Procedure for Claiming Duty Drawback on Domestically Sourced Imported Raw Materials Released

The scenario you described falls under the category of typical indirect exports, where imported raw materials are procured through domestic transactions to produce goods for export. To address your core concern: Even if you are not the party who directly filed the import declaration and paid the customs duties, you can lawfully receive a refund for the duties included in those raw materials through a system known as the Certificate of Split Import Duty.

1. Concept of the Certificate of Split Import Duty and Refund Principles

According to the South Korean customs drawback system—specifically the "Act on Special Cases Concerning the Refund of Customs, Etc. Levied on Raw Materials for Export"—the principle is to refund duties paid upon import for raw materials used to manufacture export goods. However, when purchasing raw materials from a third party rather than importing them directly, the buyer does not have direct access to the tax information at the time of import.

The document used in this situation is the Certificate of Split Import Duty. When imported raw materials are traded domestically, this certificate divides and verifies the customs duties and other taxes embedded in the goods. Essentially, the domestic transferor (supplier) certifies the portion of the tax paid at import corresponding to the quantity transferred to you. This document serves as the legal basis for you to apply for a refund with the Korea Customs Service after completing the final export.

2. Key Requirements and Considerations for Issuance

To obtain this certificate and utilize it for duty drawback, specific legal requirements must be met. Please carefully review the following criteria:

• Condition of Goods: The transferor must supply the raw materials to you in their original imported state (original state transaction). If the transferor has performed any processing on the materials, the transaction requires a "Certificate of Payment of Basic Raw Material Tax" rather than a Certificate of Split Import Duty.
• Transfer Deadline: The Certificate of Split Import Duty can only be issued if the materials are transferred within 2 years from the date of import declaration acceptance. If this period expires, the right to claim a refund is extinguished, so careful attention to inventory management and document preparation is required.
• Issuing Authority: The certificate can be issued by the entity supplying the goods under a Local L/C or by a Customs Broker who meets the criteria established by the Commissioner of the Korea Customs Service. In practice, it is common to have a professional Customs Broker handle the issuance to ensure accurate tax calculation and regulatory compliance.

3. Required Documents and Procedure for Application

To receive the Certificate of Split Import Duty from the transferor, you must verify that the transaction involves raw materials intended for export. The major supporting documents specified in the Korea Customs Service's "Drawback Notices" are as follows:

• Proof of Domestic Transaction: Documents such as a Local L/C, Confirmation of Purchasing, or a Transfer Approval Certificate are standard. If these are unavailable, you must prove the goods contribute to exports via an export letter of credit or export contract.
• Proof of Transfer Date: Documents confirming the actual delivery date, such as tax invoices or transaction statements.
• Application Form: Accurate completion of the details required by Form No. 26 of the Drawback Notices.

Finally, the Certificate of Split Import Duty is not merely a paper document; it must be electronically transmitted and approved via the Korea Customs Service's UNI-PASS system. It is efficient to request the issuance from your supplier, advising them to seek the assistance of a professional Customs Broker if they cannot process it directly. Based on this secured certificate, you can successfully claim a refund for Customs Duty, VAT (under specific conditions), and Individual Consumption Tax paid upon the import of the raw materials after you fulfill the export obligation.