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.

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 must provide a fair valuation of the goods entering the U.S borders.

According to The Trade Agreements Act of 1979, there are six methods of customs valuations. These are:

Transactional Value

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 United States. These include the packing costs incurred, selling commission, royalty/license fee paid, the proceeds of any sale or use of merchandize 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.