Category Archives: Nuts & Bolts

Customs value…a quick summary

August 12, 2016 mitch

From the archives…

Customs entries on imported merchandise involve calculating duties and taxes based on commodity classification (HTS), country of origin, and transaction value, along with special notes. In previous posts we have discussed the importance of making sure that correct HTS codes are used. In most cases the commercial invoice or CI value is used for duty calculation. In situations where the transaction is not so clear Customs has established an “appraisement hierarchy” to determine entry value. The details can be found in US Customs and Border Protection regulations 19 CFR part 152. Here is a summary:

Appraisement Hierarchy

1) Transaction Value- actual invoice value

2) Transaction Value of identical merchandise- same country, same class and kind

3) Transaction Value of similar merchandise- same country, commercially interchangeable

4) Deductive Value – start with US retail selling price and deduct commissions, transportation, insurance, duty/tax, and value of further processing

5) Computed Value- sum of the following. Importer can request computed instead of deductive.

Cost of Materials
Cost of Labor
Cost of Packaging
Profit
Overhead
G&A

6) Value if other values cannot be determined- if the value of imported merchandise cannot be determined it will be appraised on the basis of a value derived from the methods set forth in parts 152.103 thru 152.106.

Transaction Value cannot be used and the hierarchy comes into play when:

There is a restriction on sale (except geographic)
Merchandise is sold on consignment
There is a barter transaction
There is “goodwill” value involved
Parties are related, unless relationship did not influence price

Unacceptable bases of appraisement:

The selling price in the US of merchandise produced in the US
A system that provides for the appraisement of imported merchandise at the higher of two alternative values
The price of merchandise in the domestic market of the country of exportation
A cost of production other than a value determined under 152.06
The price of merchandise for export to a country other than the US
Minimum values for appraisement
Arbitrary or fictitious values

Need regulatory help? Contact mitch@52.91.45.227 .

Nuts & Bolts

Are your shipments being inspected by CBP?

August 10, 2016 mitch

In previous posts we have discussed the World Bank Logistics Performance Index for international trade. The Index also contains a domestic component as detailed below:

Domestic LPI

The Domestic LPI looks in detail at the logistics environments in 160 countries. For this measure, surveyed logistics professionals assess the logistics environments in their own countries. This domestic evaluation contains more detailed information on countries’ logistics environments, core logistics processes and institutions, and performance time and cost. This approach looks at the logistics constraints within countries, not just at the gateways, such as ports or borders. It uses four major determinants of overall logistics performance to measure performance:
• Infrastructure,
• Services,
• Border procedures and time, and
• Supply chain reliability.

Here is some of the data for the US from the 2016 report. The low percentage of physical inspections stands out.


Shipments meeting quality criteria (%)	96.34%
Number of agencies – exports	3
Number of agencies – imports	2
Number of documents – exports	3
Number of documents – imports	3
Clearance time without physical inspection (days)	1 days
Clearance time with physical inspection (days)	2 days
Physical inspection (%)	4.29%
Multiple inspection (%)	2.58%
Declarations submitted and processed electronically and on-line (%)	100%
Importers use a licensed Customs Broker (%)	100%
Able to choose the location of the final clearance (%)	100%
Goods released pending customs clearance (%)	57.14%

Nuts & Bolts

World Bank Logistics Performance Index

July 9, 2016 mitch

The World Bank has posted their Logistics Performance Index for 2016. The index benchmarks 6 areas of performance and gives nations a score from 1-5 for each area. The benchmarks are 1) Efficiency of customs clearance process, 2) Quality of trade related infrastructure, 3) Ease of arranging competitive pricing for shipments, 4) Competence and quality of logistics services, 5) Ability to track and trace shipments, and 6) Timeliness of shipments in reaching destination within scheduled time of arrival.

For 2016 the US ranks 10th overall with an average score of 3.99 for the 6 benchmarks. The highest US score is 4.25 for timeliness, and the lowest is 3.65 for ease of arranging international shipments. This may be due to the wide variety of services available to US traders which can make comparisons more complex.

http://lpi.worldbank.org/international/global

Nuts & Bolts