CBP Allows Protest Over Transaction Value of Discounted Merchandise

An importer can use a discounted price for transaction value as long as the discount was agreed to prior to the goods' importation, CBP said in a ruling posted last month. Allowing the importer's protest after an application for further review, CBP found that the unnamed electronic components distributor provided enough evidence to show the discounted price it claimed was the correct price based on the documents provided.

The protest was filed in December 2022 over the importation of LEDs. The name of the company was not provided in the request for ruling. The distributor entered into pricing adjustment with its "unrelated suppliers," CBP said. The distributor filed post-summary corrections to change the value of the entries to account for the discounts received from the supplier, the agency said.

Under 19 U.S.C. § 1401a(b)(4)(A), the price actually paid or payable is defined as the total payment "made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller,” CBP said. The agency said that CBP regulations 19 C.F.R. § 152.103(a) further add that in determining the value of the transaction, "discounts, increases, or negotiations" may be factored into the final calculation.

On the other hand, "changes in the price actually paid or payable which are arrived at subsequent to the time of importation shall not be taken into account in determining transaction value," CBP said. "This would apply to renegotiation, deferred quantity discounts, or rebates."

Initially, CBP liquidated the entries reflecting the amended valuation after the correction. In June 2022, CBP reliquidated the entries "noting a change increase" and denied the post-summary correction, CBP said.

The distributor protested CBP's appraisal and requested that CBP liquidate the entries at the post-summary correction values. The distributor submitted two documents in support of this: their "Ship from Stock and Debit" process from 2012 and their Ship and Debit request and approval from May 2021.

Those documents supported the distributor's claim that the merchandise was "renegotiated at a discounted price," CBP said. The documents also showed that the price reduction was agreed to before the merchandise was shipped in June 2021, the agency said.