OT:RR:CTF:VS H349010 RRB
Maureen Celmer
Welke Customs Brokers USA, Inc.
36 Delaware St.
Tonawanda, NY 14150
RE: Kitchen and household cleaning and maintenance products imported under
consignment; Valuation under 19 U.S.C. § 1401a; Computed Value
Dear Mr. Clark:
This is in response to your request, dated May 21, 2025, filed on behalf of your client,
Caron Brands Inc. (“Caron”), requesting a prospective ruling regarding the proper
appraisement of kitchen and household cleaning and maintenance products imported under
consignment. In response to our requests for additional information, you submitted
supplemental documentation in support of your request between February 18, 2026, and July
26, 2026.
FACTS:
You state that Caron is a non-resident importer located in Canada and manufacturer of
natural kitchen and household cleaning and maintenance products, such as cast iron oil, cast
iron soap, cast iron salt scrub, wood oil, and leather oil, among others. These products are
imported on consignment to Amazon for fulfillment services within the United States.
You explain that Caron has no contract with Amazon but rather, uses their Fulfillment
by Amazon (“FBA”) services, which allow Caron to manage products they ship, the price they
sell them for, and the amount of promotion they apply to them. Meanwhile, Amazon will
handle the platform, payment, tax collection, fulfillment, warehousing, picking and shipping of
the orders. By using this service, products may remain in inventory for months before they
are returned to Caron, or are destroyed. Regarding the relationship between Caron and
Amazon FBA services, you explain that Amazon does not purchase inventory from Caron.
Rather, Amazon charges service fees to Caron after the subject merchandise is sold to end
customers. Upon our request for additional information regarding this arrangement, you
submitted a copy of Amazon’s monthly invoicing to Caron. This monthly statement reflects
the service fees charged by Amazon, which you assert are not tied to the import invoice value
and relate solely to post-sale service charges.
You state that very limited commercial level sales are made directly to wholesalers
and consumers from Caron’s website. Caron’s consignment sales through Amazon FBA
services represent 80% of Caron’s total sales while direct (non-Amazon) sales represent 20%
of its total sales. Accordingly, you assert that the majority of Caron’s merchandise imported
into the United States is not sold for export. This ruling only addresses the valuation of
merchandise imported under consignment to Amazon’s warehouse.
To demonstrate the limited direct sales to wholesalers and consumers from Caron’s
website, you provided two representative invoices for wholesale transactions involving the
various kitchen and household cleaning and maintenance products at issue. For purposes of
this ruling request, we will be relying on the cost amounts for the 8-ounce cast iron oil (“cast
iron oil”). These invoices identify the wholesale price of the cast iron oil at $7.50 per unit.
You also provided a copy of Caron’s sales sheet of its standard wholesale pricing, which
confirms that the price per unit of the same product identified by the same item number from
the invoices is $7.50.
For the subject merchandise that will be imported under consignment using Amazon
FBA services, you propose the computed value method of appraisement. In support, you
provided a pro forma invoice that you state is for import declaration purposes only. The pro
forma invoice identifies the price of the cast iron oil as $8.59 per unit.
Upon our request for additional information and to further illustrate your proposed
computed value methodology, on February 18, 2026, you provided a spreadsheet listing
computed value calculations of the various kitchen and household cleaning and maintenance
products, including item number and description. This computed value methodology
spreadsheet consists of columns that identify corresponding value amounts for raw
materials/contents, packing costs1, and labor costs for each item in Canadian dollars, with the
total in Canadian dollar converted to U.S. dollars. The total in U.S. dollars is then added to
the amount in the subsequent column for overhead costs in U.S. dollars. You then propose
to take this total amount for raw materials/contents, packing, labor, and overhead, and apply
a 200% markup for profit and general expenses. Thus, the last column provides the total
computed value calculation for each item, which includes the 200% markup for profit and
general expenses. You explain that this markup is based on Caron’s actual operating
business model and is consistent with the margins realized by Caron on merchandise
exported to the United States. You state that in practice, Caron establishes pricing by
applying a consistent markup to production costs across product lines. This approach has
been developed and refined over time based on Caron’s realized margins, overall cost
structure (including general expenses), and market conditions and channel requirements.
