H349010

HQ H349010 September 24, 2026 OT:RR:CTF:VS H349010 RRB CATEGORY: Valuation 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: in response to your request, dated May 21, 2025, filed on behalf of your client, This is 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 arrangement, you customers. Upon our request for additional information regarding this 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 1 materials/contents, packing costs , 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). 2 same values for each product in the pro forma computed value invoice that was provided for 2 import declaration purposes only. 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 3 enumerated statutory additions. 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 sa

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 3 enumerated statutory additions. 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 Un