Authored by: Jeremy J. Gustrowsky
A recent Federal Circuit decision sheds light on how U.S. Customs and Border Protection (CBP) should value imported goods when the sales process involves multiple countries and steps. The case involved Midwest-CBK, LLC, a Minnesota-based retailer that purchased merchandise from foreign suppliers, stored it in Canada, and then shipped it to U.S. customers. Midwest challenged CBP’s decision to appraise its goods using “transaction value”—the price actually paid or payable for the merchandise when sold for exportation to the United States—arguing instead that “deductive value” should apply because the sales were domestic, not for export.
The dispute revolved around two main issues: whether CBP properly extended the deadline to finalize (or “liquidate”) the value of Midwest’s imports, and whether the sales in question qualified as “for exportation to the United States” under the relevant statute. Midwest argued that CBP had all the information it needed by June 2014 and should not have extended the liquidation period. The company also claimed that, because the sales were listed as “FOB Buffalo, NY” (meaning the goods were delivered free on board at Buffalo, New York), they were domestic sales and not for export.
The Federal Circuit rejected both arguments. On the first point, the court found that CBP acted within its discretion to extend the liquidation period while it completed a complex audit of Midwest’s entries, which involved reviewing hundreds of shipments and verifying information. The court noted that internal review and verification by CBP can justify an extension, even if all requested documents have been provided by the importer.
On the second issue, the court clarified that a sale does not have to be international or occur abroad to qualify as “for exportation to the United States.” What matters is the reality of the transaction: Midwest’s U.S. customers placed orders for goods located in Canada, which were then shipped across the border. The court found that these were indeed sales for exportation, making transaction value the correct method for customs valuation. The court also dismissed Midwest’s reliance on older case law that interpreted a now-superseded statute.
This decision provides important guidance for importers and customs professionals. It confirms that CBP can extend liquidation deadlines for legitimate internal review and that the “transaction value” method applies as long as the sale results in goods being exported to the U.S.—regardless of whether the sale is technically “domestic” or “international” under contract terms.