When you import goods to the United States, it is important that you adhere to certain guidelines set by the U.S. Customs and Border Protection (CBP). The importers need to accurately assess and declare the value of goods to the customs authorities before the arrival of the consignment. To ensure compliance, the officials may confiscate, examine and scrutinize the goods to determine if all the valuation requirements have been met.
To import shipments into the United States, a “Licensed Customs Broker” must be appointed to facilitate the process between Customs and the consignee. All U.S. Customs brokers are required to report the consignee’s Employer Identification Number (EIN) or IRS number when the clearance is in that company’s name. The Importer of Record’s EIN or IRS is provided during the execution of the Power of Attorney (POA), which is a requirement by U.S. Customs & Border Protection (CBP). When the IOR does not have an EIN or IRS number, a Customs Assigned Number can be obtained. Typically, these customs assigned numbers are for foreign importers of record.
A Customs bond is a contract used to ensure that a person or company will perform obligations related to the entry of merchandise arriving from a foreign origin into the United States. The bond is a requirement for all entries and must be purchased from a CBP approved insurance (surety) company. The bond is used in lieu of posting a cash deposit with the U.S. Government.
A “Commercial Invoice” is required for most imports into the United States. A “Pro Forma Invoice” may be used for certain transactions such as goods not intended for further sale, returned merchandise and goods intended only for temporary import among other purposes.
Binding rulings are offered through U.S. Customs and Border Protection (CBP), the binding ruling program enables importers and other interested parties to obtain classification decisions prior to importing a product. Additionally, this service provides binding guidance about other CBP regulations such as country of origin marking and valuation questions. Binding classification advice can only be given by the Office of Regulations and Rulings. The importer submits a letter describing the product in detail and provides a sample to the CBP Information Exchange, National Commodity Specialist for a ruling. The importer generally receives a response within 30 days. While tariff classifications are binding, duty rates are not. The object is to promote import compliance, uniformity and accuracy in classification of products. The importer should keep in mind that the Binding Ruling Program is just that- binding. Once CBP issues their decision, it is legally binding and enforceable by law. While the initial ruling may be protested, once a decision is finalized it must be incorporated into the importing process.
When submitting a ruling request, include the names, address and other identifying information of all interested parties including the manufacturer. Identify the ports in which the merchandise will be entered and provide a detailed description of the transaction. It always helps to submit a sample of the product when practical. Before submitting the request, be certain that there are no issues on the commodity pending before either CBP or any court, and check to see whether classification advice had previously been sought from a Customs officer.
Anti-Dumping and Countervailing Duties are types of duties in addition to the normal duty assigned to a commodity. The United States Anti-Dumping law is designed to counter international price discrimination, commonly referred to as “dumping.” Dumping occurs when a foreign firm sells merchandise in the U.S. market at a price lower than the “normal value” (NV) of the merchandise; generally, this is the price the foreign firm charges for a comparable product sold in its home market. Under certain circumstances, dumping may also be identified by comparing the foreign firm’s U.S. sales price to the price the foreign firm charges in other export markets.
With similar effect, but stemming from different causes, is Countervailing. Here foreign governments are unfairly subsidizing their industries that export to the United States. Examples of unfair subsidies are tax benefits related to exporting or government/low-cost loans for specific companies or industries. Generally, the benefit must be limited to a specific group of firms or industries or to a firm’s export activities in order to be covered under this law. The United States Department of Commerce (USDOC) investigates both Anti-dumping and Countervailing cases. These investigations are almost always initiated in response to petitions filed by an affected U.S. industry. The affected U.S. Domestic industry or company must file a petition, including details of the complaint for the USDOC to investigate. If it is determined that a U.S. industry has been injured, additional duties will be assigned to elevate the entered value of the merchandise to levels consummate with normal value.
To understand what dumping is, it is also important to understand what dumping is not. For example, dumping is not the sale of foreign merchandise in the United States at a price less than the price charged by U.S. producers of the same merchandise. In a dumping case, the fact that foreign producers sell their products at lower prices in the U.S. market than U.S. producers becomes relevant only in the context of determining whether dumped imports have materially injured a specific U.S. industry. Therefore, it is of particular importance for U.S. companies to understand their remedies. Moreover, the importing community should be aware of any safeguards that may be in place prior to purchasing for import, to prevent higher than anticipated import costs.
What Exactly Is Valuation?
Customs valuation refers to the process of assigning a monetary value to the imported goods. This, in turn, is used as basis for calculating the customs duty and taxes to be paid by the importer to obtain the release of the consignment. The value of the goods is also an important factor in applying tariff preferences, collecting taxes, accumulating trade statistics and regulating quantifiable import constraints.
There are certain circumstances in which the importer is not liable to pay any taxes to the customs authorities, such as for sample products, replacements, warranty items etc. However, he/she must provide a fair valuation of the goods entering the U.S borders.
Methods Of Import Valuation
According to The Trade Agreements Act of 1979, there are six methods of customs valuations. These are:
This is the most common method of import valuation. It refers to the actual price paid or payable by the importer for the exportation of the goods to the United States. These include the packing costs incurred, selling commission, royalty/license fee paid, the proceeds of any sale or use of merchandise to be compensated to the exporter.
Transaction Value Of Identical Goods
This method can be used when the transactional value cannot be applied. Identical goods can be defined as those having similar physical attributes and quality, manufactured in the same country as well as by the same producer.
Transaction Value Of Similar Goods
In this, the goods being valued should have a close resemblance, similar characteristics and structure as well as perform the same function. They should also be commercially interchangeable and produced by a single manufacturer as well as in the same country.
Computed Method Of Valuation
The computed value takes into account the cost of materials, fabrication and processing of the goods by the exporter. It also includes the transport, loading/unloading, insurance as well as handling charges payable by the importer.
Deductive Method Of Valuation
The deductive method is based on the resale price per unit of the goods in the import country. The value is determined after excluding the applicable deductions such as transportation charges, insurance costs, customs duties etc.
Residual Method Of Valuation
This method is applicable when any of the above criteria does not fulfill the requirements for valuation of imported goods. In this case, the value is determined according to the other methods, while making minor adjustments as necessary.
Here is a guide for import valuation into Canada, click here.