JavaScript is not enabled. This site uses JavaScript to create critical components for the best user experience. Please consider turning JavaScript on in your browser preferences.

"Dear Cathy" Discusses the Commercial Invoice Value of Samples

8/28/11 7:00 PM | Catherine J. Petersen | Export Regulations, Export Finance
Print this article:
Many times we ship items to customers free of charge as an incentive for a bulk order or just as samples for them to try out. I've always thought that their actual value must be listed on the Commercial Invoice whether we charge the customer or not. Usually when I do that, however, I always make a notation on the Commercial Invoice stating there was no charge to the customer. The value was for customs use only. Is that the correct approach to a shipment of this nature?

Dear Cathy:
 
Free_to_Try_signI found an article online that you wrote regarding the value on a commercial invoice titled Repaired Goods: Import and Re-Export. I am a Transportation Coordinator for my current employer, and there has always been a question in my mind that I'm not sure how to answer.
 
Many times we ship items to customers free of charge as an incentive for a bulk order or just as samples for them to try out. I've always thought that their actual value must be listed on the Commercial Invoice whether we charge the customer or not. Usually when I do that, however, I always make a notation on the Commercial Invoice stating there was no charge to the customer. The value was for customs use only.
 
Is that the correct approach to a shipment of this nature? Thanks in advance for your assistance.
 
All the best,
Storm Clouds in Minnesota
 
Dear Storm Clouds in Minnesota:
 
You are on the right track. There is guidance available in the Foreign Trade Regulations regarding value to be reported to Census via AESDirect; this will supplement your understanding of valuation. There are also letters posted to their website (see #163, "Proper Reporting of Exports of Merchandise Previously Imported for Repairs or Alterations, and Replacement Parts"), and they have a newsletter that can also be helpful. These resources are like an umbrella in rainstorms!
 
The buyer may want you to state a lower value to reduce their obligation for duty payment, but that is incorrect from the perspective of the U.S. government's regulations as well as the regulations of the buyer's country.
 
If the products being shipped are indeed samples, then have the packaging and the packing marked with an indication that the goods are for testing and sample purposes, not intended for resale.
 
If the sample has been compromised in any way to ensure that the product will not be resold in the market of the customer, then the value is nominal or zero. One example is a t-shirt that has been slit up the front or back, so it cannot be worn.
 
Thanks for your question! All the best (& stay out of the rain)!
 
Cathy