What is Dutiable?

01 Mar What is Dutiable?

It is incumbent on everyone engaged in trade to know policy and regulations. A lack of knowledge doesn’t mitigate liability. So what do you need to know about what’s dutiable and what’s not? What are your responsibilities when it comes to Customs values and the information you must provide?

There are several ways to determine import value but the most common is Transaction Value.  

What is Transaction Value? The transaction value of imported merchandise is the price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts equal to: 

1. The packing costs incurred by the buyer. 
2. Any selling commission incurred by the buyer. 
3. The value, apportioned as appropriate, of any assist. 
4. Any royalty or license fee that the buyer is required to pay, directly or indirectly, as a condition of the sale.
5. The proceeds of any subsequent resale, disposal, or use of the imported merchandise that accrue, directly or indirectly, to the seller.

These amounts (items A through E) are added only to the extent that each is not included in the price, and is based on information accurately establishing the amount. If sufficient information is not available, then the Transaction Value cannot be determined and the next basis of appraisement, in order of precedence, must be considered. 

What is the Price Actually Paid or Payable? The price actually paid or payable for the imported merchandise is the total payment, excluding international freight, insurance, and other C.I.F. charges that the buyer makes to the seller. This payment may be direct or indirect. Some examples of an indirect payment are when the buyer settles all or part of a debt owed by the seller, or when the seller to settle a debt he owes the buyer reduces the price on a current importation. Such indirect payments are part of the Transaction Value.

Are any amounts excluded from Transaction Value? Yes. The amounts to be excluded from Transaction Value are:  

1.) The cost, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the goods from the country of exportation to the place of importation in the United States. 

2.)  If identified separately, any reasonable cost or charge incurred for: constructing, erecting, assembling, maintaining, or providing technical assistance with respect to the goods after importation into the United States, or transporting the goods after importation. 

3.) The customs duties and other federal taxes, including any federal excise tax for which sellers in the United States are ordinarily liable.

Duty amounts can be reduced when shipping under DDP/DAP/CIF terms provided the excludable items mentioned above are documented on the commercial invoice or other written methods that can be made available for review by US Customs and Border Protection (CBP).

For those unfamiliar, DDP means delivery duty paid, and puts the maximum onus on the seller as far as responsibility for the goods. The seller is responsible for everything from origin to destination, and the buyer is only responsible for receiving and unloading. DAP means delivered-at-place and the seller has agreed to be responsible for all costs associated with transportation, including loss associated with moving the cargo. CIF is a term that encompasses cost, insurance and freight while cargo is being transported. 

You should review CBP’s helpful guide on Customs Value here.

If you have any questions about your responsibilities or the information you must provide, reach out to your Future Forwarding representative today, our expert professionals are happy to help.