H354073

H354073 May 26, 2026 OT:RR:CTF:VS H354073 RRB CATEGORY: Valuation MacKensie R. Sugama Trade Pacific, PLLC 700 Pennsylvania Ave. SE, Suite 500 Washington, DC 20003 RE: Epoxy resins; Valuation under 19 U.S.C. § 1401a; Computed Value Dear Ms. Sugama: This is in response to your October 9, 2025, request for a binding ruling, on behalf of Kumho P&B Chemicals, Inc. (“KPB” or “importer”) regarding the proper method of appraisement for prospective entries of bagged and bulk epoxy resins manufactured in South Korea. The importer has asked that certain information submitted in connection with this ruling 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 in this ruling or in the attachments to the ruling request, forwarded to our office, will not be released to the public and will be withheld from published version of this ruling. FACTS: KPB is a non-resident importer and manufacturer that will be importing bulk and bagged epoxy resins into the United States. KPB produces five types of epoxy resins in South Korea: (1) liquid epoxy resins; (2) solid epoxy resins; (3) solution epoxy resins; (4) blend epoxy; and (5) specialty epoxy resins, which include modified epoxy resins and waterborne epoxies. KPB notes that the main raw material of epoxy resins is Bisphenol-A (“BPA”), which is manufactured by KPB at its facility in South Korea. BPA is produced from phenol and acetone, which are also manufactured internally by KPB. Further, phenol and acetone are produced from a semi-finished product identified as 2 cumene, which is also produced by KPB. Cumene is produced from two other raw materials, propylene and benzene, which are purchased by KPB from unaffiliated suppliers in South Korea, along with other main inputs. KPB notes that none of the inputs are sourced from the United States while a few minor inputs are purchased from an affiliated company. Following manufacture of the epoxy resins, KPB will ship the merchandise directly to the United States, where the merchandise will stay in a third-party warehouse operated by an unrelated party. KPB explains that most imports are sold to an unrelated U.S. customer within 90 days of entry, while a small portion is sold after 90 days. KPB explains that it generally exports only one grade (i.e., a single product code) per shipment and per customs entry. Only about once per year does it import two grades or multiple types of epoxy products included with a single shipment and entry. KPB exports two types of products: (1) bagged shipments with lot numbers that are indicated, and (2) bulk products with ISO tank numbers that are indicated. However, with both types of products, neither the lot numbers nor the ISO tank numbers are assigned at the time of production. Instead, they are assigned at the time of shipment from the South Korean warehouse. In addition, rather than producing epoxy resins to order, KPB continuously produces its primary epoxy resin products and ships them to the United States for warehouse storage. KPB explains that once production of the subject merchandise at its facilities in South Korea is completed, the liquid is continuously fed into large vat storage tanks where the product is subsequently blended. When a shipment of product is made, the product is filled into an ISO tank or tank lorry directly from the vat storage tank. Consequently, KPB avers that it is not possible to trace exactly when the shipped product was produced or under which lot number it was manufactured. At the same, KPB states that it keeps detailed records of costs on a product code-specific basis, which are finalized once per month at closing. It also maintains its inventory movement ledger report by material code. KPB explains that it uses a process costing system to calculate production costs for its epoxy resins. It also calculates actual costs on a product code basis and plant-specific basis every month in the ordinary course of business. Through its cost accounting system, KPB calculates its production costs on an accumulative basis. Under this method, the cost of each production process absorbs the cost of the output of the previous process as incurred by adding it to the production cost in the current process. Accordingly, the cost of the current process then passes through to the next process in the same manner. Within this accounting system, the value of KPB’s raw materials, semi-finished goods, and finished goods inventories are calculated using a moving weighted-average method. It also applies the lower of cost or market value principle for its inventory valuation. 3 KPB notes that its above-referenced accounting system is used to prepare its financial statement data and provides the cost of goods sold (“COGS”) and inventory value in accordance with K-IFRS, which is the Korean International Financial Reporting Standards.1 KPB collects the following types of production costs, which are assigned on a product-specific basis: (1) raw materials; and (2) conversion costs, which include labor and manufacturing overhead. In determining the production costs for raw material inputs, KPB calculates the total quantity and cost of inputs consumed (including packing expenses) in the production of the merchandise and the associated prior production at the factory at the end of each month. In calculating the production conversion costs, KPB records labor and overhead costs incurred at its factories using cost centers. Cost centers are designated either as direct cost centers for manufacturing and packing processes or as indirect cost centers for supporting processes. Direct cost centers include the recording of material, labor, packing, and direct overhead costs. Costs initially collected in each indirect cost center are then periodically allocated to direct cost centers. Subsequently, KPB allocates all direct and indirect costs to the manufactured products so that the cost of manufacturing (“COM”) statement includes all costs. Through its records system, KPB rolls over materials and processing costs at each production process into the next production process. Taking all of the above into consideration, KPB will begin its computed value methodology calculation by looking at the product code that is being shipped. In support of its proposed methodology for prospective shipments, KPB submitted a sample computed value methodology spreadsheet for a separate bulk shipment and bagged shipment from April 2025, with each spreadsheet setting forth all associated costs under computed value for a particular product code and material name. With respect to the sample bulk shipment calculation, for [***] kg of product shipped in April 2025, KPB looked to its production costs from March 2025 for that product and associated material code. Based on its March 2025 production costs, KPB determined that the cost of manufacturing per kg in U.S. dollars is $[***]. KPB then applied this amount per unit to the quantity shipped in April 2025 in order to derive the total production value for the associated product code in the amount of $[***].2 Taking the production costs from March 2025, KPB then added expenses related to profit; selling, general and administrative expenses (“SG&A”); and foreign inland transportation costs. For profit and SG&A amounts in the sample computed value methodology, KPB calculated ratios from its prior FY 2024 audited financial statements, which were included with this ruling request.3 For example, for SG&A, KPB calculated a ratio of 3.56% by dividing its total SG&A expenses set forth in its financial statements by its total sales amount. To determine the profit ratio, KPB divided its total profit before income taxes by its total sales amount to derive a profit ratio of 0.26%. KPB then 1 KPB states that K-IFRS is the generally accepted accounting principles for South Korea. 2 KPB derived its p

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. See 19 U.S.C. § 1401a(b). For the imported merchandise to be appraised using the transaction value method, it must be the subject of a bona fide sale between a buyer and seller, and the sale must be for exportation to the United States. When imported merchandise cannot be appraised based on transaction value, it is appraised in accordance with the remaining methods of valuation, applied in hierarchical order. See 19 U.S.C. § 1401a(a)(1). The alternative bases 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 subject merchandise will not be sold on entry and will be stored in a warehouse. Since there is no sale for the purposes of determining transaction value, transaction value may not be used to appraise the merchandise. The next method of appraisement is the transaction value of identical or similar merchandise. See 19 U.S.C. § 1401a(c). The transaction value of identical or similar merchandise refers to a previously accepted transaction value of identical or similar merchandise that was exported at or about the same time as the merchandise being valued. KPB states that for the very limited entries where an underlying sale occurred between KPB and its customer, KPB’s customer served as the importer of record for those entries. Where KPB served as the importer of record, it did not enter into any contracts for sale for exportation at the time of entry. KPB confirmed that for all of its entries in which KPB was the importer of record, it imported the merchandise for 
6 storage at a third-party warehouse until post-entry sales occurred. Thus, there are no transact