You explain that while pricing may vary over time based on real-world factors, the 200%
markup represents Caron’s standard baseline methodology. You further assert that this
pricing methodology supports Caron’s full business operating model, including both general
expenses and profit, and is not an arbitrary or one-time allocation. Lastly, for each product
set forth by row in the spreadsheet, the computed value amounts in the last column are the
1 In an email dated August 24, 2026, you confirmed that “packaging costs” as set forth in the computed value
methodology spreadsheet is intended to represent “packing costs” as defined in 19 U.S.C. § 1401a(h)(3).
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same values for each product in the pro forma computed value invoice that was provided for
import declaration purposes only. 2 As such, the computed value methodology spreadsheet
confirms the price of the cast iron oil, as set forth in the pro forma computed value invoice, as
$8.59 per unit.
ISSUE:
What is the proper method of appraisement for certain kitchen and household cleaning
and maintenance products imported on a consignment basis as described above?
LAW AND ANALYSIS:
Transaction value of imported merchandise is the “price actually paid or payable for
the merchandise when sold for exportation to the United States” plus amounts for five
enumerated statutory additions. 3 See 19 U.S.C. § 1401a(b). In order for imported
merchandise to be appraised under the transaction value method, it must be the subject of a
bona fide sale between a buyer and seller, and it must be a sale for exportation to the United
States. The shipments at issue are stated to be consignment shipments where the
merchandise is imported into the United States and stored at Amazon fulfillment centers, at
which time the merchandise will be shipped once a purchase from a U.S. consumer is made.
In La Perla Fashions, Inc. v. United States, 22 CIT 393, 9 F. Supp. 2d 698 (1998),
aff’d, 185 F.3d 885 (Fed. Cir. 1999), the Court of International Trade (“CIT”) considered
CBP’s use of “the sale between [a U.S.-based distributor] and its U.S. customers” in
determining transaction value appraisement. There, the CIT upheld CBP’s determination to
utilize the transaction value based on the purchase price paid by unrelated U.S. customers to
the U.S.-based distributor. La Perla Fashions, Inc., 22 CIT at 399. Similarly, in Midwest
CBK, LLC v. United States, 578 F.Supp.3d 1296 (CIT 2022), aff’d, 163 F.4th 1365 (Fed. Cir.
2026), the Court of Appeals for the Federal Circuit (“CAFC”) affirmed the CIT’s finding that
the transactions at issue were sales for exportation rather than domestic sales. The CIT had
previously found that where customers in the United States placed orders for merchandise
located in Canada and the merchandise was then shipped from Canada to the United States,
such transactions constituted sales for exportation to the United States which could serve as
the basis for appraisement using transaction value. Midwest CBK, LLC, 578 F. Supp. 3d at
1306-07. In Headquarters Ruling Letter (“HQ”) H012659, dated November 14, 2007, CBP
distinguished a sale for exportation to the United States from a consignment situation where
no sale for exportation occurred. CBP noted that goods imported under consignment were
2 You initially submitted a pro forma invoice that relied on average item costs across product configurations,
including single units, bundles, and multipacks. Accordingly, the unit value reflected in that invoice blended
average costs rather than the SKU-specific computed values set forth in the February 2026 spreadsheet. We
contacted you via email, dated July 13, 2026, and requested a pro forma computed value invoice for import
declaration purposes with updated information that corresponds to the figures and calculations set forth in the
February 2026 spreadsheet. Via email dated July 26, 2026, you submitted a pro forma invoice for import
declaration purposes, which you state will be used for future shipments to Amazon using the computed value
calculations set forth in the February 2026 spreadsheet.
3 The enumerated additions are as follows: (A) the packing costs incurred by the buyer; (B) any selling
commission incurred by the buyer; (C) the value of any assist; (D) any royalty or license fee that the buyer is
required to pay as a condition of the sale; and (E) the proceeds, accruing to the seller, or any subsequent
resale, disposal, or use of the imported merchandise.
