Inputs Bought From Unrelated US Companies Aren't Assists, CBP Says
U.S.-origin resin bought by a Chinese manufacturer to make zipper bags isn't an assist for valuation purposes because it was bought at full price from U.S. suppliers unrelated to the U.S. importer of the bags, CBP said in a recent ruling.
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The ruling, H342634, dated April 24, involves the requestor Duralok, which wanted to know the dutiability of low-density polyethylene (LDPE) resin sold by U.S. vendors to Yantai Bagmart Packaging in China. The resin is used in the production of imported merchandise, specifically zipper-type LDPE plastic bags.
When the Chinese manufacturer buys the resin from assorted U.S. vendors, the resin is sent with "FOB China" Incoterms. When Duralok imports the plastic bags from the Chinese manufacturer, the country of origin of the bags is China, and they are classified under subheading 3923.21, according to CBP.
In analyzing the situation, CBP affirmed that the preferred method of appraisement is transaction value, which is the price actually paid or payable for merchandise when sold for export to the U.S. Importers may also consider "assists" when calculating the transaction value. Assists are those materials, components or tools that were incorporated or used in the production or importation of a product.
CBP acknowledged that the resin in this situation is incorporated into the imported merchandise. However, the resin is not an assist, the agency said, because it's sold at full price by a vendor other than the importer.
"The importer does not provide the resin material that is used in the production of the bags," CBP said. "Further, the resin is sold directly to the Chinese manufacturer at 'full price' by an unrelated U.S. vendor. Therefore, we find that the resin would not be considered an assist in accordance with 19 U.S.C. §1401a(h)(1)(A)(i)."
Since the resin is not an assist, it doesn't need to be added to the price actually paid or payable for the finished plastic bags, CBP concluded.