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DRAWBACKS

PURPOSE

PROCEDURE

FOR REFUNDS

DRAWBACKS

An important subject which has been generally disregarded in the past by both large and small importers and exporters is that of "drawbacks." The "drawback" system was inaugurated by the Government in the early stages of our foreign trade, the primary reason being to foster and encourage manufacturers in placing United States goods in foreign markets when the materials that make up the manufactured articles, wholly or in part, were imported from foreign countries. "Drawbacks" are allowed to the extent of 99% of the duty paid on the imported articles when re-exported in the original form or as parts or ingredients of goods exported. Among the principal goods that are imported and which are subject to refunds are the following: iron and steel, glycerine, tobacco, drugs, medicinal oils, grain and grain products, forest products, sugar and paper.

In the case of domestic alcohol used in toilet and medicinal preparations exported, on which the Government internal revenue tax has been paid, a drawback equal to the amount of the tax paid will be refunded.

The Government regulations provide that on goods that are imported into the United States, the importer may register the importation and show the amount of duty paid. When the imported goods are used in the manufacture of goods that are to be exported, the record of the importation should be supplied to the purchaser, as such record is required by the Government in support of claims for "drawbacks." For instance, an important commodity on which a "drawback" is allowed by the Government is sugar, which is imported from various foreign countries. The "drawback" allowed will be in accordance with the amount of duty paid when the sugar is imported, the duty being computed on the basis of value of the sugarad valorem. The importer of the sugar files a statement with the Government showing importation record of the sugar, and when the importer sells the lot to manufacturers of candies, condensed milk, or other articles in the manufacture of which sugar is used, he advises the manufacturer of the record that was filed with the Government at the time the importation was made, this information being necessary to permit the manufacturer to prepare his "drawback" claim, as he must make reference therein to the record of importation.

The procedure to be followed by the manufacturer is to make a laboratory test, showing the ingredients of the candy and the percentage of sugar that is used in the manufacture of his goods. This statement should be filed with the Treasury Department, United States Government, the purpose being to enable the Government at any time to verify the statement of the manufacturer as to the amount of imported sugar consumed in the manufacture of the candy. The certificate filed with the Government should be accurate, as misstatements will subject the manufacturer to a fine; and further, the Government may require that the manufacturer pay to the Government all refunds or "drawbacks" that have been made by the Government to the manufacturer for a period of five (5) years.

The form of procedure with reference to "drawbacks" is complicated. The initial form that should be compiled by the importer is the statement containing complete reference to the importation and the amount of duty paid. The chemical analysis ("Certificate of Manufacture") furnished by the manufacturer should cover the ordinary form of report of the chemist, showing the ingredients

PROCEDURE
FOR
REFUNDS
(Con.)

DRAWBACK
ATTORNEYS

DRAWBACKS

of the manufactured goods that are to be exported. The manufacturer or exporter should file a "notice of intent to export" with the Government inspector, indicating to the Government that the goods imported are to be used in the manufacture of goods to be exported. If these papers are not filed with the Government, the manufacturer will not be able to obtain refunds. The "notice of intent to export" should give a full description of the goods or merchandise. It is from these notices that the Government receives information that the manufacturer intends to file claim against the Government for refund of duties paid. Two forms are used, one pertaining to shipments that are to move to a foreign country by steamer from a port in the United States and the other to shipments that are to move by rail to Canada or Mexico.

Drawbacks have made it necessary to have in this field experts, known as "Drawback Attorneys," who specialize in the business of securing refunds for manufacturers. When a "drawback attorney" is employed by a manufacturer, proper notice should be sent to him by manufacturer similar to form 41, page 526, thereby giving the "drawback attorney" an opportunity to perform the necessary duties in securing refund. "Drawback attorneys" are located at all the principal ports.

After the documents have been filed with the Government, and the goods exported, the manufacturer, or his "drawback attorney," should present to the Government a "drawback" claim. It is customary to compile claims every 30 days.

