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CBP to Cease Average Price Valuation Method for Cut Flowers at Port of Miami

Friday, November 18, 2011
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection is revoking a treatment relating to the appraisement of cut flowers entering the U.S. under consignment. This change will be effective as of Jan. 17, 2012.

When the Andean Trade Preference Act expired Feb. 12, 2011, cut flowers from ATPA beneficiary countries became dutiable. In connection with this change, CBP states, representatives of a flower association discussed with Port of Miami officials the method of valuation for flowers entered under consignment. Under this method, flowers are valued based on an average of the prices of flowers from the previous four weeks (per flower and grade) of imported flowers, less a percentage for gross margin and international transportation. This average price is utilized only by participating floral association members.

However, CBP states, this method is not in accord with the valuation statute (19 USC 1401a). Under this law the preferred method of appraisement of imported goods is transaction value. If there is no bona fide sale, as in the case of merchandise imported under consignment, appraisement must be based on another of the methods specified in the law, taken in sequential order. The next method is transaction value of identical or similar merchandise, and CBP states that consignment entries of cut flowers imported through the port of Miami should be appraised based on this method to the extent possible.

If there are no entries of identical or similar flowers, the deductive value method is applied, under which merchandise is appraised on the basis of the price at which it is sold in the U.S. in its condition as imported. CBP states that because the merchandise concerned in deductive value refers not only to the actual imported merchandise but also to identical or similar merchandise, cut flowers imported under consignment may be appraised either by the transaction value of identical or similar merchandise or the deductive value method. It is unlikely that the third option, computed value, would be selected before deductive value, but if the importer has the necessary information it may choose to do so.

Because these three valuation methods are available, CBP “see[s] no reason to reach 19 U.S.C. § 1401a(f), the fallback method,” which appears to be the method being used for consignment entries by certain cut flower importers through the port of Miami. This method uses an averaging of values, which CBP states “clearly conflicts” with the “clear desire on the part of the drafters of the statute that the lowest value be used when more than one alternative value exists for appraisement purposes.” CBP is therefore revoking any treatment allowing the use of this methodology.

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