American Goods Returned Are Not Always Duty-Free

Imagine you have a sports car that was entirely manufactured in the US. Repairing it requires specialty skills, equipment, and parts, so you send it to a specialized Canadian company. After getting the repairs, you arrange to have the car shipped back home. The question at the heart of today’s post is this - is that import dutiable in the eyes of Customs and Border Protection? 

Before that, consider another example: Your US company has sold goods to a Canadian buyer. However, upon receiving the shipment, the goods are ultimately returned to you because they do not meet the buyer’s specifications. When shipped back into the US - are those goods dutiable? 

The answers to these questions are covered by the Harmonized Tariff Schedule or HTS code for US goods returned, 9801.00.10, sometimes known as the declaration for free entry of returned American products or “US Goods Returned” (USGR). This formal declaration is exclusively used for entering goods manufactured in the US that were exported out of the country but are now returning unchanged. 

It may seem like an incredibly narrow declaration for a remarkable corner case, but it is also a common-sense way for many businesses to save duties on goods returned from outside the country. However, you’d be mistaken if you thought this was a simple affair, as proving that you actually have ‘US or American goods returned’ to CBP can potentially be an exercise in frustration.

Rules and Regulations for Returned Retail

The USGR may seem straightforward, but there are two significant pitfalls many importers fall into when it comes time for a US goods returned declaration. The first is a lack of knowledge about the product's manufacturing history. The goods returning must be manufactured in the US to qualify for this declaration, and just because it was purchased here does not mean that it was entirely manufactured here. Understanding the history of your import is vitally important not just for this declaration but for any declaration you make at Customs. 

Increased Enforcement On “Made In USA” Claims

The second is that USGR allows for products to be returned without being subject to duty and the Merchandise Processing Fee on the proviso that the goods cannot be advanced in value and the condition of the goods cannot improve while abroad - and this is the vital point to focus on. 

Merchandise Processing Fee 2023

Returning to the examples above, under USGR, your car will be considered materially improved after being repaired in Canada, and as a result, the value of the repairs may be subject to duty. In the second example, your returning goods are unchanged, and as a result, could return duty-free provided they have the correct documentation. 

US Manufacturer's Affidavit

Speaking of documentation, another challenge some importers face is that you will need proof of your returning good’s manufacturing history, and while there are several ways you could potentially prove it, the most common for this purpose is the Manufacturer’s Affidavit. 

This document, as the name might suggest, is a form completed by the actual manufacturer of the goods. The affidavit is a requirement for any shipments valued over $2000 and for articles not clearly marked with the name and address of the manufacturer. The affidavit essentially gives information about the manufacturer and assurances that the goods are manufactured in the US. With it in hand, you have the most concise and effective way to take advantage of this declaration. 

That is a quick overview of the US Goods Returned Customs declaration. If you have any questions or concerns about this process or how PCB’s team of import experts can help correctly identify and apply this to your imports, please contact us today, and we’ll be happy to help you take full advantage.