CUSTOMS AND INTERNATIONAL TRADE

ASSISTS

VALUE OF ASSISTS INCREASED

In a ruling modification issued on December 20, 1995, U.S. Customs announced that assists will be valued differently in the future. Previously if waste or scrap resulted during the manufacturing process, its value was not part of the dutiable value for Customs purposes. Effective February 20, 1996, waste and scrap which result during manufacturing become part of the value of the assist on the theory that they are consumed during production. In its ruling, Customs made clear that if a defect is identified prior to commencement of production, its value is not included. If the waste or scrap is sold and the importer receives some of the sale proceeds, the value of the assist is reduced accordingly. If the resulting scrap is used to produce another article, the value of the assist is apportioned appropriately. But if the defect is discovered during production which leads to the scrap or waste, its value is included.

An assist arises where the importer provides something to his supplier free of charge or at a reduced price which is used in production. The value of the assist includes the freight to transport it to the manufacturing site and the attendant international insurance premium. For most companies the result of this change in position by Customs will mean doing a better job of documenting when and how defects are discovered.