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not sales for exportation because the “buyers” were not obligated to purchase the imported
merchandise or pay within a specified time period; the prices for the imported merchandise
were not agreed to until the merchandise was withdrawn from the warehouse and did not
necessarily conform to the prices from the invoices upon entry; and the risk of loss did not
transfer to the buyer until the merchandise was withdrawn.
Here, unlike in La Perla Fashions, Inc., and Midwest CBK, LLC, we agree that the
transactions at issue are imported under consignment rather than bona fide sales for
exportation because the products remain in a warehouse in the United States, conceivably
for an extended period of time, and will only be sold once a consumer in the United States
makes a purchase from the Amazon website. Therefore, since the merchandise will be
entered into the U.S. under consignment, there is no sale for the purposes of determining
transaction value and transaction value cannot be used as a method of appraisement.
When imported merchandise cannot be appraised on the basis of transaction value, it
is appraised in accordance with the remaining methods of valuation, applied in hierarchical
order. 19 U.S.C. § 1401a(a)(1). The alternative basis of appraisement, in order of
precedence, are: the transaction value of identical or similar merchandise (19 U.S.C. §
1401a(c)); deductive value (19 U.S.C. § 1401a(d)); computed value (19 U.S.C. § 1401a(e));
and the fallback method (19 U.S.C. § 1401a(f)).
The transaction value of identical or similar merchandise is based on sales, at the
same commercial level and in substantially the same quantity of merchandise exported to the
United States at or about the same time as the good being appraised. See 19 C.F.R. §
1401a(c). Whether the merchandise can be appraised on the basis of the transaction value of
identical or similar merchandise will depend on whether there are other entries of the same or
commercially interchangeable merchandise from the same country proximate in time to the
merchandise being entered. Here, you state that 80% of Caron’s total sales consist of
consignment sales through Amazon FBA services while 20% of its total sales consist of sales
to wholesale buyers and consumers directly from Caron’s website. The 20% sales versus
the 80% sales channel via Amazon are not on the same level and not in the same quantity
(wholesale quantities versus individual Amazon sales). Nonetheless, the wholesale price of
the cast iron oil at $7.50 per unit, as an example, is still instructive in evaluating the
appropriate valuation of the merchandise.
If transaction value and transaction value of identical or similar merchandise cannot be
determined, then the customs value will be based upon deductive value, unless the importer
has elected computed value. The importer has elected the application of computed value.
See 19 U.S.C. §1401a(a)(2) and 19 CFR §152.101(c).
Under the computed value method, merchandise is appraised on the basis of the
materials and processing costs incurred in the production of imported merchandise, plus an
amount for profit and general expenses equal to that usually reflected in sales of
merchandise of the same class or kind, and the value of any assists and packing costs. See
19 U.S.C. § 1401a(e)(1).
Title 19 U.S.C. § 1401a(e) provides the following regarding computed value:
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(1) The computed value of imported merchandise is the sum of— (A) the cost or
value of the materials and the fabrication and other processing of any kind
employed in the production of the imported merchandise; (B) an amount for profit
and general expenses equal to that usually reflected in sales of merchandise of the
same class or kind as the imported merchandise that are made by the producers in
the country of exportation for export to the United States; (C) any assist, if its value
is not included under subparagraph (A) or (B); and (D) the packing costs.
(2) For purposes of paragraph (1)— (A) the cost or value of materials under
paragraph (1)(A) shall not include the amount of any internal tax imposed by the
country of exportation that is directly applicable to the materials or their disposition
if the tax is remitted or refunded upon the exportation of the merchandise in the
production of which the materials were used; and (B) the amount for profit and
general expenses under paragraph (1)(B) shall be based upon the producer’s
profits and expenses, unless the producer’s profits and expenses are inconsistent
with those usually reflected in sales of merchandise of the same class or kind as
the imported merchandise that are made by producers in the country of exportation
for export to the United States, in which case the amount under paragraph (1)(B)
shall be based on the usual profit and general expenses of such producers in such
sales, as determined from sufficient information.
The amount for general expenses and profit is considered as a whole. Section
152.106(c) of the CBP Regulations (19 C.F.R. § 152.106(c)) provides:
Profit and general expenses. The amount for profit and general expenses will be
taken as a whole. If the producer’s profit figure is low and general expenses high,
those figures taken together nevertheless may be consistent with those usually
reflected in sales of imported merchandise of the same class or kind.
