OT:RR:CTF:VS H350911 RRB
Assistant Center Director
Pharmaceuticals, Health, and Chemicals
Center of Excellence and Expertise (CEE)
U.S. Customs and Border Protection
1100 Raymond Blvd.
Newark, NJ 07102
RE: Internal Advice Request; Method of Appraisement; Dutiability of Payments for
Technical Assistance Provided Post-Importation Under Technical Assistance Service
Agreement; 19 U.S.C. § 1401a(b)(3)
Dear Assistant Center Director:
This is in response to a letter, dated July 28, 2025, from Diaz Trade Law, on
behalf of their client, SVC Veterinary Medical Supply LLC, (“SVC”), requesting a
prospective ruling concerning the appropriate appraisement of merchandise under
transaction value pursuant to 19 U.S.C. § 1401a. In the course of our evaluation of this
request, it was determined that the merchandise entered the United States.
Accordingly, this prospective ruling request will be processed as an internal advice
request.
The importer requested that certain information submitted in connection with this
request be treated as confidential. Inasmuch as this request conforms to the
requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The
information contained within brackets will not be released to the public and will be
withheld from published versions of this decision.
FACTS:
SVC imports merchandise identified as V-Clamp products, which are veterinary
medical devices. SVC purchases the merchandise from an unrelated third-party
supplier pursuant to the terms of a Distributor Agreement between SVC and the
supplier. The original Distributor Agreement became effective on August 25, 2024, and
was to terminate on December 31, 2025, unless terminated earlier under the terms of
the agreement. Under terms of the original Distributor Agreement, the price of the V-
clamp was $[***] a set. In an email to our office, dated February 11, 2026, counsel for
SVC explained that the original price for a set included the device itself plus post-
importation technical support. Counsel for SVC further explained that under the terms
of the original Distribution Agreement, the post-importation technical support was
mandatory and must be purchased with the device as a set.
On May 7, 2025, SVC and the supplier executed an Amendment to the
Distributor Agreement (hereinafter, “Amended Distributor Agreement”. Effective as of
the date of the Amended Distributor Agreement, i.e., May 7, 2025, the parties agreed to
the following revised prices for the subject merchandise:
• $[***] per unit for each V-clamp
• $[***] fee per unit for post-import technical assistance.
Counsel for SVC explained in its email to our office, dated February 11, 2026, that per
the terms of the Amended Distributor Agreement, the post-importation technical
assistance services became optional and were no longer required to be purchased with
the device.
On May 23, 2025, SVC and the supplier entered into a Technical Assistance
Service Agreement. Under the terms of the Technical Assistance Service Agreement,
the supplier agreed to offer technical assistance services solely related to the operation
and clinical use of the V-clamps distributed by SVC. These services include on-site or
remote guidance on handling and use; procedural tips for clinical application; and
operational troubleshooting support. The Technical Assistance Service Agreement
further stipulates that the following services are not included: product design,
engineering or development; and manufacturing, packaging, or compliance work. The
terms of the Technical Assistance Service Agreement also stipulate that the services
offered under this agreement are “strictly optional” and not required for SVC’s use, sale
or maintenance of the V-clamps. The terms of the Technical Assistance Service
Agreement further state that services rendered under the agreement shall only be made
available after the V-clamp has been imported into the United States by SVC.
In addition to the above-referenced documents, SVC submitted a copy of an
invoice, dated May 7, 2025, which was issued to SVC by its supplier for the V-clamps.
According to this invoice, the unit price for each V-clamp was set forth as $[***] per unit
(the same price as indicated on the Amended Distributor Agreement). Along with each
V-clamp purchased under this invoice, the invoice lists separate line items for post-
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importation technical assistance at $[***] per unit (same amount as above), with a
notation that these services are optional. The invoice further states that $[***] for [***]
units of V-clamps was due upon placing the order, while $[***] for the optional post-
importation technical assistance was due 45 days after placing the order. SVC also
submitted a copy of a wire payment, dated May 28, 2025, from SVC to the supplier, with
a notation indicating that such payment was for the above-referenced invoice number.
The wire payment amount matches the amount due upon placing the order for the [***]
units of V-clamps purchased per the invoice, dated May 7, 2025, plus an additional bank
transfer fee. Lastly, SVC submitted a copy of its CBP Form 7501, with an entry date of
June 2, 2025, confirming that the merchandise has been entered into the Customs
territory of the United States. The CBP Form 7501 identifies the invoice number of the
above-referenced invoice. Moreover, the invoice value and entered value set forth in
the CBP Form 7501 match the invoice total listed in the May 7, 2025 invoice.
ISSUE:
Whether the amount paid by the importer to the supplier for technical assistance
services provided post-importation is included as part of the price actually paid or
payable for the imported merchandise under transaction value.
.
LAW AND ANALYSIS:
Merchandise imported into the United States is appraised for Customs purposes
in accordance with Section 402 of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979 (“TAA”) (19 U.S.C. § 1401a). The primary method of
appraisement is transaction value, which is defined as “the price actually paid or
payable for the merchandise when sold for exportation to the United States,” plus
amounts for certain statutorily enumerated additions to the extent not otherwise
included in the price actually paid or payable. See 19 U.S.C. § 1401a(b)(1). However,
transaction value does not include, inter alia, any reasonable cost or charge incurred for
the construction, erection, assembly, or maintenance of, or the technical assistance
provided with respect to, the merchandise after its imported into the United States,
provided the costs or charges are separately identified from the price actually paid or
payable. See 19 U.S.C. § 1401a(b)(3)(A)(i).