MARINE INSURAN

MARINE CER

TIFICATE AND

OPEN POLICY

NECESSITY FOR
INSURANCE

MARINE INSURA

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DRAWBACKS

PROCEDURE

FOR
REFUNDS

(Con.)

DRAWBACK
ATTORNEYS

of the manufactured goods that are to
to be exported. The manufacturer or
exporter should file a "notice of intent to export" with the Government inspector,
indicating to the Government that the goods imported are to be used in the manu-
facture of goods to be exported. If these papers are not filed with the Government,
the manufacturer will not be able to obtain refunds. The "notice of intent to
export" should give a full description of the goods or merchandise. It is from these
notices that the Government receives information that the manufacturer intends
to file claim against the Government for refund of duties paid. Two forms are
used, one pertaining to shipments that are to move to a foreign country by steamer
from a port in the United States and the other to shipments that are to move by rail
to Canada or Mexico.

Drawbacks have made it necessary to have in this field experts, known as "Drawback Attorneys," who specialize in the business of securing refunds for manufacturers. When a "drawback attorney" is employed by a manufacturer, proper notice should be sent to him by manufacturer similar to form 41, page 526, thereby giving the "drawback attorney" an opportunity to perform the necessary duties in securing refund. "Drawback attorneys" are located at all the principal ports.

After the documents have been filed with the Government, and the goods exported, the manufacturer, or his "drawback attorney," should present to the Government a "drawback" claim. It is customary to compile claims every 30 days.

MARINE INSURANCE

NECESSITY FOR
INSURANCE

MARINE CER-
TIFICATE AND
OPEN POLICY

MARINE INSURANCE

Marine insurance to cover loss while goods are water-borne is necessary under the same principles as govern in connection with fire, tornado, etc., in the domestic trade. However, the necessity for Marine Insurance is more apparent through the fact that the vessel or vessel owners are not, because of United States statutes or valid clauses in contract of affreightment, held liable to any extent for goods that may be destroyed or damaged while in the possession of the vessel.

Marine insurance covering water-borne shipments is a form of protection against loss from perils of the sea, and other losses caused by theft and pilferage, breakage, leakage, etc., covering shipments while on docks or being loaded at point of shipment, while on board vessels during discharge, and while on dock at destination in due course of transit.

Practically all "letters of credit" specify that marine insurance must be obtained and that certificate of insurance must be furnished with other papers before "letter of credit" becomes available. However, marine insurance should be placed covering all import and export shipments when moving by steamer, as vessel owners and operators are not liable under United States, or other statutes, to any extent for merchandise damaged or destroyed while in possession of the carrier if caused by perils of the sea, theft, pilferage, breakage, leakage, etc.

The Assured should be very particular to examine the insurance certificate when received from the insurance company or from the insurance broker. There are various forms of Marine Insurance Certificates. The degree of protection given under an insurance certificate will be in accordance with the premium that the shipper or receiver may desire to pay for the protection of property under extreme possibilities of loss or damage.

Marine insurance may be placed direct with an insurance company, or through an insurance broker, or a freight forwarding company. The owner should be specific in his requests as to what protection he requires. If additional risks are to be protected, specific instructions should be given, also the extent to which protection is desired. Payment for damage is made only in accordance with the provisions of the insurance certificate.

An open or floating policy which is a contract between the assured and an insurance company is a popular method of handling marine insurance where there is more or less regular movement of specific commodities from and to regular places. Under this arrangement, the assured is held automatically covered from warehouse or factory at initial point of shipment, and covers continuously thereafter in due course of transit, subject to the full terms of policy until safely delivered into store or warehouse at final place of destination. Trans-shipment, reshipment and delivery, including risk while on docks, wharves, quays, lighters and any appraised store for examination.

When an open policy has been consummated between owner and insurance company, the owner is required to notify the insurance company as to shipments that are made against it. In supplying such information details must be given, such as, description and value of shipment, destination, dates and name of vessel on which shipment will be forwarded, etc.

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