Q – We recently exported some warranty goods to South Korea. I declared the full transaction value on the commercial invoice. However, when the goods reached South Korea the customer wanted a reduced value on the invoice for importation purposes. I provided this, however I felt uncomfortable about it. As a company are we wrong to do this?

A – Yes, it’s wrong. Warranty goods are direct replacements of items and therefore should bear the original transaction value — under Valuation Method 2 Identical Price. This is more of an issue for your customer than you, in a way, as they come under the import valuation regulations and carry the burden of proof but you have assisted them in declaring a lower value to South Korean customs and therefore paying less customs duty. They should have used a customs procedure to avoid this duty not reduce the value on the customs declaration. They should have reclaimed the duty on the original import when it is scrapped or returned to you and pay it on this replacement, of course they may be keeping this along with the other item in which case two lots of customs duty is correct.

Source – Croner a Wolters Kluwer business.

For further information please contact Abigail Peake on [email protected] or 01254 356473.