CBP Proposes to Change Interpretation Of the Phrase “Sold for Exportation to the U.S.”
Regarding Valuation of Certain Imported Merchandise

Issue 04, January 29, 2008

U.S. Customs and Border Protection (CBP) has issued a notice in the Federal Register regarding a proposal changing how they interpret the expression “sold for exportation to the U.S.” for the purposes of valuation involving a series of sales that results in an importation into the U.S.

CBP’s current interpretation is to base transaction value on the price paid by the buyer in the first or earlier sale (e.g., the sale between the manufacturer and the intermediary) provided the importer can prove that this was an arm’s length sale and that the merchandise was clearly destined for exportation to the U.S. at the time of the first sale. Application of this ‘‘first-sale’’ principle often results in the transaction value being determined on the basis of the price paid by a foreign buyer (either a buying agent or a foreign vendor) to a foreign seller rather than the price paid by the American buyer to the foreign intermediary.

CBP proposes a new interpretation of the phrase ‘‘sold for exportation to the United States’’ in the “series of sales for importation” scenario. Specifically, CBP proposes that in a transaction involving a series of sales, entered value for the imported goods when sold for exportation to the United States is based on the price paid in the last sale occurring prior to the introduction of the goods into the United States instead of the first (or earlier) sale. Under this proposal, transaction value will normally be determined on the basis of the price paid by the buyer in the United States to the intermediary.

This proposed change would generally result in higher duty liability.
The Federal Register notice contains information on how and where to send comments, as well as background information regarding the proposal. Written comments on this proposed interpretation must be submitted by March 28, 2008.

A copy of the Federal Register notice listing CBP’s proposal is available at-
http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/E8-1140.pdf
Form more information contact Karl Krueger, DHL Regulatory Compliance at karl.krueger@dhl.com.