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.
Tools and hardware that are destroyed due to damage, defects, or unsold inventory are eligible for duty drawback. For tools importers and retailers with damage rates or destruction events, this represents a straightforward opportunity to recover duties on merchandise that is already being written off.
Tools and hardware are destroyed for several reasons: (1) damage during shipping from overseas suppliers; (2) defects discovered during quality inspection; (3) returned merchandise that cannot be resold; (4) unsellable surplus inventory; and (5) tools damaged in transit from fulfillment centers. Destruction is documented through waste processor invoices, recycling facility receipts, or facility disposal records.
The statute (19 U.S.C. 1313) refunds 99 percent of eligible duties on destroyed merchandise. Tools destroyed as waste qualify fully. If your damage rate or destruction rate is 5 to 10 percent of annual imports (common for tools due to rusted fasteners, broken components, etc.), the refundable amount is substantial over five years.
A tools importer enters $3 million annually at an average 3.5 percent duty rate. Six percent of inventory is destroyed annually due to damage and defects. Over 5 years, the estimated refund on destroyed tools is approximately $31,185. This is cash on inventory that was already expensed.
Your broker will need: (1) CBP import entries; (2) destruction records (waste processor invoices, disposal facility receipts, facility destruction logs); (3) quantities destroyed matched to import entries by SKU or invoice; and (4) proof that items were indeed destroyed (inspection photos, destruction certificates). Most tools importers have waste contracts that provide these documents automatically.
Tools that fail quality inspection before leaving your warehouse and are destroyed are refundable at 99 percent. This is one of the well-documented destruction scenarios because you have full documentation of the failure, the quantity, and the disposal.
Estimate your destroyed tools refund.
Free EstimatorDrawbackIQ prepares claim packages for a licensed customs broker to file. DrawbackIQ is not a customs broker. This page is informational only.