What American Importers, Customs Brokers, International Freight Forwarders, and International Logistics Companies must do in order to comply with U.S. Customs and Border Protection (CBP) Valuation Regulations Presented by Brent Claypool, LCB/CCS Email: bc606039@gmail.com

1. PRESENTED BY BRENT CLAYPOOL,
LCB, CCS
IMPORT COMPLIANCE:
CUSTOMS VALUATION

2. Regulatory Requirements
Since the Dec. 8, 1993 U.S. Congress passage
of the Modernization Act (“Mod Act,”) it has
been the legal responsibility of the Importer of
Record to apply “reasonable care” in identifying
the correct Value on all of it’s imported
merchandise to Customs and Border Protection
(CBP), which will properly assess import duties,
record accurate statistics, and determine if all
other necessary legal requirements have been
satisfied.
Under the “Mod Act,” which is codified at 19
U.S.C. 1401a, et. Seq., there are six different

3. Appraisement Methods
Appraisement methods, in order of the following
preferential order:
1) Transaction Value
2) Transaction Value of Identical Merchandise
3) Transaction Value of Similar Merchandise
4) Deductive Value
5) Computed Value
6) Values if Other Values Can’t Be Determined

4. Appraisement Methods - Continued
In case imported merchandise can’t be appraised
by Transaction Value, then the next Appraisement
Value method should be applied.
Note: At the time the Entry Summary is filed, the
Importer of Record can request to CBP for written
authorization to use the Computed Value Appraise-
ment method instead of using the Deductive Value
Appraisement method.

5. Transaction Value - Defined
For the imported merchandise when it’s sold for
exportation to the United States of America
(USA), the Transaction Value is the price
actually paid or payable, plus amounts equal to:
1) The Packing Costs incurred by the Buyer.
2) Any Selling Commission incurred by the
Buyer.
3) The appropriate apportioned Value of any
Assist.

6. Transaction Value – Defined -
Continued
4) As a condition of the sale, any required direct
or indirect payment by the Buyer for any
Royalty or License Fee.
5) Any direct or indirect proceeds of any subse-
quent Resale, Disposal, or Use of the import-
ed imported merchandise to the Seller.

7. Price Actually Paid or Payable - Defined
As the payment can be direct or indirect, the
“Price Actually Paid or Payable” for the imported
Merchandise is the total payment, excluding
International Freight, Insurance, and other C.I.F.
charges, that the Buyer makes to the Seller.

8. Packing Costs - Defined
Packed available for shipment to the USA, and
used in placing merchandise in condition, the
Packing Costs are the costs of all imported con-
tainers and coverings of any nature, and of
Packing, either for Labor or Materials.

9. Selling Commissions - Defined
Related to or controlled by, or working for or on
behalf of the Manufacturer or the Seller, the
Seller’s Agent is paid any commission.

10. Assists - Defined
For use in the production or sale of merchandise
for export to the USA, an Assist is any of the
following identified items that the Buyer of the
imported merchandise provides directly or in-
directly, or free of charge, or at a reduced cost:
1) Incorporated in the imported merchandise,
any materials, components, parts, and any
similar items.
2) Used in producing the imported merchandise,
any tools, dies, molds, and similar items.

11. Assists – Defined - Continued
3) Any merchandise consumed in producing the
imported merchandise.
4) Undertaken outside the USA, and necessary
for the imported merchandise’s production,
any Engineering, Development, Artwork, De-
sign Work, and Plans and Sketches.

12. Assist Values Determined
The following rules must be followed when
determining an Assist Value:
1) The Assist Value is either the cost of acquir-
ing the assist, if acquired by the Importer
of Record from an unrelated Seller, or the
cost of producing the assist, if produced by
the Importer of Record or a person related
to the Importer of Record.

13. Assist Values Determined - Continued
2) The Assist Value includes the Assist’s trans-
portation cost to the production facility.
3) The Assist Values used in the imported mer-
chandise production are adjusted to identify
use, repairs, modifications, tools, dies,
molds, or other factors affecting the Assist
Values.

14. Assist Value Apportionment
With the Assist Value determined, it’s important
to apportion the Assist Value to the imported
merchandise.
For clarification, suppose an imported merchan-
dise’s complete production using the Assist will
be exported to the USA. In this scenario, the
Assist Value can be pro-rated several ways:
1) Over the first shipment if the Importer of

15. Assist Value Apportionment -
Continued
Record wants to pay Import Duty once on the
entire Value.
2) Over the number of units produced up to the
time of the first shipment.
3) Over the entire anticipated production.

