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Reporting Values for Repair

Posted By rosannatorres On January 21, 2010 @ 7:25 am In Foreign Trade Regulations | 12 Comments

By: Selina Ferguson

Picture this…you’re sitting at your computer, in the zone, ready to enter all of today’s export shipment information. You’re completing your Electronic Export Information (EEI) with no problem, just rolling right along from field to field. All of a sudden, when you’re more than half-way done, you get stumped by the Value field. Normally this wouldn’t be an issue for you, but today you are filing an item that is being re-exporting after coming into the U.S. for repair (take a breath) and you’re wondering what is the correct value to report?

Let’s look at an example. A company in California exports a machine worth $20,000 to France and files the EEI with this value upon the original export of the good. After a few months, the machine is returned to the U.S. for repair. To complete the repair, the company ended up incurring a cost of $3,000 for replacement parts and $1,200 for labor. The company also had to pay $500 for freight, insurance and other charges to get the repaired item to the port of export. The total cost to the California company for repairing the machine amounted to $4,700. Which value should you report, $20,000 for the machine or $4,700 for the cost to repair it? In this example, the total cost of $4,700 is the correct value that should be entered in the EEI when the repaired machine is exported back to France.

Calculating U.S. Repair Value  

Replacement Parts

$3,000

Labor Costs

$1,200
          Charges to Port of Export $500
Total Value to Report on EEI for Reexport $4,700

Here’s what you need to remember when exporting repaired items:

1. Report the value as the cost of parts and labor plus cost to get the good to the port of export, not the original selling price.

2. Report the Schedule B number as 9801.10.0000, not the original Schedule B number.

Reporting repairs can be found in30.29 of the FTR [1], but here’s a quick tip. Remember that we are collecting export data for statistical purposes. If you’ve already exported a good and filed the required EEI then the information for your good has already been captured. We don’t want to count that value twice so when the good is re-exported we only want to capture information for values that have not already been entered in the previous EEI. In the case of repairs, this value would be the cost of parts and labor for repairing the good plus freight, insurance and other charges to get the good to the port of export.

 

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12 Comments To "Reporting Values for Repair"

#1 Comment By “Cricket” Diane C Phillips On January 21, 2010 @ 8:44 pm

very nifty – easy to understand, easy to follow, makes sense – not like a government sort of blog at all, very nifty.
Thanks so much! Good, really good!
- cricketdiane
P.S. I especially like the explanation of value with its clearly described word problem. That does make sense now.

#2 Comment By Lee Weil On January 22, 2010 @ 12:57 pm

To all of the FTD bloggers. As I posted before, I have been using the AES system since the beginning of time. Before that I used a computer generated SED, and before that, I typed everything on a typewriter with carbon paper. I had to learn everything by trial and error and was self taught as far as regulations and tariff numbers go. I think I did a pretty good job. However, I am reading all of these new blogs and a bunch of what is getting posted is stuff I had to find out the hard way. It is comforting to know I was doing it correctly. I could have used this many, many years ago. Thanks to the FTD bloggers for helping the new people come online and giving us all of their tribal knowledge. Exporting is a viable way for the USA to get out of this current economic downturn, and I applaud these bloggers for not being so tied up in governmental red tape and sharing their tricks and secrets. Keep the info coming.
Thanks

#3 Comment By Jim Dickeson, Import Export Geeks On January 28, 2010 @ 10:13 am

Selina,
I agree, that the regs say to do just what you say in your post. However, I have a comment on your statement, “We don’t want to count that value twice…”, presumably for overall balance of trade issues. But doesn’t it get counted coming back into the U.S. when the Customs entry is filed? And aren’t the values from the customs entries relayed to Census?
Customs prescribes various methods of valuation on goods being returned for repair. Very generally, it settles around a cost of materials when new, or sales price with adjustments made for depreciation, damage, or wear and tear.
Following both FTR and Customs regulations:
- Original export to France: $20,000. Net trade balance: $20,000.
- Return to U.S. for repair: -$15,000 (est). Net trade balance: $5,000.
- Export after repair: $4,700. Net trade balance: $9,700.
What’s wrong with this picture? Customs and FTR regs are not working in concert, so your overall trade statistics are off. It’s certainly not getting counted twice. But is it even acurately getting counted once?

