Appraisement and Valuation of Imported Merchandise (19 CFR Part 152)
Valuation uses six sequential methods: transaction value, transaction value of identical merchandise, transaction value of similar merchandise, deductive value, computed value, and fallback. Transaction value is the price actually paid or payable for the goods when sold for export to the United States, plus specified additions: packing costs, selling commissions, assists (materials, tools, engineering, etc. supplied free or at reduced cost), royalties or license fees related to the goods and required as a condition of sale, and proceeds of resale accruing to the seller.
Exclude buying commissions, international freight and insurance (the U.S. system generally appraises on an FOB-type basis), post-importation construction or assembly, and U.S. duties. Transaction value is unavailable if there is no bona fide sale, if the sale is subject to impermissible restrictions, or if the buyer and seller are related and the relationship influenced the price. Related-party sales can still use transaction value if the price is arm's length.
Deductive value starts from the resale price in the United States and deducts commissions, profit, transportation, and duties. Computed value builds up materials, fabrication, general expenses, and profit. Fallback uses flexible application of the prior methods.
Traps: adding international freight; treating buying commissions as dutiable; forgetting assists; and assuming related parties automatically lose transaction value.
Worked example/rule of thumb: A foreign seller invoices $100 FOB, and the U.S. buyer supplies free molds worth $5 and pays a $3 selling commission. Dutiable transaction value is $108. Rule of thumb: start with the price paid, then add only statutory additions.