why must records be obtained and retained? Simply to enable Customs to verify drawback claims. These records are used to follow the flow of goods from one stage to another. Records must link import to manufacture, and if applicable, to exportation.

What records need to be kept?
Typically, you should obtain and retain the following documents for drawback purposes, however you may want to verify that additional records are not needed.

Import documentation such as the CF-7501 Entry Summary
Certificate of delivery
Purchase orders, invoices, packing lists
Import bill of lading, import delivery records
Bills of material, formulas
Export bill of lading, invoices, packing lists
Export invoices, packing lists

Who must keep these records?
An importer must keep all import-related documents. Should an importer transfer goods to another party then they must prepare a certificate of delivery (CD) that will need to be kept by the party obtaining the goods. The importer will need to keep records supporting the information provided on the CD.

A manufacturer is required to keep all manufacture or production records. Should a manufacturer transfer goods to another party for additional manufacturing or export, they must prepare a certificate of manufacture and delivery. Both parties should keep these records, although it is the principle manufacturer's responsibility to provide Customs with the records should they request them.

Any party other than the importer or manufacturer that transfers substituted commercially interchangeable goods, drawback products or manufactured goods has to provide a CD and must maintain those records. The recipient of the goods must retain the CD records.

As for the drawback claimant - who may be the importer, exporter, manufacturer, intermediate party or some combination of the four - they are required to keep records pertaining to the exportation for which the drawback claim is based. Otherwise the claimant must keep records applicable to their particular area of responsibility.

How long must records be kept?
Records must be kept for at least three years after a drawback claim has been paid by accelerated payment. However, this can be extended by Customs and your particular situation may require that records be retained indefinitely. Additionally, if Customs begins to verify a drawback claim just prior to the expiration date, records must be kept until Customs has finished its review.