Unused merchandise drawback is provided for in subsection (j) of the drawback law 19 U.S.C. 1313(j). Drawback is available when imported merchandise is exported or destroyed within 3 years of import without being used domestically.

Drawback may also be granted on domestic or other merchandise, which is commercially interchangeable with the imported merchandise, and can be substituted for the imported merchandise.

Manufacturing Drawback

Manufacturing drawback is provided for in subsection (a) and (b) of the drawback law (19U.S.C. 1313(a) and (b)).

Subsection 1313 (a) provides for what is called "direct identification" manufacturing in which substitution of the imported merchandise is not permitted.

Subsection 1313(b) provides for substitution manufacturing drawback, in which substitution for the imported merchandise is permitted, subject to certain conditions.

In substitution manufacturing drawback, any other merchandise, whether imported or domestic, of the same kind and quality as the imported merchandise may be substituted for the imported merchandise and drawback is granted on the export or destruction of exported articles made from the imported merchandise, the substituted merchandise, or any combination of them. The manufacturer must use the imported merchandise and the substituted merchandise in manufacture within 3 years of receipt of the imported merchandise. In both cases, the manufactured article may not be used in the U.S. after manufacture.

Rejected Merchandise Drawback

Rejected merchandise drawback is provided for in subsection ( c ) of the drawback law (19 U.S.C. 1313(c)). Drawback is available when imported merchandise not conforming to sample or specifications, shipped without consent, or determined to be defective at the time of import is returned to Customs custody within 3 years of the date of import and is exported or destroyed.

The merchandise may be established to be defective at the time of import by presenting evidence of the agreement of the foreign shipper and the importer acknowledging that fact.