Two invoices for the same cartons show different values, and the difference is not a discount. One includes the printing plates, the die and the freight to the port; the other shows only the cartons. Both were prepared by people who thought they were right. Customs valuation is a defined method rather than a negotiation, and the items that must be added to a price are where the surprises sit.
What the primary method requires. Duty is normally assessed on the transaction value: the price actually paid or payable for the goods, adjusted for specified additions. The starting point is the commercial invoice, but the invoice is not the end of the calculation. If the buyer paid for something that contributed to the imported goods and it is not on the invoice, the value is incomplete.
Which costs must be added. Tooling paid by the buyer and supplied free to the factory, such as dies, plates and moulds; assists in the form of artwork, design or development provided free of charge; commissions other than buying commissions; and, depending on the terms of sale, freight and insurance to the place of import. A buyer who pays for a die separately and treats it as a capital purchase may still find its value belongs in the goods.
Which costs usually do not belong. Post-import transport, duties themselves, and costs of the buyer’s own activities in the importing country. The line between a pre-import service and a post-import one decides whether a charge is dutiable, and that line follows the terms of sale. A CIF price already includes freight and insurance; an FOB price does not, and the customs value has to be built up accordingly.
Why the term of sale matters so much. Under FOB the buyer arranges freight, so the freight is a separate cost that customs may still add to the value. Under DDP the seller has paid duty, and the value declared at import has to be reconstructed rather than read off a single number. Changing incoterms without changing the valuation method is a common source of mismatch between what is declared and what is true.
Why under-declaring is a bad trade. Duty saved is small relative to the penalty when a valuation is challenged, and the challenge is not limited to one shipment: authorities can review past entries and reassess. Undervaluation also damages the importer’s own position in an insurance claim, because the declared value becomes the reference for loss. A container of cartons lost at sea is compensated against the value on record, not the value actually paid.
What records to keep. The commercial invoice, the purchase order, the tooling invoice if any, evidence of freight and insurance, and the payment records that tie them together. Consistency across these documents is what an audit looks for. Where a price change is legitimate, the record should show why: a board grade change, a quantity break, a renegotiated term.
How to handle tooling cleanly. Decide who owns the die, how it is invoiced, and whether its cost is amortised into the unit price or charged once. Each choice has a valuation consequence, and the choice should be made before the first shipment rather than reconstructed afterwards. Amortising the tool into the carton price is simpler for customs and harder to unwind if the supplier changes.
What to ask a supplier for. An invoice that itemises what the price includes, freight terms stated explicitly, and a clear statement of any charge the buyer pays separately that contributed to the goods. Suppliers who ship to several markets already format invoices this way, because their other customers’ brokers ask for the same things.
Chengtop issues carton and ondulé invoices from Wuhan with tooling and freight itemised, and quotes on the incoterm the buyer nominates so the declared value can be built correctly. Send your incoterm and the broker’s requirements and we will format the documents to match. This article is general information, not customs advice; valuation rules are applied by the importing authority.
