Question 1

What is duty drawback?

Accepted Answer

Duty drawback is a refund of customs duties, taxes, and fees paid on imported goods that are subsequently exported or used in the manufacture of exported goods. Most countries offer drawback programs — the US refunds up to 99% of duties under 19 USC §1313, the EU provides Inward Processing Relief (IPR), India has fixed drawback rates by tariff heading, and the UK offers Outward Processing Relief (OPR).

Question 2

How do you calculate duty drawback?

Accepted Answer

Duty drawback is calculated as: Duties paid on import × Drawback rate × Quantity re-exported ÷ Total quantity imported. In the US, manufacturing drawback refunds 99% of duties on imported materials used in exported products. In India, drawback is a fixed percentage of the FOB export value set by the government for each tariff heading. The EU uses Inward Processing Relief where duties are suspended entirely if goods are re-exported after processing.

Question 3

How to claim duty drawback in the US?

Accepted Answer

To claim US duty drawback: (1) File CBP Form 7551 (Drawback Entry) within 5 years of import, (2) Provide proof of export within 5 years of import, (3) Link the import entry to the export shipment, (4) Submit manufacturing records if claiming manufacturing drawback. Claims are filed electronically through ACE (Automated Commercial Environment). The refund is 99% of duties paid, minus a 1% retention by CBP.

Question 4

What is the duty drawback rate in India?

Accepted Answer

India's duty drawback rates are fixed by the government and published in the All Industry Rates (AIR) schedule under the Customs, Central Excise Duties and Service Tax Drawback Rules. Rates vary by tariff heading — for example, cotton garments typically get 2.5–3.5% of FOB value, leather goods 2–3%, and engineering goods 1–2%. Exporters can also claim Brand Rate drawback based on actual duty incidence if the AIR rate is insufficient.

Question 5

What is the difference between duty drawback and inward processing relief?

Accepted Answer

Duty drawback is a refund claimed after duties have been paid, while Inward Processing Relief (IPR) suspends duties upfront — you never pay them if the goods are re-exported after processing. IPR is the EU's primary mechanism and requires prior authorisation. Drawback (US model) is simpler — you pay duties on import and claim a refund after export. Both achieve the same economic result: no duty on goods that transit through a country for processing.

Duty Drawback Calculator

Drawback Scheme

Import Details

How to Claim — United States