Goods With Negative Value OK for Valuation Using Similar Merchandise, CBP Says

An importer of recyclable material with a negative valuation can use the transaction value of similar goods that had a positive valuation to appraise the merchandise, CBP said in a recent ruling. Though goods with a negative price can’t be appraised using transaction value, fluctuations in the prices of the underlying metals means some shipments of the recyclable materials will have positive prices that can be used to appraise the negatively priced entries, CBP said.

The ruling, dated July 20, involves recyclable material imported by an anonymous company in a situation in which the final price is determined after importation by applying a formula whereby a processing fee is deducted from the market values of three different metals contained in the recyclable material. Sometimes the processing fee can exceed the values of the metals, resulting in a negative final price. But fluctuations in the values of the three metals can also turn the price positive.

CBP had already issued a ruling to the same importer for the same merchandise in 2018, finding that the goods should be appraised based on a fallback method involving the processing fee. The importer, which continues to bring in similar recyclable materials, subsequently requested that CBP find it may also use the transaction value of similar merchandise to value the entries.

“Provided the importer can establish that the transaction value of similar recyclable material of the same weight and similar metal content as set forth in 19 U.S.C. § 1401a(h)(3) may serve as the basis for appraising the recyclable material, namely by showing that the products are commercially interchangeable, have the same weight and similar composition, and involve the same country and time of export, CBP can appraise the merchandise on the basis of transaction value of similar merchandise, subject to adjustments for commercial level or quantity if supported by sufficient documentation,” CBP said in the ruling.

Because the recyclable material is non-perishable, the “at or about the same time” requirement for valuation using transaction value of similar merchandise “needs to be interpreted flexibly,” CBP said.