In order to use transaction value as a method of appraisement, there must exist a
bona fide sale between the buyer and the seller. In VWP of America, Inc. v. United
States, 175 F.3d 1327 (Fed. Cir. 1999), the Court of Appeals for the Federal Circuit
found that the term “sold” for purposes of 19 U.S.C. § 1401a(b)(1) means a transfer of
title from one party to another for consideration (citing J.L. Wood v. United States, 62
CCPA, 25, 33, C.A.D. 1139, 505 F.2d 1400, 1406 (1974)).
However, transaction value is an acceptable basis of appraisement only if, inter
alia, the buyer and seller are not related, or if related, the relationship did not influence
the price actually paid or payable, or the transaction value of the merchandise closely
approximates certain “test values.” 19 U.S.C. § 1401a(b)(2)(B). Counsel for SVC states
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that SVC and the supplier of the imported merchandise are unrelated. Therefore, we
assume, for the purposes of this ruling, that transaction value is the appropriate basis of
appraisement.
The term “price actually paid or payable” is defined as “the total payment
(whether direct or indirect…) made, or to be made, for imported merchandise by the
buyer to, or for the benefit of, the seller.” 19 U.S.C. § 1401a(b)(4)(A). We presume that
all payments made by the buyer to the seller, or a party related to the seller, are part of
the price actually paid or payable. Generra Sportswear Co. v. United States, 905 F.2d
377, 380 (Ct. Int’l Trade 1990) (holding that so long as quota payments were made to
the seller in exchange for merchandise sold for export to the U.S., they “properly may
be included in transaction value, even if (they represent) something other than the per
se value of the goods”)). However, this presumption may be rebutted by evidence
which clearly establishes that the payments are completely unrelated to the imported
merchandise. Chrysler Corporation v. United States, 17 Ct. Int’l Trade 1049, 1055-1056
(1993).
SVC asserts that in accordance with 19 U.S.C. § 1401a(b)(3)(A)(i), the charges
incurred for post-importation technical assistance should be excluded from the
transaction value of the subject merchandise. The fees for post-importation technical
assistance are listed on the invoice separately from the costs charged for the V-clamps.
SVC also explains that because the fees for post-importation technical assistance are
optional, this illustrates that such technical assistance services are not attached to or a
condition of the merchandise itself. In other words, these post-importation services are
not related to the merchandise.
In support of SVC’s position that the charges for post-importation technical
assistance services are not dutiable, it cites to Headquarters Ruling Letter (“HQ”)
546000, dated September 6, 1996. There, the importer asserted that general
engineering services, including installation, set-up, and operation of the imported
merchandise, should not be included in the transaction value because these services
did not contribute to the production or development of the imported merchandise and
because such services were performed post-importation. Additionally, the charges at
issue were identified separately in the contract for these services. CBP determined that
because the charges for these general engineering services were unrelated to and not
in exchange for the imported merchandise, and where such services were provided
after importation and identified separately from the price actually paid or payable in
accordance with 19 U.S.C. § 1401a(b)(3)(A)(i), these charges were properly not
included in the transaction value. SVC also cites to HQ 546697, dated August 26, 1999,
in support of its position. There, CBP determined that payments for work performed
relating to post-importation activities, including the testing and installing of machinery
and equipment, were not included in the transaction value provided that the cost was
identified separately from the price actually paid or payable pursuant to 19 U.S.C. §
1401a(b)(3)(A)(i).
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Here, in accordance with Chrysler Corp., we agree that based on the fact that the
charges incurred for post-importation technical assistance services were strictly optional
and did not contribute to the development of the merchandise or production of the V-
clamps, such services were not related to the merchandise. Of particular importance,
we also note that the Amended Distributor Agreement, the Technical Assistance Service
Agreement, and the commercial invoice each state that the technical assistance
services shall only be made available after the merchandise has been imported into the
United States. Moreover, the charges for these post-importation services are identified
on the invoice and the Technical Assistance Service Agreement separately from the
price actually paid or payable for the V-clamps, as provided for in 19 U.S.C. §
1401a(b)(3)(A)(i).
In addition to the above-cited rulings, our office notes that the Code of Federal
Regulations provides an example of the type of exclusions from transaction value that
are set out in 19 U.S.C. § 1401a(b)(3)(A)(i). Specifically, 19 CFR § 152.103(i) describes
the following example:
A foreign shipper sells a piece of equipment to a U.S. buyer. The total contract price for
the equipment includes technical assistance in the U.S. The equipment cannot be
purchased without the technical assistance, but the contract provides a breakdown of
costs.
Should the appraised value include the technical assistance? No, transaction value does
not include any reasonable costs for construction, erection, assembly, maintenance of, or
technical assistance, for the imported merchandise after its importation into the U.S., the
cost of which can be accurately identified as being separate from the price actually paid
or payable for the merchandise to which they relate.
This example from the Code of Federal Regulations is analogous to the instant
transaction. However, in the instant transaction, whereby the post-importation technical
assistance services are optional, such services are even further detached from the
merchandise when compared to the regulatory example in which the equipment cannot
be purchased without the post-importation technical assistance.
In light of the above, because the $[***] fees are for technical assistance services
provided post-importation and are separately identified from the price actually paid or
payable, we find that in accordance with 19 U.S.C. § 1401a(b)(3)(A)(i), these payments
are not included in the transaction value of the imported V-clamps.
HOLDING:
In accordance with the above analysis, we find that the payments made
for technical assistance services provided after importation are not included in
the transaction value of the subject merchandise pursuant to 19 U.S.C. §
1401a(b)(3)(A)(i).
You are to mail this decision to the internal advice requester no later than
60 days from the date of the decision. At that time, the Office of Trade,
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Regulations and Rulings will make the decision available to CBP personnel, and
to the public on the Customs Rulings Online Search System (CROSS) at
https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border
Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Monika R. Brenner
Chief, Valuation and Special Programs Branch
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