US duty drawbacks for Indian Exporters: Duty Drawback & Binding Rulings

Understanding the Opportunity

Global trade is becoming increasingly complex, and U.S. Customs compliance sits right at the heart of it.

For Indian exporters, it’s not just about moving goods efficiently - it’s also about recovering costs, ensuring predictability, and avoiding surprises.

Over the years, through our discussions with U.S. Customs professionals and licensed brokers, one thing has become clear - most exporters pay more than they should simply because they aren’t aware of the programs available to them.

Among the most effective tools are the U.S. Duty Drawback Program and CBP Binding Rulings - each designed to make trade smoother, faster, and more profitable.

Recent trends also show why this matters more than ever: staffing shortages at ports, increased automation in document reviews, and a shift toward trusted traders who follow structured compliance programs.

Let’s look at how Indian exporters can turn these challenges into opportunities.

1. What Is the U.S. Duty Drawback Program?

The U.S. Duty Drawback Program, administered by U.S. Customs and Border Protection (CBP), allows businesses to claim back up to 99% of import duties, taxes, and fees paid on goods that are later exported, re-exported, or destroyed under Customs supervision.

For Indian exporters selling into the U.S. — whether through direct shipments or a U.S. subsidiary — this program is often underutilized but extremely powerful.

It’s one of those programs that can quietly improve margins if managed well.
We’ve seen exporters recover thousands of dollars in refunds simply by maintaining proper records and filing on time.

2. Why Duty Drawback Matters for Indian Exporters

Many Indian companies pay U.S. import duties on:

• Products stored in U.S. warehouses or 3PLs for order fulfillment
• Samples or items displayed at trade shows
• Raw materials imported for manufacturing or assembly in the U.S.

If these goods are later exported, returned, or destroyed, you can recover up to 99% of the duties - provided your documentation is in order.

3. Types of Duty Drawback

The program covers several scenarios:

• Unused Merchandise Drawback — Refund for goods imported but not used in the U.S. and later exported in the same condition.
• Manufacturing Drawback — Refund for duties on imported materials used to make goods exported abroad.
• Rejected Merchandise Drawback — For goods that are defective, not as ordered, or returned to the supplier.
• Substitution Drawback — When “commercially interchangeable” goods (imported or domestic) are substituted in manufacturing or export.

It’s an old program — but as we often say, it’s money left on the table if you’re not using it.

4. Who Can File and How

Both U.S. entities and their foreign parent companies can file if:

• Export or destruction occurs within five years of importation
• Claims are submitted using CBP Form 7551 via the ACE portal
• Documentation — import entries, export proofs, invoices, and bills of lading — is complete and consistent

The right to claim drawback is dependent upon the type of drawback. The rights to the drawback claim can be transferred from one party to another. It is important to understand who has the right to make the drawback claim and process to transfer rights to drawback.

It is important to know that the CBP must be notified in advance of the exportation or destruction of the goods.

And for those importing food or beverages — note that the Food Safety Modernization Act (FSMA) adds extra checks. The FDA and USDA may test or inspect shipments, so ensure your products meet labeling and safety standards before shipping.

5. Binding Rulings: Predictability and Faster Customs Clearance

In our experience, uncertainty around how CBP will classify a product can be one of the biggest causes of delay.

To avoid that, you can request a Binding Ruling — an official written decision on how Customs will treat your product when it arrives.

Having a Binding Ruling gives you:

• Predictability - confirmed duty rate before shipping
• Faster clearance - fewer delays or disputes
• Compliance confidence - less chance of reclassification
• Better planning - accurate pricing and forecasting

And remember: even if you’re confident in your classification, a written ruling gives you protection when staffing shortages or system delays slow things down.

Predictability is key.
That’s where Binding Rulings come in — they help you know your duty rates in advance and establish a trusted profile with Customs. Binding Rulings are also available for valuation, country of origin, marking, and Special Program applicability.

Another important aspect of obtaining a binding ruling from CBP is that very often the HTS determines whether the product requires a review by another government agency. There are close to fifty other government agencies in the USA that has clearance authority over imported products. This will serve some protection that it is complying with regulations of other government agenci

The other entity afforded legal protection when requesting a binding ruling is that of the importer requesting the binding ruling. For example, if an exporter or an association requests a binding ruling and later the ruling is later revoked by CBP resulting in a higher duty rate, only the requestor of the binding ruling will be protected against owing back duties plus interest.

6. Expert Insights: Lessons from the Field

When we talk to Customs professionals and importers, these questions come up repeatedly — here’s what we’ve learned from real experience:

7. Beyond Drawback — Understanding FTZs, HS Codes, and Origin

Through our client discussions, we often see confusion around three related topics - Foreign Trade Zones (FTZs), HS Codes, and Country of Origin.

Here’s how to think about them

Foreign Trade Zones (FTZs)
Operating inside an FTZ can be strategic. You can manipulate or assemble goods and sometimes achieve a tariff shift (substantial transformation), meaning the finished item could be classified differently and attract a lower or even zero duty when it enters the U.S. market.
This flexibility does not exist in bonded warehouses.

HS Codes for Import and Export
The U.S. uses the Harmonized Tariff Schedule (HTSUS) for imports and Schedule B for exports. Both are identical up to six digits — that’s the international standard — but diverge after that.

When you export, use only the 6-digit code on invoices, since the destination country’s customs will apply its own last four digits.

Country of Origin & Transshipment
Never relabel goods or route them through another country to change their declared origin — that’s considered transshipment, a violation CBP takes very seriously.
Always declare the true country of origin and keep a certificate or statement of origin ready for Customs review.

It is highly recommended that a country of origin binding ruling be obtained if a manufacturer has a manufacturing process that sources material from various countries.

8. Example Scenarios

9. How Entry USA Helps

At Entry USA, we’ve seen firsthand how exporters lose money and time simply because of incomplete filings or avoidable compliance issues.

Our team helps Indian manufacturers and exporters:

• Assess duty drawback eligibility
• Prepare compliant import/export documentation
• Coordinate with licensed drawback specialists
• Guide on Binding Rulings and CTPAT certification
• Structure internal compliance programs to avoid future penalties

It’s not about doing more paperwork — it’s about being proactive so you can focus on sales and growth while staying fully compliant.

10. Key Takeaways

• Duty Drawback refunds up to 99% of import duties
• Binding Rulings and CTPAT make operations faster and predictable
• Anti-dumping duties are not refundable - confirm your category
• Export/destruction must occur within five years
• Keep digital, centralized documentation
• Use FTZs strategically for tariff benefits
• Stay compliant with true country of origin declarations
• Multiple brokers can be used if records stay unified
• Compliance isn’t bureaucracy — it’s protection

Ready to Reclaim Your Duties?

If your company imports or exports through the U.S., you might be leaving thousands unclaimed.
Entry USA can help you recover duties, simplify compliance, and accelerate customs clearance - so your business runs smoother on both sides of the ocean.

Contact Entry USA to review your eligibility for Duty Drawback, Binding Rulings, or CTPAT certification.