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Part I:
Where to begin
Before Customs will give you drawback, they require that you provide them with specific information. We have listed exactly what Customs needs. Some may or may not pertain to your situation so we have spelled it all out so you can determine what is and isn't relevant to your particular drawback program.
What you need from Customs are called Special Privileges and they are:
Accelerated Payment - allows you to get paid in 4 weeks instead of years later
Waiver of Prior Notice privileges, both future and past (2 separate privileges)
- Needed when you don't notify Customs ahead of time that an export will occur
- Waivers are not needed and do not apply to manufacturing claims
Commercial Interchangeability Ruling (a 4th privilege possibly)
- To avoid having to match an export directly to a specific import
- May not need this if your parts are ordered for a specific job and can be traced
- This privilege will be required for Unused Substitution claims
Manufacturing ruling - not really a privilege but a necessity if the imports are used to make another product.
You have to apply in the proper format, answering questions about the way you do business, who the people in charge of the business are and how you intend to prove what you claim. The privileges can take up to 90 days for Customs to approve (according to their regulations). They can actually take much less time depending upon how well the request is put together, whether the people that have to sign off (at Customs) are in the office or out training, auditing or simply on vacation. They are supposed to be done in no more than 90 days but Customs closed 3 ports for drawback recently so 5 ports are now doing the work of 8 and it's anyone's guess if they can keep within 90 days.
Accelerated payment is a request to get paid from Customs within a month of filing a claim. Without accelerated payment you may not get paid for years. There is no maximum time limit on when they have to pay except when you have accelerated payment. Then they "have to" pay within 3 weeks of the claim. The "have to" is not really enforced and sometimes it takes a month, sometimes less. We consider 4 weeks to be a realistic projection.
The waivers of prior notice are necessary because you do not ordinarily notify Customs that you plan on exporting goods and claiming drawback on them before they leave the US. Once goods have left the US and Customs was not notified with the 7553 form filed - you absolutely have to get the waivers. The past waiver covers all exports from yesterday back three years and says that you can prove the export by showing a signed bill of lading or air waybill if requested. The future waiver says the same but covers shipments from today into the future. If you get a past waiver and not a future waiver you can only claim drawback on past exports and never, ever on shipments into the future. It's a very bad situation to only apply for a past waiver and not a future waiver because you can not do future waivers ever again. In essence both waivers MUST be applied for at the same time. They contain about the same information and, if you ask me, are just a way for Customs to trick people into asking for one and forgetting the other so they can deny half the drawback claims - unless you know what you are doing and apply for both at once. The waivers are not needed for manufacturing claims.
The Commercial Interchangeability ruling is needed if you cannot identify an export as having come from a specific import entry. This allows you to file under "substitution" where any import that has the same part number as an export and within three years before the export can be claimed as a match. The commercial interchange ruling says that you will classify merchandise by something like a part number and that the part number always denotes the commercial interchangeability of the item. For example a part number XYZ is always a blue widget meant for consumer use. A part number XYZ-M might be the same blue widget but is meant for military use and it has it's own part number because the quality has made the items not interchangeable.
Manufacturing rulings are used when imported components are made into finished goods. Sometimes it's not that clear whether you are packaging or making items and rulings become required as a result. For a manufacturing ruling you need to go one of two routes; use a general ruling, one that applies to others in the same types of business or get a specific ruling because you are doing something unique that does not fit into a general ruling. General rulings can be done at the drawback port, specific rulings come through headquarters and take closer to 90 weeks than 90 days to get approved. Can take days to prepare as opposed to hours with a general ruling.
Part II:
What you must provide Customs to get drawback privileges
Exports: Customs official policy is the need to see a commercial invoice from you to the export customer and a bill of lading showing the laden on board date. These should be signed by the carrier but in certain cases others can sign as copies of true originals. On air shipments Customs wants to see the flight number and date.
Imports: you need the CF7501 entry summary form and commercial invoice plus packing list if necessary.
Other: receiving records to show the merchandise arriving at your place of business; manufacturing records to show imports of components or raw materials being made into finished goods; purchase orders to show that you ordered one item and received just as you ordered; sales orders from your customers showing what they ordered from you; proof of payment from the export customer to prove a commercial transaction existed and not just a paper one. The purchase and sales orders help to show the commercial interchangeability since they generally tie products to descriptions by part numbers.
The above are needed both for the accelerated payment and the export waivers. For commercial interchangeability we would need to show Customs that the same part number or sku# is always the same product with the same qualities and can be interchangeable from one import to another. For example a part number of "2911451321" is always a piston for a Diesel engine model# ABC. On a model XYZ engine the piston part number may be something else. The request has to show that you keep stock by that part number and that the retail customer buys based on that. If you can tie the imports to the exports by an order or lot# you can avoid the interchangeabability ruling but there has to be that link on the import and export documents.
In order to complete the application process, you must provide the necessary information in the format Customs specifies. Go to the U.S. Customs website for Sample Applications
As the sample applications will state, in order to get the privileges you must put the information together with a sample claim and answer all of the necessary questions about who the claimant is and how records will be kept and regulations complied with. Then it's a matter of waiting for a response from Customs.
It can take a day or two to put together all of the requests once the documents to substantiate them are gathered. For further assistance with your company's drawback applications and drawback processing, contact Dutycalc Data Systems.
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