Customs Import Appraisal

Customs law requires that all merchandise including internet purchases imported into the United States be declared, classified, and valued. It is the responsibility of the importer using reasonable care to do this.
What is appraisal of imported merchandise? Appraisal of imported merchandise is determining the correct value of the merchandise on which the Customs duty is paid.
There are several methods of determining the correct value of imported merchandise. I will only discuss the first method known as Transaction Value which is the method that most (about 99%) of all imported merchandise is appraised under. Probably all of internet purchases (small and low-valued shipments) imported into this country would be appraised under Transaction Value.
Transaction Value as defined by Customs law is the price actually paid or payable for the merchandise when sold for exportation to the United States, with certain additions (packing costs, selling commissions, assists, royalties) and subtractions (international freight, discounts, insurance). For these costs to be added or subtracted they must be itemized on the invoice. There are numerous Customs rulings and court cases deciding what the price actually paid or payable is, what a sale is, what sold for exportation is, and what can actually be added or subtracted.
The invoice price may or may not be the Transaction Value depending on what costs are stated on the invoice. All costs should be stated on the invoice to arrive at the correct value. Most internet purchases, small low-valued shipments, and even some high-valued shipments do not break down the costs as required. This results in the overpayment of Customs duties.
In such cases where the costs are not spelled out, the Transaction Value would be the cost or price for the goods stated on the invoice without any additions or subtractions. Even though the price includes costs that are not dutiable.
For example, say a shipment valued at $1.000.00 purchased over the internet arrives in the U.S. and is declared to Customs. The invoice states that the cost of the goods is $1,000.00 and includes costs for international freight and insurance but does not state those costs or the terms of the sale. Customs would, if the goods are dutiable, collect duty on the $1,000.00. But if the cost of the goods is actually $800.00 and the cost for international shipping is $150.00 and the cost of insurance is $50.00, and these costs were stated separately on the invoice Customs would collect duty on $800.00. The terms of the sale agreed on by the seller and buyer would be CIF (cost, insurance, freight) and the seller would know to break down the costs.
It is important for the buyer (importer) to communicate with the seller (exporter) and agree on the terms of the sale and for the importer to advise the seller what costs are to be stated on the invoice so as not to overpay Customs duties..