For the last few months, we have devoted Monday’s blog to issues related to valuation of imported merchandise. Last week the blog addressed duties and taxes. The answer to last week’s question can be found at the end of this article. As we discussed in the first article in this series, both importers and brokers must have a good understanding of valuation and how to apply it to a variety of situations. Over the past few months, we have provided some information about methods of valuation and components of valuation, as well as some examples. This week, we will conclude our valuation series by providing some tips for studying valuation.
· Gather resources such as the Valuation Encyclopedia and Informed Compliance Publications.
· Read the blogs in this series; they appear on Mondays from March 9 to June 1.
· Read Part 152 of the CBP Regulations.
· Take a valuation course. (See www.bcplearning.com for a sample.)
· Learn the methods of valuation, focusing on why each one is used.
· Learn the components of valuation.
· Create fact sheets summarizing what you have learned.
· Create a process/checklist for verifying the value of imported goods. This list will likely include a review of the purchase order, commercial invoice and accounts payable.
· Create procedures for certain key valuation topics such as declaring assists, deducting non-dutiable charges and converting foreign currency.
· Create presentations and tools for use in training other departments with valuation responsibilities such as purchasing and finance.
· Compile all of your resources into a valuation guide to share with your team and other departments having responsibilities related to valuation .
This concludes our series on valuation. Join us next Monday as we start a new series. The topic has not yet been determined so submit your suggestions in the next few days.
Answer to Duties & Taxes Question – Monday May 25, 2009
Question 58 October 2005
$100,000 - $6,000 (frt) - $850 (ins.) = $93,150 6.5 + .21 +.125 = 6.835% (duty paid)
$ 93,150/1.06835= $87,191
Showing posts with label Customs Valuation. Show all posts
Showing posts with label Customs Valuation. Show all posts
Monday, June 1, 2009
Monday, April 13, 2009
Methods of Valuation: Prohibited Valuation
We want to thank our loyal readers who indulged us last week as we took a break from our regular blog schedule to post and discuss answers to the most recent Customs Broker Exam. Now, we'll return to our study on "Methods of Valuation." Last week we discussed computed value and derived value. Now that we have covered all of the acceptable methods of appraisement, we will finish this series with a list of methods that are prohibited.
Imported merchandise may not be appraised on the basis of:
a. Selling price in the U.S. of merchandise produced in the U.S.
b. A system that provides for the appraisement of imported merchandise at the higher of two alternative values.
c. The price of merchandise in the domestic market of the country of exportation.
d. The cost of production, other than a value determined under 19 CFR 152.106 for merchandise that is identical merchandise or similar merchandise to the merchandise being appraised.
e. The price of merchandise for export to a country other than the U.S.
f. Minimum values for appraisement.
g. Arbitrary or fictitious values.
Example:
Broker receives an invoice consisting of 5000 chainsaws valued at $20 each for a total of $100,000. In addition, the invoice includes 5 chainsaws and 10 blades free-of-charge. Broker calls Importer and requests values for the free-of-charge items. Importer tells Broker that all of the free-of-charge items are worth $1.00 each because Importer is not required to pay Seller for them.
This is clearly an example of an "arbitrary or fictitious" value. Regardless of the nature of the transaction between Importer and Seller, CBP requires the true value for all merchandise entered into the commerce, not just some arbitrary number. Failure to provide CBP with accurate valuation information will be considered a violation of the "reasonable care" standard and will subject the importer to penalties.
Next week we will start a series covering the various “components” of valuation.
Imported merchandise may not be appraised on the basis of:
a. Selling price in the U.S. of merchandise produced in the U.S.
b. A system that provides for the appraisement of imported merchandise at the higher of two alternative values.
c. The price of merchandise in the domestic market of the country of exportation.
d. The cost of production, other than a value determined under 19 CFR 152.106 for merchandise that is identical merchandise or similar merchandise to the merchandise being appraised.
e. The price of merchandise for export to a country other than the U.S.
f. Minimum values for appraisement.
g. Arbitrary or fictitious values.
Example:
Broker receives an invoice consisting of 5000 chainsaws valued at $20 each for a total of $100,000. In addition, the invoice includes 5 chainsaws and 10 blades free-of-charge. Broker calls Importer and requests values for the free-of-charge items. Importer tells Broker that all of the free-of-charge items are worth $1.00 each because Importer is not required to pay Seller for them.
This is clearly an example of an "arbitrary or fictitious" value. Regardless of the nature of the transaction between Importer and Seller, CBP requires the true value for all merchandise entered into the commerce, not just some arbitrary number. Failure to provide CBP with accurate valuation information will be considered a violation of the "reasonable care" standard and will subject the importer to penalties.
Next week we will start a series covering the various “components” of valuation.
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