Defective stock, wrong shipments and returned orders do not have to cost you the duty too.
Rejected merchandise drawback refunds up to 99% of U.S. duties on imports that were defective, did not match the order, or were shipped without your consent, once you export or destroy them. It is set out in 19 U.S.C. 1313(c).
It also covers retail customer returns. If a product you imported and sold at retail comes back for any reason, the duty can be refunded when the returned goods are exported or destroyed.
Goods must be exported or destroyed under CBP supervision within five years of import.
Returns are a cost every ecommerce brand knows. What most do not know is that the import duty on those returns can come back. The same goes for faulty batches sent back to the factory and wrong items a supplier shipped by mistake.
Sending goods back or writing off returns?
It is a refund of duties paid on imported goods that the importer rejects or that customers return. Unlike unused merchandise drawback, the goods do not need to be unused. A product can be sold, returned and still qualify.
Under 1313(c), imported goods qualify if they:
The goods must then be exported or destroyed under CBP supervision within five years of the import date.
This is the part that matters most for ecommerce. Since the 2015 TFTEA reforms, goods sold at retail and returned to the importer can qualify for any reason. The customer does not have to report a defect.
The rules are specific:
This means you do not have to trace each returned unit back to its original shipment. You match by SKU and tariff code to a recent import.
Returned goods that cannot be resold are often liquidated or destroyed. If they are exported, for example to an overseas liquidator or back to the factory, or destroyed under CBP supervision, the duty can be claimed. Goods resold in the U.S. do not qualify.
| Charge | Drawback? |
|---|---|
| Regular (MFN) duties, MPF and HMF | Yes |
| Section 301 duties | Generally yes |
| Section 232 steel and aluminum duties | No |
| Antidumping and countervailing duties | No |
| IEEPA tariffs | Not through drawback. Recovered through CBP's IEEPA refund process |
See our 2026 tariff breakdown for more detail.
An importer brings in 5,000 kitchen appliances from China and pays $60,000 in duties, including Section 301 tariffs. Testing finds 800 units defective. The importer ships them back to the factory.
Duty on the 800 units: $9,600. Refund at 99%: about $9,500.
A DTC apparel brand pays about $8 of duty per jacket. It gets 6,000 jacket returns a year that cannot be resold, and sends them to an overseas liquidator instead of a U.S. landfill.
Duty on returned units: $48,000. Refund at 99%: about $47,500 a year.
Example figures are simplified for illustration.
Goods must be exported or destroyed within five years of import, and the claim filed within the same period. For retail returns, the designated import must be from the year before the export or destruction.
CBP must be notified before destruction. Goods dumped without notice cannot be claimed.
Only returns that are exported or destroyed qualify.
Retail return claims need the same SKU and 8-digit HTS code as the designated import.
The designated import must be from the past year, so returns should be processed regularly, not once every few years.
We match your returns and rejected goods to eligible imports, handle the CBP notices, and manage the claim with our licensed U.S. drawback partners. We can also help you set up a regular returns process so refunds keep coming. No upfront cost. We are paid a percentage of what we recover.
Yes. Imported goods sold at retail and returned for any reason can qualify if they are exported or destroyed under CBP supervision.
No. Retail returns qualify for any reason. Non-retail rejections must be defective, non-conforming or shipped without consent.
No. For retail returns you designate an import from the past year with the same 8-digit HTS code and SKU.
Up to 99% of the eligible duties paid.
Yes, if CBP is notified and the destruction is supervised.
Five years from import for export or destruction and for filing. Retail return claims must designate an import from the year before export or destruction.
This page provides general information and is not legal, tax or customs advice. Sources: 19 U.S.C. 1313(c) and 19 CFR Part 190, including 190.45. Eligibility depends on the charges paid and the rules in effect at the time.
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