Apparel Imported for Reclamation Should Be Valued at Recycling Fee, CBP Says
Rejected and recalled apparel imported into the U.S. for recycling and fiber reclamation should be valued for customs purposes at the fee paid to the U.S. recycler, CBP said in ruling HQ H262963 (here), issued March 3. With other methods of valuation unavailable, CBP cited previous rulings that found recycled goods should be valued at the fee charged to take possession of the goods. The agency chose the fee paid by the importer to the recycler, rather than the original owner to the importer, to serve as the basis for appraisement.
The original owner of the apparel, an anonymous “Company A” in Canada, pays a per-pound fee to Canada-based Debrand to provide the recycling and fiber reclamation services, CBP said. Debrand performs the services outside of Canada to allow Company A to claim drawback. It imports the goods into the U.S., where they are then sent to a recycler in Arizona and dismantled, shredded, crushed, ripped or destroyed for a per-ton fee paid by Debrand. The recycler “uses as much of the destroyed materials as possible in producing entirely new products including various types of insulation and mattresses,” CBP said.
Debrand claimed the fee paid to the Arizona recycler is not a resale price. The goods are neither salable nor salvageable in their imported condition, said Debrand, and Company A pays to recycle them only to protect its brand and ensure that the products are reused instead of put into landfills. Debrand argued the rejected apparel should be valued according to the fallback method at its per-pound scrap value.
CBP agreed that established methods of valuation are unavailable for the rejected apparel. The merchandise isn’t sold, so can’t be appraised according to transaction value or the transaction value of identical or similar merchandise. No information is available to value the rejected apparel using computed value, and merchandise is not sold in its condition as imported, so deductive value is unavailable.
Turning to the fallback method, CBP ruled the rejected apparel should be valued at the per-ton fee paid by Debrand to the Arizona recycler. In previous rulings, CBP has found merchandise imported for recycling should be valued at the fee charged to take possession of the goods. CBP has also previously found that waste being imported for disposal should be valued at the fee that was paid to the U.S. company responsible for disposing of the waste, it said. “In accordance with the cited rulings, we find that the imported merchandise may be appraised under the fallback method using the fee of $[X] or $[X] per ton paid from Debrand to [the Arizona recycler] to destroy the imported goods and recycle the materials,” CBP said.