CBP Says Costs of Product Compliance Tests Not Dutiable if Paid to Tester
The costs of product compliance tests outside the U.S. may be dutiable as part of the price actually paid for imported goods, depending on whether the payments go to the seller or directly to a third-party tester, said CBP in a Aug. 20 ruling. The ruling, HQ H256223, involves a company named ViewSonic that imports computing products from foreign sellers. The company sought CBP insight in July on whether the costs of compliance testing are considered dutiable by CBP.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
ViewSonic uses product compliance tests outside the U.S. for some products "to verify whether the products conform to the U.S. import requirements as well as to the import requirements of other countries such as Chile and Canada," the ruling said. The company's compliance team in Taiwan determines whether to hire test vendors itself, in which case it directly pays the testers, or to ask the sellers to hire the test vendors.
When ViewSonic makes the payments to the seller for arranging the tests, the costs become part of the transaction value, said CBP. CBP has previously "held that where the buyer makes payments to the seller for tests performed by the seller on the merchandise before it is exported, such payments are part of the price actually paid," it said. As a result, ViewSonic’s "argument that the compliance test payments should not be considered as assists need not be addressed because these payments are dutiable as part of the price actually paid or payable," the agency said.
When ViewSonic makes the payment directly to the testing company, that payment differs from cases where the costs are being made for the benefit of the seller, said CBP. CBP previously considered the testing issue in the context of quality assurance programs in a 2006 ruling. In that ruling, CBP found that "situations where independent testers have performed the testing, the associated testing costs are not included in the price paid or payable for the imported merchandise. Accordingly, we determine that payments made by ViewSonic to a third party test vendor are not part of the price actually paid or payable for the imported goods," it said.