16. Royalty & License Fee Treatment
Required from the sale of imported merchandise
for export to the USA, the direct or indirect
Royalty or License fees a buyer pays must be
included in the Transaction Value.
A Royalty or License fee will be dutiable depend-
ing upon if the buyer had to pay them as a
condition of the sale, and to whom, and under
what circumstances they were paid.

17. Proceeds Treatment
Any accrued proceeds, either directly or
indirectly to the seller, are dutiable, resulting
from the subsequent sale, disposal, or use of
the imported merchandise.

18. Excluded Transaction Value Amounts
The excluded Transaction Value amounts are:
1) Incidental to the international shipment of
the merchandise from the export country
to the USA import place, the cost, charges,
or expenses incurred for transportation,
insurance, and related services.
2) If separately identified, the reasonable cost
or charge incurred for:

19. Excluded Transaction Valve Amounts -
Continued
A) In regards to the merchandise already
imported into the USA, the constructing
erecting, assembling, or the maintaining or
providing of technical assistance.
B) After importation, the transportation of the
merchandise.
3) With mandatory USA seller’s liability, the
CBP duties, Federal taxes, and Federal excise
tax.

20. Transaction Value Limitations
The Transaction Value can’t be applied as the
appraised value if any of the following identified
limitations exist:
1) Any restrictions on the disposition or use of
the imported merchandise.
2) The Transaction Value can’t be determined.
3) If a suitable adjustment to the Transaction

21. Transaction Value Limitations - Continued
Value can’t be made, any seller accrued
proceeds from any subsequent resale, dis-
posal or use of the imported merchandise.
4) Where the Transaction Value isn’t accept-
able, any related-party transactions.

22. Acceptable Transaction Value Related-Party
Transactions
The term “acceptable” defined. In determining
the circumstances of the sale, the term “accept-
able” directly refers to if the relationship
between the buyer and seller didn’t influence
the “price actually paid or payable.”
An “acceptable” Transaction Value exists if the
Imported merchandise’s Transaction Value
closely approximates any of the following test
values, which directly relate to exported
merchandise to the USA around the identical

23. Acceptable Transaction Value Related-Party
Transactions - Continued
time as the imported merchandise:
1) In sales to unrelated buyers in the USA, the
Transaction Value of identical merchandise,
or of similar merchandise.
2) The Deductive Value or Computed Value for
identical merchandise or similar merchandise.

24. Acceptable Transaction Value Related-Party
Transactions - Continued
An adjustment is necessary to determine if the
Transaction Value is similar to the following test
values, dependent upon if the sales involved are
different in:
1) Commercial levels
2) Quantity levels
3) The Costs, Commissions, Values, Fees, and
Proceeds previously identified as “additions
to the price actually paid or payable.” (Review
Slide/Page 5 and 6.

25. Acceptable Transaction Value Related-Party
Transactions - Continued
4) The Costs acquired by the seller in sales
whereby the seller and the buyer aren’t
related that aren’t acquired by the seller in
sales in which the seller and the buyer are
related.

26. Other Appraisement Methods
If imported merchandise can’t be appraised
applying the Transaction Value method, the
following listed, in order, Appraisement methods
will be used:
1) Transaction Value of Identical Merchandise
2) Transaction Value of Similar Merchandise
3) Deductive Value
4) Computer Value
5) Values of other Values can’t be determined

27. Transaction Values of Identical and Similar
Merchandise
The next Appraisement method after Trans-
Action Value, the Transaction Value of Identical
Merchandise must have a previously accepted
CBP value.
The next Appraisement method after Trans-
Action Value of Identical Merchandise is the
Transaction Value of Similar Merchandise, of
which the value must be previously CBP-ac-
cepted.

28. Deductive Value
The next Appraisement method is Deductive
Value, which is the resale price in the USA after
importation of the merchandise, specifically with
deductions and additions for certain items from
the original unit price.
Reminder: If an Assist is involved in a sale, the
same sale can’t be used in deter-
mining the Deductive Value.

29. Deductive Value - Continued
The following identified items aren’t part of the
Deductive Value and must be deducted from the
unit price:
1) Related with sales in the USA of imported
merchandise of the same class or kind as the
merchandise in question, any commissions
usually paid or the addition usually made for
profit and general expenses.

30. Deductive Value - Continued
2) Transportation and Insurance Costs
3) Customs (CBP) Duties and Federal Taxes
4) Further Processing Value, which is applied
only when the merchandise isn’t sold in its
original imported condition.

31. Deductive Value – Continued
Reminder: A deduction can’t be made for both
commissions and profits.
Example: A paid commission can be deducted
from the unit price but any profit and
general expenses can be added to the
unit price.

32. Computed Value
The next Appraisement method is Computed
Value, of which the Importer of Record can
choose as the Appraisement method to precede
the Deductive Value.
The Computed Value is collectively made up of
the following items:
1)