#4 Comment By Craig On January 28, 2010 @ 11:45 am

Question, if you are returning IITs back to another country what value should you be reporting? The fair market value? The purchase price? or ???? We do not own these and simply returning back to the originator.
Thanks

#5 Comment By ANN On February 5, 2010 @ 12:04 pm

We repair power supplies for many different customers.My question is if a power supply is sent here (usa)for repair from Japan, say it was made in China so it has never passed our borders what would i put down for a value. Say it original cost 500.00 usd and it cost 150.oo usd to repair. Most of our repair go out on hts# 8504406018. What would i put down for the value?

#6 Comment By Taylor On February 10, 2010 @ 11:11 am

Craig – Assuming that the foreign shipper declared on the B/L that the goods were “US Goods being returned for repair”, or that the Importer knew this to be the case and told the broker, the broker would declare them on the Import entry as such and classify in chapter 98 of the HTS (9801.xx.xxxx) . In this situation the broker would also have to obtain an affidavit per the wording in the CFR and maintain as backup paperwork in case Customs questioned the entry. Of course Customs is more concerned with payment of duty then with the reporting of trade data, my opinion. I’m going to assume that when the import entry data is shared with FTD they don’t count 9801 data in the over all trade data. Therefore as long as everyone is using the proper codes and values the overall data would be/should be correct. You can refer to the CFR, or Customs webpage, for the more information about US Goods being returned. You can also refer to the HTS online to see that this chapter only deals with US Goods being returned and that these HTN’s can only be used for Imports.
Hope these comments help… Best Regards

#7 Comment By Darla On July 8, 2010 @ 2:28 pm

Can anyone here tell me how to address the issue of returns when they cannot be repaired? Our product cannot be repaired, and must be replaced if it’s found to be defective. Can I use this same HTS number? I couldn’t obtain a definite answer from my local chamber of commerce nor a representative from AES. Any help would be deeply appreciated.

#8 Comment By Nydatapc On October 13, 2010 @ 8:53 am

Very good explanation. All make sense when you’re using the example. Thank you very much.

#9 Comment By Mike Sevigny On November 12, 2012 @ 12:17 pm

OK, good description but what if this is warranty repair. Then we are just making the item like what we shipped before and there is really no value added in the sense that we declared the full value when we originally shipped the item. Now we are saying a $20,000 item is that plus the $4700 repair? If out of warranty we would charge to fix the item but in inflates the acutal export value.

#10 Comment By Global Reach Daniel On November 13, 2012 @ 11:17 am

Hi Mike,

Warranty repair is treated the same as a regular repair. Thus you would classify the item being shipped with Schedule B number 9801.10.0000 and report only the repair (service charges) on the item. Based on your scenario, the item is valued at $20,000 but you would only report $4,700 to the AES.

#11 Comment By Marlene On February 27, 2013 @ 10:28 am

Re: Return to USA for repair and export back: I understand you must place the value of the repair as a line item on the export invoice. My question has to do with the value of the product itself. Example: We sell it for $2,500.00. What price should the foreign customer put on the invoice for the product for the return to USA for repair, $2,500.00? And what price should be noted for the product upon export from USA, $2,500.00? What if product is over a year old, still under warranty? Do I have to come up with a depreciation value? We are having conflict with foreign customer due to this issue. Thank you.

#12 Comment By KC On April 23, 2013 @ 9:25 am

I have product to send back to Taiwan for repair what value do I put on that.
I know how to do it when I repair somthing and send back to customer.
now I’m the customer.


Article printed from Global Reach Blog: http://globalreach.blogs.census.gov

URL to article: http://globalreach.blogs.census.gov/2010/01/21/reporting-values-for-repair/

URLs in this post:

[1] 30.29 of the FTR: http://www.census.gov/foreign-trade/regulations/regs/regulations20080602-federalregister.pdf

[2] Tweet: https://twitter.com/share