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How to Determine Value for U.S. Customs

On: September 13, 2023    |    By: Mitch Kostoulakos Mitch Kostoulakos    |    3 min. read

How to Determine Value for U.S. Customs | Shipping SolutionsCustoms entries on imported merchandise involve calculating duties and taxes based on commodity classification (Harmonized Tariff Schedule codes), country of origin and invoice value. In most cases, the commercial invoice value is used for duty calculation. But in situations where the transaction is not so clear, U.S. Customs and Border Protection (CBP) has established an “appraisement hierarchy” to determine a fair entry value. The details can be found in CBP regulations 19 CFR part 152.  Here is a summary:

Appraisement Hierarchy

  1. Transaction value: actual invoice value
  2. Transaction value of identical merchandise: same country, same class and kind
  3. Transaction value of similar merchandise: same country, commercially interchangeable
  4. Deductive value: Start with U.S. retail selling price and deduct commissions, transportation, insurance, duty/tax and value of further processing
  5. Computed value: sum of the following—
    • Cost of materials
    • Cost of packaging
    • Assists (CBP describes this in detail in this Informed Compliance Publication)
    • Profit
    • Overhead
    • General and administrative (G&A) expenses

    (The importer can request the use of the computed value method instead of the deductive value method.)

  6. Value if other values cannot be determined: If the value of imported merchandise cannot be determined, it will be appraised based on a value derived from the methods outlined in parts §152.103 through §152.106.

Download Sample Comerical Invoice

Transaction value cannot be used, and the hierarchy comes into play when:

  • There is a restriction on sale (except geographic)
  • Merchandise is sold on consignment
  • There is a barter transaction
  • There is “goodwill” value involved
  • Parties are related, unless relationship did not influence price

Unacceptable Bases of Appraisement

Imported merchandise may not be appraised based on:

  • The selling price in the U.S. of merchandise produced in the U.S.
  • A system that provides for the appraisement of imported merchandise at the higher of two alternative values.
  • The price of merchandise in the domestic market of the country of exportation.
  • A cost of production other than a value determined under §CFR 152.06.
  • The price of merchandise for export to a country other than the U.S.
  • Minimum values for appraisement.
  • Arbitrary or fictitious value.

Related Resources

Understanding how to determine value for customs is essential for a smooth and accurate import process. Here’s where you can learn more: 

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Mitch Kostoulakos

About the Author: Mitch Kostoulakos

Mitch Kostoulakos is an independent logistics consultant and a Licensed Customs Broker (LCB). He was an award-winning International Executive with FedEx Services before launching Ad Hoc Logistics LLC, and previously held management positions in the LTL industry. Ad Hoc Logistics assists small and medium-sized firms with international logistics and customs issues. Mitch holds the CTL—Certified in Transportation and Logistics designation. His articles have been published in Transportation Journal. He was honored to be appointed to the Standing Committee on International Trade and Transportation of the Transportation Research Board beginning April 2020. TRB is a unit of the National Academies of Sciences, Engineering, and Medicine.

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