Duty Drawback – Not Just for Returns

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Fancy cocktail toothpicks, yoga pants that do not leave much to the imagination, cell phone cases that are no longer in style, and cars that were washed and detailed by Hurricane Sandy while waiting at the port are just some of the items that were imported into the U.S. with the intention of being sold. Instead, they were disposed of and drawback claimed on the duties and fees paid.

People usually think of Duty Drawback as merchandise that is imported duty paid, then exported without entering the commerce of the U.S. However, if the merchandise is not sellable due to damage or defect (or poor taste) the merchandise may be returned to the foreign vendor or destroyed in the U.S. and a claim for drawback of duties paid can be filed. Often it is more cost effective for a foreign supplier to write off the merchandise as a loss and pay for a destruction rather than bear the costs of shipping the items back to the country of origin. This is most common when the items are damaged beyond repair (water-filled automobiles), seasonal (holiday sweaters) or just plain out of date (last years’ cell phone case). 

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Topics: Duty Drawback, North America

My Favorite Kind of Duty Drawback

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What do treadmills, party decorations, stereo equipment, and fun, sleeved blankets have in common? 

These are all products that have appeared on duty drawback claims that have been filed with U.S. Customs. Many everyday products that are sold in the U.S. are also sold in other countries. Items that are imported duty-paid into the U.S. prior to moving to their final destination outside the U.S. are eligible for a duty refund. 

If a company wants to import 6,000 fun, sleeved blankets in November the company must pay U.S. duty and fees on all 6,000 blankets. If the company has the intention of only selling 1,000 in the U.S. for holiday family pictures and chooses to send 5,000 to Canada for the start of indoor curling season, the company can get a refund of 99% of the duties and fees paid on the 5,000 blankets exported to Canada to warm those stylish curling fans. 

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Topics: Duty Drawback, North America

An End to the Cuban Embargo… Close, but No Cigar

An End to the Cuban Embargo... Close, but No CigarMaking a gasket for a 1958 Plymouth Belvedere’s carburetor from an old piece of cardboard is a typical job for an auto mechanic’s apprentice in Cuba, where parts for American cars that were stranded on the island since 1960 are almost impossible to come by. Cuban mechanics have all acquired and perfected unique skills ever since the embargo was implemented by the U.S. in retaliation for Cuba’s nationalization of American-owned oil refineries. Now, talk of the embargo being lifted has buoyed the hopes of many U.S. auto parts companies that sell after-market parts, and U.S. classic car buffs are salivating at the chance to acquire classic Fords, Buicks, Oldsmobiles, and Cadillacs in ready-to-restore condition.

But not so fast…

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Topics: Export Consulting, Import Consulting, North America

Why Did the Chicken Cross the Road...

stand-back-magellanA friend of mine was over a few weeks ago and while relaxing on the deck, the topic of EU Agriculture Regulation came up. I typically try to confine my weekend leisure discussions to things like how the NY Giants are doing, but alas, it was July. My friend is also a professor whose expertise lies in biotech regulation for EU member States, so I might have been out of my league. In a simultaneous attempt to confuse, amaze and distract, I brought up the US Chicken tax, one of the most obscure, draconian pieces of Trade Regulation I could come up with that somehow explains why we aren’t all driving German Pickup Trucks.

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Topics: Export Consulting, Import Consulting, North America

Are You a Target for the CBSA This Year?

blog-target-031115Customs Audits……Stop rolling your eyes like you did when your Father told you good things come to those who wait” or “Rome wasn’t built in a day.”

Customs audits happen more regularly than your Father’s platitudes. I have worked with importers on some audits that have resulted in some minor changes. Yet there are others that take up lots of time, money, and resources. All of this trouble and drama can be avoided with a little preventative maintenance.

The usual issues for the CBSA are classification, valuation and preferential trade agreements. These are three things that as an importer you should have a good handle on. The CBSA is even kind enough to provide us with a list of the types of imported products they are targeting and what they are targeting them for. The link below takes you a list of items that the CBSA will be auditing this year. 

http://cbsa-asfc.gc.ca/import/verification/menu-eng.html

It also tells you whether they are auditing for classification or valuation. You can click on a target to expand it and get a detailed description including the number of audits performed, value of reassessments and the fines that have been levied as a result of the audits. This is just like a dashboard light coming on telling you that you need gas. You don’t need that. You have that big gauge. Yet people still run out of gas.

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Topics: Export Consulting, Import Consulting, North America, HS Classification