CIT Rules in Favor of Importer in Not Paying Royalty Fees as Part of Value of Goods

Date: January 14, 2020

The Court of International Trade (CIT) ruled on Dec. 17 in favor of an importer of Giorgio Armani apparel over whether they were required under US customs laws to pay, “advertising fees and trademark royalty fees as part of the value of the goods declared to [U.S. Customs and Border Protection] CBP,” as reported by Arent Fox.

“In this case, Trimil SA v. United States, the importer, Trimil, successfully challenged CBP’s inclusion of certain advertising fees and trademark royalty fees paid to Armani and its subsidiary in the calculation of the transaction value, the value upon which duties are determined, of the apparel,” Arent Fox said. “Transaction value is defined as the price actually paid or payable for the merchandise. One of the statutorily permitted inclusions to the price actually paid or payable is a royalty or license fee related to the goods paid by the buyer, but only if that fee (1) is a condition of sale for the imported merchandise, and (2) benefits the seller.”

In the case, the court held that the fees are not part of the good’s transaction value. Their decision was based on the fact that the advertising fee in question was a “post-import transaction” and that the court found no evidence to suggest that the trademark royalty fee needed to be paid in order to import the goods.

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