What is Destruction Drawback?
Not all imported goods are exported—some are destroyed. Destruction drawback allows recovery of duties on imported merchandise that is destroyed under CBP supervision rather than exported. Following TFTEA modernization, destruction and export are treated nearly interchangeably for drawback purposes, opening significant opportunities for companies with obsolete or damaged inventory.
“Destruction” means the merchandise is rendered completely without commercial value. Simply disposing of goods isn’t sufficient—they must be destroyed in a manner that CBP can verify.
Notice Requirements
Unlike export drawback (where waivers eliminate notice requirements), destruction drawback typically requires a “Notice of Intent to Destroy” filed with CBP before destruction occurs. This gives CBP the opportunity to witness the destruction if they choose.
In practice, CBP often waives the right to witness destruction, especially for established programs with good compliance histories. However, notice must always be provided—you cannot destroy goods and claim drawback retroactively without proper notification.
Scrap Value Adjustments
When destruction generates scrap with commercial value, that value must be deducted from the drawback calculation. For example: if aluminum cans are imported at $0.07 each and destroyed through recycling that yields $0.41 per pound in aluminum scrap value, the scrap value is subtracted from the import value before calculating the refund.
This adjustment ensures drawback refunds accurately reflect the net duty burden on goods that were ultimately valueless to the claimant. Proper scrap value documentation is essential for compliance.
Common Destruction Scenarios
Destruction drawback is valuable in several scenarios: expired or obsolete inventory that cannot be sold, damaged goods with no commercial value, product recalls requiring destruction, manufacturing waste (when waste contains dutiable imported materials), and samples or prototypes that serve no ongoing purpose.
For companies with significant inventory turnover, particularly in industries with short product lifecycles, destruction drawback can recover substantial duties on goods that would otherwise be written off entirely.
Documentation Requirements
Destruction drawback requires documentation proving: the goods were imported and duties paid (standard import entry data), the goods were destroyed (destruction certificates, recycling receipts), the destroyed goods correspond to claimed imports (matching evidence), and any scrap value (if applicable).
Many destruction facilities provide certificates documenting what was destroyed, when, and any recovered value. These certificates, combined with internal inventory records linking destroyed goods to import entries, support destruction drawback claims.
About TLR Drawback Services
TLR’s drawback team combines decades of specialized experience with modern technology to maximize duty recovery for our clients. From program evaluation through claim filing and payment, we handle the complexity so you can focus on your business. Contact us to explore your drawback opportunity.
