Meaning
Financial recovery programs allow companies to reclaim import duties paid on raw materials when the finished products are subsequently exported. Polymer processors use these procedures to recover the costs of tariff payments made on imported virgin resins or additives that are molded and then shipped to international buyers. This mechanism helps maintain competitive pricing in global markets by lowering the net cost of raw materials.
Claim Process
Manufacturers must maintain detailed records that link the import entry documents of the plastic resin to the export bills of lading for the molded parts. When initiating a customs drawback, the processor submits a calculations spreadsheet demonstrating the exact weight of resin imported versus the weight of the resin in the exported parts. Scrap rates and purge material from the molding process must be factored into these calculations to prevent inflated recovery claims.
Discrepancies in the material balance can lead to audits and financial penalties from customs authorities.
Economic Value
Reducing the tax burden on imported technical resins improves the operating margin of high-volume molding programs. Companies can utilize specialized polymer grades from overseas suppliers without being permanently penalized by regional import duties. This return of capital directly impacts cash flow, allowing molders to reinvest in new mold tooling and automated machinery.
Compliance Margin
Rigid tracking systems prevent the mix-up of imported and domestic resins in the raw material silo. Processors must prove that the exported molded products were manufactured using the imported material or an approved substitute. When compliance is maintained, the program provides a steady source of recovered capital for export-oriented manufacturing plants.
