Please read: this guide is general information, not legal or customs advice, and rates and examples are illustrative. Drawback claims must be completed within 5 years of the date of importation (19 U.S.C. 1313(r)). Destruction claims require destruction under CBP supervision with advance notice, and DrawbackIQ currently prepares unused-merchandise export claims only. Your licensed customs broker decides what can be filed.
Apparel has the highest return rates of any consumer product category, and returned apparel that is destroyed (rather than resold or restocked) is eligible for duty drawback. For retailers and Amazon FBA sellers, destroyed apparel returns represent a significant opportunity to recover duties on inventory that is already costing them money to dispose of.
Returned apparel is frequently destroyed rather than restocked due to: (1) hygiene concerns; (2) damage from the return shipping process; (3) seasonal inventory that cannot be resold; (4) end-of-season clearance inventory that is unsellable; (5) FBA return processing that determines items are not sellable. Destruction rates for apparel can range from 8 to 15 percent of annual import volume, especially for Amazon sellers.
The statute (19 U.S.C. 1313) explicitly allows refund of duties on merchandise destroyed as waste. The refund is 99 percent of eligible duties on the destroyed quantity. If your apparel carries high duty rates, the destroyed inventory represents substantial refundable value.
A retailer imports $1.5 million in apparel annually at an average 16 percent duty rate. Ten percent of stock is destroyed annually (returns, damage, clearance). Over 5 years, the estimated refund on destroyed apparel is approximately $118,800. This is cash back on inventory already written off.
Your broker will need: (1) CBP import entry records; (2) destruction documentation (waste processor certificates, landfill receipts, 3PL destruction reports, or Amazon FBA waste records); (3) quantity records showing which import entries the destroyed merchandise came from; and (4) matching by SKU or HTS code. Amazon FBA sellers can request waste reports from their fulfillment centers; retailers typically have waste contracts that provide destruction certificates.
Amazon provides destruction reports if you request them in your seller account. These reports show quantities destroyed by date and fulfillment center. With matching to your original import entries by SKU, this becomes your proof of destroyed merchandise for the drawback claim.
Apparel return rates are significantly higher than other product categories, often exceeding 25 percent on certain items. This means apparel importers and sellers have more destroyed merchandise (in absolute quantity) than most other categories. The opportunity is correspondingly larger.
Estimate your destroyed apparel refund.
Free EstimatorDrawbackIQ prepares claim packages for a licensed customs broker to file. DrawbackIQ is not a customs broker. This page is informational only.