§10.206. Value content requirement.
19 C.F.R. § 10.206
General. An article may be eligible for duty-free treatment under the ATPA only if the sum of the cost or value of the materials produced in a beneficiary country or countries, plus the direct costs of processing operations performed in a beneficiary country or countries, is not less than 35 percent of the appraised value of the article at the time it is entered.
Commonwealth of Puerto Rico, U.S. Virgin Islands and CBI beneficiary countries. For purposes of determining the percentage referred to in paragraph (a) of this section, the term “beneficiary country” includes the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and any CBI beneficiary country as defined in § 10.191(b)(1) of this part. Any cost or value of materials or direct costs of processing operations attributable to the Virgin Islands or any CBI beneficiary country must be included in the article prior to its final exportation to the United States from a beneficiary country as defined in § 10.202(a).
Materials produced in the United States. For purposes of determining the percentage referred to in paragraph (a) of this section, an amount not to exceed 15 percent of the appraised value of the article at the time it is entered may be attributed to the cost or value of materials produced in the customs territory of the United States (other than the Commonwealth of Puerto Rico). The principles set forth in paragraph (d)(1) of this section shall apply in determining whether a material is “produced in the customs territory of the United States” for purposes of this paragraph.
Cost or value of materials—
“Materials produced in a beneficiary country or countries” defined. For purposes of paragraph (a) of this section, the words materials produced in a beneficiary country or countries refer to those materials incorporated in an article which are either:
Wholly the growth, product, or manufacture of a beneficiary country or two or more beneficiary countries; or
Substantially transformed in any beneficiary country or two or more beneficiary countries into a new or different article of commerce which is then used in any beneficiary country as defined in § 10.202(a) in the production or manufacture of a new or different article which is imported directly into the United States. For purposes of this paragraph (d)(1)(ii), no material shall be considered to be substantially transformed into a new or different article of commerce by virtue of having merely undergone simple (as opposed to complex or meaningful) combining or packaging operations, or mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. The examples set forth in § 10.196(a) of this part, and the principles and examples set forth in § 10.195(a)(2) of this part, shall apply for purposes of the corresponding context under paragraph (d)(1) of this section.
Questionable origin. When the origin of a material either is not ascertainable or is not satisfactorily demonstrated to the appropriate Center director, the material shall not be considered to have been grown, produced, or manufactured in a beneficiary country or in the customs territory of the United States.
Determination of cost or value of materials.
The cost or value of materials produced in a beneficiary country or countries or in the customs territory of the United States includes:
The manufacturer's actual cost for the materials;
When not included in the manufacturer's actual cost for the materials, the freight, insurance, packing, and all other costs incurred in transporting the materials to the manufacturer's plant;
The actual cost of waste or spoilage, less the value of recoverable scrap; and
Taxes and/or duties imposed on the materials by any beneficiary country or by the United States, provided they are not remitted upon exportation.
Where a material is provided to the manufacturer without charge, or at less than fair market value, its cost or value shall be determined by computing the sum of:
All expenses incurred in the growth, production, or manufacture of the material, including general expenses;
An amount for profit; and
Freight, insurance, packing, and all other costs incurred in transporting the material to the manufacturer's plant.
If the pertinent information needed to compute the cost or value of a material is not available, the appraising officer may ascertain or estimate the value thereof using all reasonable ways and means at his disposal.
Direct costs of processing operations—
Items included. For purposes of paragraph (a) of this section, the words direct costs of processing operations mean those costs either directly incurred in, or which can be reasonably allocated to, the growth, production, manufacture, or assembly of the specific merchandise under consideration. Such costs include, but are not limited to the following, to the extent that they are includable in the appraised value of the imported merchandise:
All actual labor costs involved in the growth, production, manufacture, or assembly of the specific merchandise, including fringe benefits, on-the-job training, and the cost of engineering, supervisory, quality control, and similar personnel;
Dies, molds, tooling, and depreciation on machinery and equipment which are allocable to the specific merchandise;
Research, development, design, engineering, and blueprint costs insofar as they are allocable to the specific merchandise; and
Costs of inspecting and testing the specific merchandise.
Items not included. For purposes of paragraph (a) of this section, the words “direct costs of processing operations” do not include items which are not directly attributable to the merchandise under consideration or are not costs of manufacturing the product. These include, but are not limited to:
Profit; and
General expenses of doing business which either are not allocable to the specific merchandise or are not related to the growth, production, manufacture, or assembly of the merchandise, such as administrative salaries, casualty and liability insurance, advertising, and salesmen's salaries, commissions, or expenses.
Articles wholly the growth, product, or manufacture of a beneficiary country. Any article which is wholly the growth, product, or manufacture of a beneficiary country as defined in § 10.202(a), and any article produced or manufactured in a beneficiary country as defined in § 10.202(a) exclusively from materials which are wholly the growth, product, or manufacture of a beneficiary country or countries, shall normally be presumed to meet the requirement set forth in paragraph (a) of this section.
