Unused merchandise drawbacks allow a claimant to recover up to 99% of the duties paid on imported goods that are exported, unused, within five years of importation. 19 U.S.C. § 1313(j)(1); 19 C.F.R. § 190.31(a)-(b)(2025). For importers of apparel, footwear, eyewear, and accessories, customer returns complicate that recovery. Once a product has been sold at retail and is returned, United States Customs and Border Protection (CBP) treats it as merchandise that may have been used for its intended purpose, and its new appearance does not prove otherwise. See HQ H263493 (July 25, 2017).
The problem came into focus in a 2017 protest decision involving a footwear and handbag retailer with a “no questions asked” return policy. HQ H263493. CBP held that visual inspection could not establish non-use, because a shoe worn once and returned may look identical to one never worn: “Carefully used and returned footwear or handbags may appear unused for purposes of resale by a retailer but are
