Entered Value
/ˈɛntərd ˈvæljuː/
The entered value is the monetary value of imported merchandise declared by the importer of record to U.S. Customs and Border Protection (CBP) at the time of entry. This declared value serves as the primary basis for assessing ad valorem duties, which are calculated as a percentage of the goods' value. Accurate determination of entered value is crucial for compliance with U.S. customs laws and regulations.
In Detail
The legal framework for customs valuation, including the methods used to determine entered value, is primarily found in Section 402 of the Tariff Act of 1930, as amended (19 U.S.C. § 1401a). This statute mandates the use of Transaction Value as the preferred method, based on the price actually paid or payable for the imported goods, with certain additions and deductions. If transaction value cannot be determined, alternative methods like deductive value, computed value, or value if other methods fail are applied in a prescribed hierarchy.
Importers declare the entered value on the Entry Summary (CBP Form 7501), often filed electronically via ACE. This declaration must include all costs and charges required to be added to the price paid or payable, such as selling commissions, assists, packing costs, and certain royalties. Conversely, certain charges like international freight and insurance, when separately identified, may be excluded from the dutiable value if not considered part of the price paid or payable.
A common challenge involves related party transactions, where the relationship between buyer and seller can influence the price and potentially invalidate transaction value. CBP scrutinizes these transactions to ensure the price was not affected by the relationship, often requiring additional evidence. Misstating the entered value, whether intentionally or through negligence, can lead to significant penalties, including liquidated damages, increased duties, and even criminal prosecution for fraud.
Classification Significance
Incorrectly declaring the entered value exposes importers to substantial risks, including underpayment of duties, which can result in significant penalties under 19 U.S.C. § 1592, ranging from negligence to fraud. Frequent errors or willful misstatements can trigger CBP audits, increased scrutiny of future entries, and even lead to denial of import privileges. Such non-compliance not only incurs financial penalties but can also damage an importer's reputation and lead to competitive disadvantages for businesses that adhere to compliant valuation practices.
How Kanon Handles This
While Kanon primarily focuses on HTSUS classification, it understands that accurate classification is intrinsically linked to correct valuation. Our system helps identify the precise HTS code, which then dictates the applicable ad valorem duty rates. By providing robust legal reasoning for classification, Kanon indirectly supports importers in making accurate entered value declarations, minimizing the risk of valuation errors stemming from incorrect duty rate application, and providing comprehensive documentation for audit defense.
Frequently Asked Questions
What is the most common method for determining entered value?
The most common and preferred method for determining entered value is Transaction Value, which is based on the price actually paid or payable for the goods when sold for export to the U.S., with certain adjustments as defined by law.
Can international freight costs be excluded from the entered value?
Yes, international freight, insurance, and other charges incurred in transporting the goods from the country of exportation to the port of importation in the U.S. can generally be excluded from the entered value, provided they are separately identified on the commercial invoice or other shipping documents.