How does a company trace an export back through the inventory and manufacture process and match it against its original importation if the merchandise loses its identity?
The regulations allow a company to match exports and imports at a part number level within certain regulatory time frames. This method of matching imports to exports is called substitution. Any time a company makes a duty-paid import, think of it as making a deposit into a drawback “bank account”. To make a withdrawal, the company must export merchandise that is essentially the same as the merchandise in the “bank”. The designated import must fall within the three-year period prior to the export date. Additionally, the exported and imported merchandise must be commercially interchangeable in the case of unused substitution drawback and of the same kind and quality in the case of manufacturing drawback. Customs will only allow a company to match export to imports of like product. The alternative to the substitution methodology of matching imports to exports is called direct identification. The direct ID provision of the regulations requires a company to match an export to its exact impo
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