The Statement of Administrative Action (“SAA”), adopted by Congress, provides that
with respect to computed value:
The cost or value of the materials and the fabrication and other processing of any
kind employed in the production of the imported merchandise will be determined on
the basis of information supplied by, or on behalf of, the producer and will be based
upon the commercial accounts of the producer, if such accounts are consistent with
the generally accepted accounting principles applied in the country where the
goods are produced. The “amount for profit and general expenses” will be
determined on the basis of information supplied by, or on behalf of, the producer
and will be based upon the commercial accounts of the producer, provided that
such accounts are consistent with the generally accepted accounting principles
applied in the country where the goods are produced and unless the figures
provided are inconsistent with those usually reflected in sales, of merchandise of
the same class or kind as the imported merchandise, that are made by producers
in the country of exportation for export to the United States.
As part of “the cost or value of the materials and the fabrication and other processing
of any kind employed in the production of the imported merchandise,” Caron proposes to
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include in its computed value calculation the cost of raw materials/contents; labor costs
associated with production, packaging, and packing; and manufacturing overhead costs
(including facilities, utilities, and quality control). We also note that there is no indication of
any assists involved in the production of the merchandise that need to be taken into account.
In addition, Caron will use an allocation for profit and general expenses based on a
200% markup of the total amounts used to calculate computed value. Caron explains that it
established its pricing by applying a consistent markup to production costs across product
lines based on Caron’s realized margins, overall cost structure (including general expenses),
and market conditions and channel requirements. We note that in La Perla Fashions, Inc., 22
CIT at 399-400, La Perla sought to use computed value for appraisement of the garments at
issue based on accounting records that “were kept in accordance with Italian law and
generally accepted accounting principles (“GAAP”) in Italy.” La Perla asserted that because
the computed value was prepared in accordance with GAAP, it could not be rejected “merely
because it was not created exactly as Customs would have liked.” Id. at 400. The CIT
agreed with CBP’s position that the evidence presented in support of computed value was
inadmissible because it represented summaries that were not verifiable by a Customs
auditor. In holding as such, the CIT referenced the dangers of utilizing unverified computed
values to appraise merchandise, even if such costs are alleged to be in compliance with
GAAP (citing to VWP of America v. United States, 980 F. Supp. 1280, 1288 (CIT 1997)). Id.
at 401. The CIT further noted that La Perla’s use of cost information derived from audited
records did not provide the court with inherently accurate information. Moreover, “[t]he
purpose behind Customs’ verification procedures is to ensure that an accurate computed and
deductive value is formulated.... The Court reject[ed] La Perla’s computed and deductive
value calculations because of their lack of reliability, not their form.” Id.
In comparing the proposed computed value methodology as applied to the subject
merchandise, we note that the computed value price of the cast iron oil—as a representative
example of the proposed methodology—is reasonably comparable to the wholesale price for
this item. However, as noted, in verifying the formulation of computed value calculations,
Caron should be prepared to provide verifiable evidence and accounting records in support of
its proffered markup, upon request.
Title 19, C.F.R. § 141.88 states:
When the Center director determines that information as to computed value is
necessary in the appraisement of any class or kind of merchandise, he shall so notify the
importer, and thereafter invoices of such merchandise shall contain a verified statement by
the manufacturer or producer of computed value as defined in § 402(e) Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(e)).
Thus, the importer must be prepared to provide to CBP upon request the
documentation, which supports the computed value method of appraisement.
HOLDING:
Based on the information submitted, the appraisement of the imported merchandise
should be appraised under computed value pursuant to 19 U.S.C. § 1401a(e), provided the
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importer is prepared to present CBP with documentation to support appraisement under this
valuation method.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on
the assumption that all of the information furnished in connection with the ruling request and
incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and
complete in every material respect. The application of a ruling letter by a CBP field office to
the transaction to which it is purported to relate is subject to the verification of the facts
incorporated in the ruling letter, a comparison of the transaction described therein to the
actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents at the time this
merchandise is entered. If the documents have been filed without a copy, this ruling should
be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch
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