Monday, May 4, 2009

Dutiable Components of Valuation: Assists

An “assist” is anything of value that the buyer provides to the seller, either directly, or indirectly, and free of charge, or at a reduced cost and used in connection with the production or the sale for export of the merchandise to the United States.

The CBP Regulations, 19 CFR 152.102(a)(2), define assists as:
1. Materials, components, parts, and similar items incorporated in imported merchandise.
2. Tools, dies, molds, and similar items used in the production of the merchandise.
3. Merchandise consumed in the production of the imported merchandise.
4. Engineering, artwork, design work and plans, and sketches that are done somewhere other than in the U.S., and used in production of the imported merchandise.

Note: No work provided in (4) will be treated as an assist if the work:

a. Is performed by an individual domiciled in the U.S.
b. Is performed by that individual while acting as an employee of the buyer.
c. Is incidental to other engineering, development, artwork, design work, or plans or sketches that are undertaken in the U.S.

Assists are considered dutiable components; therefore, the value of any assist must be added to the invoice value if not already included.
Part 152.102(a)(3) provides the methods for determining the value of an assist. The important thing to remember is that regardless of where the assist originates, transportation costs to the place of production by the manufacturer are part of the value of any assist. Part 152.103 (e) explains the methods for apportioning the value of assists to imported merchandise. The total value of an assist may be apportioned over:

· The number of units produced with the assist on each shipment.
· The number of units produced up to the time of the first shipment, or,
· The entire anticipated production.
· Other methods subject to GAAP and approved by CBP.

To test our understanding of this concept, let's take a look at an example.

Totally Teevee, the importer, purchases a mold in Taiwan and ships it to Japan for use in manufacturing LCD televisions. The value of the mold is $50,000, and the transportation costs from Taiwan to Japan were $1,500. An engineer working for Teevee in the U.S. designed the new televisions and the drawings, valued at $1,000 were sent via express courier to the Japanese manufacturer at a cost of $30. Teevee decided to declare the entire cost of the mold on the first shipment. The invoice from the Japanese manufacturer stated only the value for the televisions ($1,250,000) and did not include the mold or drawings. What is the dutiable value for the imported merchandise ?

A. $1,250,000
B. $1,300,000
C. $1,301,500
D. $1,301,000
E. $1,302,530
F. None of the above

The answer will be provided next Monday when we discuss another dutiable component of valuation.

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