Applying for Individual Drawback for Exports Prior to Approval Date for First-Time Applicants with No Refund History Released

Eligibility for Individual Drawback on Prior Exports

If you have received initial approval for the non-application of the Simplified Fixed Drawback Rate and have no prior record of receiving customs refunds, you are eligible to apply for Individual Drawback for goods whose export declarations were accepted even before the approval date.

Legal Basis: Article 14, Paragraph 7 of the Refund Special Act

Under the Act on Special Cases concerning the Refund of Customs Duties, etc. (Refund Special Act), the standard regulation dictates that the non-application of the simplified fixed rate applies only to goods exported after the approval date. However, the proviso of Article 14, Paragraph 7 establishes a clear exception for specific cases.

Conditions for Exception and Retroactive Application

The law allows for the application of individual drawback for exports prior to the approval date under the following circumstances:

• The applicant has no history of receiving customs refunds (excluding refunds for 'exports in original state' under Article 3, Paragraph 1, Item 2).
• The applicant is receiving the non-application approval for the first time.

The reason 'exports in original state' are excluded from the refund history check is that such refunds apply to goods re-exported without manufacturing or processing, making them distinct from the typical drawback associated with domestic production. This exception is intended to prevent a 'refund gap' or financial disadvantage when a company first transitions to or adopts the individual drawback system.

Advantages and Requirements of the Individual Drawback System

The Individual Drawback method calculates the actual amount of duty paid on the specific raw materials used to manufacture exported goods. While the calculation is more complex than the Simplified Fixed Drawback system, it offers significant benefits:

• Maximizing Refund Amounts: If the raw materials have high customs duty rates or high import unit prices, the individual drawback amount often exceeds the fixed rate amount.
• Complexity of Documentation: It requires detailed proof, such as consumption reports (Soyo-ryang), to demonstrate the exact quantity of imported materials used.

Recommended Action and Documentation

To file a claim for individual drawback for exports prior to the approval date, you must prepare and submit all necessary documentation, including:

• Import declaration certificates for the raw materials used.
• Consumption calculation sheets (Soyo-ryang) and production flowcharts.
• Inventory ledgers and records related to purchasing and production.

Since applying for refunds on exports accepted prior to the approval date involves a retroactive application, the accuracy and integrity of your evidentiary documents are paramount. We recommend consulting with a Professional Customs Broker to ensure accurate calculation and a successful refund application.