We are always asked whether it is necessary to file a Value Reconciliation with U.S. Customs if the product imported into the USA is duty free. The answer is Yes. Whenever the customs value declared at the time of importation into the USA is not reflecting the real value of the imported product, it is obligatory to file a Value Reconciliation so as to correct the Customs Value. This is U.S. CBP’s stated position. The main point is that it is unlawful to make a false declaration to U.S. Customs, even on a product that is duty-free. Filing an entry with an incorrect value, and not correcting it is tantamount to filing a false statement with U.S. Customs. This alone positions one for potential penalties for filing false statements with U.S. Customs.
Besides the issue of making a false declaration, there is also the aspect of potential duties on so-called duty-free products. Many duty-free products are duty-free under the concept of special programs, such as NAFTA, which make the product “conditionally free”. This means that the product is duty-free if it meets certain conditions. For example NAFTA. As you know, a product has to qualify for NAFTA in order for it to be imported duty-free. This is a “conditionally free” program. If the product is not eligible for NAFTA it would pay duty and MPF. If the product is found to be ineligible for NAFTA, payment of duties is based on the real value of the product, therefore, the real value is necessary. If you pay duty on a lower value than the correct value, it is the same as underpaying your taxes, with the same results as one faces with the IRS.
“Unconditionally free” products are those whose HTS tariff classification has a 0% duty rate as its general duty rate. These products are duty-free regardless of origin, regardless of value, regardless of quantity. But an “unconditionally free” product is duty-free but not MPF-free, so it is still a matter of revenue to the U.S. Government, so its status of “Unconditionally free” is only half-right.
The bottom line is that if you file documents for an importation into the USA, and the value shown on those documents are estimated, which means they are not the real value, you have an obligation to vile a Value Reconciliation, even if the product is duty-free.