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Source-reviewed study unitAbout 31 minutes

Substitution Drawback

Ability objective

Apply the correct substitution standard, possession and timing rules, and the lesser-of refund limitation without pretending the exported merchandise is the imported merchandise.

Answer first

Core rule

For substitution unused-merchandise drawback under § 1313(j)(2), the designated import and substituted export generally must share the same eligible 8-digit HTSUS subheading, with special treatment when the subheading description begins with 'other.' The substituted merchandise must be unused and in the claimant's possession before export or destruction. Refund is ordinarily 99% of the lesser eligible duty measure—not automatically 99% of the designated import duties.

Authority and lookup route

Locate the rule before returning to the facts. Links point to government or official publications.

19 U.S.C. § 1313(j)(2)

Read the substitution classification, nonuse, possession, timing, and refund-limitation elements as a single test.

Current law reviewed 2026-08-18; for the October 2026 CBLE, answer from CBP's designated 2025 CFR edition when its text differs

19 CFR §§ 190.2 and 190.32

Use the definitions for possession and substituted merchandise, then apply the same-8-digit, 'other,' lesser-of, certification, and wine rules in § 190.32.

Current law reviewed 2026-08-18; for the October 2026 CBLE, answer from CBP's designated 2025 CFR edition when its text differs

19 CFR § 190.51

Verify per-unit averaging and claim calculations rather than allocating the highest-duty import selectively to exported units.

Current law reviewed 2026-08-18; for the October 2026 CBLE, answer from CBP's designated 2025 CFR edition when its text differs

Reference lookup task

Build a substitution screen with six rows: 8-digit match, 'other' exception, Schedule B alternative, unused status, possession before export, and lesser-of calculation. Test it against one current HTSUS subheading you select.

Route: § 1313(j)(2) → § 190.2 definitions → § 190.32 substitution screen → § 190.51 calculation

Worked example

Assume an imported lot and an exported domestic lot share the same eligible 8-digit subheading that does not begin with 'other.' The unused exported lot was in the claimant's possession before export. Eligible duties paid on the designated imports were $8,000, but duties that would apply to the exported lot if imported are $6,000. What is the ordinary ceiling?

  1. 1Confirm classification, unused status, possession, sequence, quantity, and certification before calculating.
  2. 2Apply the lesser-of rule: the lower eligible duty measure is $6,000.
  3. 3Apply 99%: $6,000 × 0.99 = $5,940.

Conclusion: $5,940, not $7,920. The substituted export's lower hypothetical duty measure limits the claim on these facts.

Common traps

  • Treating commercial interchangeability alone as the general modernized unused-substitution test.
  • Stopping at an 8-digit match when the subheading description begins with 'other.'
  • Ignoring possession before export or destruction.
  • Calculating 99% of the higher duty measure instead of applying the lesser-of limitation.