Rejected Merchandise Drawback: Refunds on Defective Imports

Rejected merchandise drawback refunds up to 99% of the duty paid on imported goods that turned out to be defective, did not match the sample or specifications, or were shipped without the buyer's consent, once those goods are returned to CBP custody and exported or destroyed. It is authorized by 19 U.S.C. 1313(c). If you send bad product back to a foreign supplier, you can usually recover the duty you paid on it.

What qualifies as rejected merchandise?

• Defective at the time of import: The goods had the defect when they entered the United States.
• Not conforming to sample or specifications: The goods do not match what was ordered.
• Shipped without consent: The consignee never agreed to receive the goods.

The goods then go back to CBP custody and are exported or destroyed under CBP supervision.

How is it different from unused merchandise drawback?

Unused merchandise drawback, 19 U.S.C. 1313(j), applies to good product you export unused. Rejected merchandise drawback applies to product that failed. The documentation differs: a rejected merchandise claim has to show why the goods were rejected, through supplier correspondence, quality control reports or inspection records.

Deadlines

• Five years: File within five years of the import date.
• Notice: File a notice of intent to export or destroy (CBP Form 7553) before the goods leave or are destroyed, unless a waiver applies. See our Form 7553 guide.
• Records: Keep the rejection evidence, the export or destruction proof and the import entry for three years after the claim liquidates.

The records that make the claim

• The import entry for the rejected goods, with the duty paid.
• Rejection evidence: Supplier correspondence, a return authorization, a quality control report or a test result.
• Export or destruction proof: A bill of lading or airway bill for returns to the supplier, or a certificate of destruction witnessed under CBP supervision.

Frequently asked questions

Can I claim if the supplier already credited me? The supplier credit and the duty refund are separate. Drawback recovers the duty, which the supplier credit usually does not cover.

Do the goods have to go back to the original supplier? No. They have to be exported or destroyed under CBP supervision.

Is rejected merchandise drawback worth it for small amounts? It often is when rejections repeat. Many companies batch a year of returns into one claim.

How Caspian handles rejected merchandise drawback

Caspian matches your supplier returns and destruction records to the original ACE entries, assembles the rejection evidence and files the claim through our licensed brokers. See our duty drawback services or the full duty drawback guide.

Works Cited:

• 19 U.S.C. 1313, Drawback and refunds
• 19 CFR Part 190, Modernized drawback
• 19 CFR 190.35, Notice of intent to export, destroy, or return