Customs valuation and transaction value under 19 USC 1401a: the hierarchy, the additions, and the related-party tests

Valuation and duty assessment is one of the exam’s steadiest point sources, because appraisement runs on a fixed order of preference and a short, closed list of additions. Get the hierarchy and the five additions right and you answer most of the category correctly. The whole scheme lives in the valuation statute, 19 USC 1401a, and its implementing regulation, 19 CFR Part 152. This guide walks the hierarchy, then transaction value in detail, then the related-party tests, and ends with a worked appraisement. For where valuation sits among the other regulations, see the corpus map, and the glossary defines valuation, entry, and liquidation.

What is the customs valuation hierarchy?

Appraisement follows a strict order of preference set by 19 USC 1401a(a). You use the first method that can be applied and you move down only when the method above it cannot be determined. The order is:

1. Transaction value of the imported merchandise (1401a(b)).
2. Transaction value of identical merchandise (1401a(c)).
3. Transaction value of similar merchandise (1401a(c)).
4. Deductive value: the resale price in the United States, less commissions, transport, duties, and other deductible costs (1401a(d)).
5. Computed value: the sum of materials and processing, profit and general expense, and packing (1401a(e)).
6. Fallback (derived) value: a value determined by the earlier methods applied with reasonable flexibility, when none can otherwise be used (1401a(f)).

Two wrinkles the exam likes to test. First, the order is fixed except that an importer may, by written request, ask CBP to apply computed value before deductive value, reversing methods 4 and 5. Second, the fallback method is not a free-for-all: it reapplies methods 1 through 5 with reasonable flexibility, it does not invent a new basis. The great majority of entries are appraised under method 1, transaction value, so that is where the exam concentrates.

What is transaction value?

Transaction value is the price actually paid or payable for the merchandise when sold for export to the United States, plus five statutory additions, defined in 19 USC 1401a(b)(1) and 19 CFR 152.103(b). The price actually paid or payable is the total payment the buyer makes to, or for the benefit of, the seller, considered without regard to how the price was derived (152.103(a)).

The five additions, added only to the extent not already included in the price and only when based on sufficient information, are:

• (A) Packing costs incurred by the buyer.
• (B) Any selling commission incurred by the buyer. A buying commission, paid by the buyer to its own agent, is not dutiable and is not added. That buying-versus-selling distinction is a classic exam trap.
• (C) The value of any assist, apportioned as appropriate to the imported merchandise.
• (D) Any royalty or license fee the buyer is required to pay, directly or indirectly, as a condition of the sale.
• (E) The proceeds of any subsequent resale, disposal, or use of the merchandise that accrue to the seller.

What is excluded from the price actually paid or payable?

Just as important as the additions is the closed list of amounts that are not part of transaction value, because separately identified costs on an invoice are frequently the wrong answer to add. Under 19 USC 1401a(b)(3) and (b)(4), the price actually paid or payable does not include, if identified separately:

• The cost of international freight, insurance, and related services incident to transporting the goods from the country of export to the place of importation. Customs value is essentially an FOB, not a CIF, value.
• Any reasonable cost for construction, erection, assembly, maintenance, or technical assistance provided with respect to the merchandise after importation, and the cost of transporting the merchandise after importation.
• The customs duties and other federal taxes currently payable on the merchandise by reason of its importation.

If those costs are rolled into a single delivered price and not broken out, they stay in the value. The exclusion depends on the amount being separately identified.

What is an assist?

An assist, defined in 19 USC 1401a(h)(1), is something the buyer supplies to the seller free of charge or at reduced cost, for use in producing or selling the merchandise for export. There are four categories:

1. Materials, components, parts, and items incorporated into the imported merchandise.
2. Tools, dies, molds, and similar items used in producing the merchandise.
3. Merchandise consumed in producing the imported merchandise.
4. Engineering, development, artwork, design work, and plans and sketches undertaken outside the United States and necessary for production.

The fourth category carries its own trap: engineering or design work done inside the United States is not an assist and is not added. The value of an assist is apportioned across the merchandise it helps produce in a reasonable manner appropriate to the circumstances (152.103(d)), so a mold used across several shipments is spread over them, not loaded entirely onto the first entry.

When can transaction value not be used? (the limitations)

Transaction value is unusable if any of four conditions in 19 USC 1401a(b)(2)(A) applies:

• There are restrictions on the buyer’s disposition or use of the merchandise, other than restrictions imposed by law, geographic resale limits, or restrictions that do not substantially affect value.
• The sale or price is subject to a condition or consideration whose value cannot be determined.
• Proceeds of a later resale accrue to the seller and cannot be added under (b)(1)(E) for lack of sufficient information.
• The buyer and seller are related, and the relationship influenced the price, unless a test below is met.

How do the related-party tests work?

A sale between related parties does not automatically kill transaction value. Under 19 USC 1401a(b)(2)(B), the value is still acceptable if either test is satisfied:

• Circumstances of sale: an examination of how the price was set shows the relationship did not influence the price actually paid or payable (for example, the price was settled the way the seller prices to unrelated buyers, or it recovers all costs plus a normal profit).
• Test values: the transaction value closely approximates a previously accepted test value for identical or similar merchandise: their transaction value in sales to unrelated buyers, or their deductive or computed value.

Meet either test and the related-party sale is appraised at transaction value like any other. Fail both and you move down the hierarchy to identical or similar merchandise.

A worked transaction value

A US buyer purchases 1,000 units at an ex-factory price of $50,000. The commercial documents also show:

Item	Amount	Treatment
Ex-factory price actually paid or payable	$50,000	Base
Packing costs paid by the buyer	+$500	Add, 1401a(b)(1)(A)
Selling commission the buyer pays to the seller’s agent	+$2,000	Add, (b)(1)(B)
Steel mold supplied free by the buyer, cost $6,000, used across 3 equal shipments	+$2,000	Add apportioned assist, (b)(1)(C)
Royalty the buyer must pay as a condition of sale	+$1,500	Add, (b)(1)(D)
International ocean freight and insurance	$3,000	Excluded, (b)(4)(A)
Buying commission to the buyer’s own agent	$1,000	Not dutiable, not added

Transaction value is $50,000 + $500 + $2,000 + $2,000 + $1,500 = $56,000. The freight and insurance are excluded because they are separately identified and relate to transport after export, and the buying commission is not a selling commission, so neither belongs in the value. That $56,000 is the appraised value the duty rate is then applied to; try this same worked example in the transaction value and duty calculator, and see liquidation and duty relief for how CBP makes the duty on that value final.

Practicing valuation for the exam

Valuation questions reward two habits: knowing the hierarchy cold so you can name the next method down, and running the additions as a checklist while spotting the excluded items planted in the invoice. Tab Part 152 and 19 USC 1401a, drill the lookups in the navigation trainer, place valuation among entry, classification, and drawback in the corpus map, and test yourself with the free practice test. Once the value is fixed, liquidation is how CBP makes the duty on that value final. To practice the additions and exclusions checklist directly, run your own numbers through the transaction value and duty calculator, which builds the value step by step and applies a duty rate.

Sources: 19 USC 1401a (value), subsections (a) through (h), and 19 CFR Part 152, sections 152.101, 152.103, 152.104, 152.105, 152.106, and 152.107, as published on the Legal Information Institute mirror (law.cornell.edu/uscode/text/19/1401a and law.cornell.edu/cfr/text/19/152.103), cross-checked against the eCFR (ecfr.gov/current/title-19), reviewed 2026-07-24. Valuation rules and the apportionment of assists turn on facts; confirm the current text and applicable CBP guidance before relying on it.