The value of products imported into the United States for customs purposes is determined by methods of “appraisement” (i.e., methods of determining and fixing a value to a product [appraisal]). When products are imported into the United States, the importer must classify and value the products. It is then CBP’s responsibility to set the final appraisement of the products.
What are the methods of customs valuation (appraisement)?
There are six different methods of appraisement (i.e., determine value) that Customs can use, which are applied in order of preference:
- Transaction value
- Transaction value of identical merchandise
- Transaction value of similar merchandise
- Deductive value
- Computed value
- Values if other values cannot be determined
What is transaction value for customs?
Transaction value is the preferred, or “default,” method of assigning a value to the product. Transaction value is the price actually paid (or payable), plus amounts equal to:
- Packing costs incurred by the buyer (costs of containers, coverings, labor, etc., used for placing the merchandise packed and ready for shipment to the United States)
- Any selling commission incurred by the buyer (any commission paid to the seller’s agent that is related to or controlled by, or works for or on behalf of, the manufacturer or seller)
- The value of any assist (apportioned as appropriate) (buyer provided items that is provided directly or indirectly, free of charge or at a reduced cost, for use in the production or sale of the merchandise for export to the United States)
- Any royalty or license fee the buyer is required to pay, directly or indirectly, as a condition of the sale
- The proceeds of any subsequent resale, disposal, or use of the product that accrue to the seller, whether directly or directly
What is excluded from the customs transaction value?
Transaction value does not include cost or charges incurred for constructing, assembling, maintaining, or providing technical assistance for the products after importation into the United States, or international freight, insurance, or other CIF charges that the buyer makes to the seller.
When is use of transaction value prohibited?
Transaction value cannot be used if:
- There are restrictions of the disposition or use of the products
- There exist conditions that make a value unascertainable
- Proceeds of a subsequent resale, dispose, or use of the merchandise accruing to the seller, for which an adjustment to transaction value cannot be made
- Related-party transactions where the relationship has an affect on the price actually paid or payable
In the case of related party transactions, the circumstances of the sale must be considered to determine if the relationship affected the price paid or payable, and so determine if transaction value is an appropriate method of valuation.
If transaction value cannot be used as a method of appraisement, then CBP moves down the list to transaction value for identical merchandise, then for similar merchandise, then to deducted value, computed value, and the last method of valuation.
How do I value my product?
The methods of valuing imported merchandise into the United States can be complicated, and this is only intended to give a basic treatment of the topic. What is included in transaction value and what is excluded is not always intuitive, and transactions between related parties are full of potential problems. Great Lakes Customs Law can help you determine the appropriate value to declare to customs, so please contact us for help with your valuation and appraisement problems.