Notes, amendments, and revision history
Source
Source: Sections 10.201 through 10.208 appear at T.D. 98-76, 63 FR 51292, Sept. 25, 1998, unless otherwise noted.
Authority
Authority: 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States (HTSUS)), 1321, 1481, 1484, 1498, 1508, 1623, 1624, 4513. Section 10.17 also issued under 19 U.S.C. 1401a, 1402; Sections 10.25 and 10.26 also issued under 19 U.S.C. 3592; Sections 10.41, 10.41a, 10.107 also issued under 19 U.S.C. 1322; Section 10.41b also issued under 19 U.S.C. 1202 (Chapter 98, Subchapter III, U.S. Note 3, HTSUS); Section 10.53 also issued under 16 U.S.C. 1521, et seq.; Section 10.59 also issued under 19 U.S.C. 1309, 1317; Sections 10.61, 10.62, 10.63, 10.64, 10.64a also issued under 19 U.S.C. 1309; Sections 10.62a, 10.65 also issued under 19 U.S.C. 1309, 1317, 1555, 1556, 1557, 1646a; § 10.62b also issued under 19 U.S.C. 1557; Sections 10.70, 10.71 also issued under 19 U.S.C. 1486; Sections 10.80, 10.81, 10.82, 10.83 also issued under 19 U.S.C. 1313 (e) and (i); Section 10.91 also issued under Pub. L. 106-476 (114 Stat. 2101), sections 1434, 1435; Section 10.121 also issued under 19 U.S.C. 2501. Sections 10.171 through 10.178a also issued under 19 U.S.C. 2461 et seq.; Section 10.183 also issued under 19 U.S.C. 1202 (General Note 6, HTSUS); Sections 10.191 through 10.199 also issued under 19 U.S.C. 2701 et seq.; Sections 10.201 through 10.207 also issued under 19 U.S.C. 3203; Sections 10.211 through 10.217 also issued under 19 U.S.C. 3721; Sections 10.221 through 10.228 and §§ 10.231 through 10.237 also issued under 19 U.S.C. 2701 et seq. Sections 10.241 through 10.248 and §§ 10.251 through 10.257 also issued under 19 U.S.C. 3203. Sections 10.401 through 10.490 also issued under Pub. L. 108-77, 117 Stat. 909 (19 U.S.C. 3805 note). Sections 10.501 through 10.570 also issued under 19 U.S.C. 1202 (General Note 25, HTSUS) and Pub. L. 108-78, 117 Stat. 948 (19 U.S.C. 3805 note). Sections 10.581 through 10.625 also issued under 19 U.S.C. 1202 (General Note 29, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 109-53, 119 Stat. 462 (19 U.S.C. 4001 note). Section 10.699 also issued under Pub. L. 109-53, 119 Stat. 462. Sections 10.701 through 10.712 also issued under 19 U.S.C. 1202 (General Note 18, HTSUS) and Pub. L. 107-43, 115 Stat. 243 (19 U.S.C. 2112 note). Sections 10.721 through 10.748 also issued under 19 U.S.C. 1202 (General Note 28, HTSUS) and Pub. L. 108-286, 118 Stat. 919 (19 U.S.C. 3805 note). Sections 10.761 through 10.789 also issued under Pub. L. 108-302, 118 Stat. 1103 (19 U.S.C. 3805 note). Sections 10.801 through 10.829 also issued under 19 U.S.C. 1202 (General Note 30, HTSUS) and Pub. L. 109-169, 119 Stat. 3581 (19 U.S.C. 3805 note). Sections 10.841 through 10.850 also issued under 19 U.S.C. 2703A. Sections 10.861 through 10.890 also issued under 19 U.S.C. 1202 (General Note 31, HTSUS) and Pub. L. 109-283, 120 Stat. 1191 (19 U.S.C. 3805 note). Sections 10.901 through 10.934 also issued under 19 U.S.C. 1202 (General Note 32, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 110-138, 121 Stat. 1455 (19 U.S.C. 3805 note). Sections 10.1001 through 10.1034 also issued under 19 U.S.C. 1202 (General Note 33, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 112-41, 125 Stat. 428 (19 U.S.C. 3805 note). Sections 10.2001 through 10.2034 also issued under 19 U.S.C. 1202 (General Note 35, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 112-43, 125 Stat. 497 (19 U.S.C. 3805 note). Sections 10.3001 through 10.3034 also issued under 19 U.S.C. 1202 (General Note 34, HTSUS), 19 U.S.C. 1520(d), and Pub. L. 112-42, 125 Stat. 462 (19 U.S.C. 3805 note).
Source
Source: 28 FR 14663, Dec. 31, 1963, unless otherwise noted.