Guidelines for Declaring the Commercial Invoice Value when Importing Used Goods Released

Overview of Customs Valuation for Used Goods

Used goods often fall under the category of non-sale items imported free of charge. Because they are not "sold for export to Korea," the primary valuation method (Article 30 of the Customs Act, based on transaction value) cannot be applied. Consequently, the customs value must be determined sequentially using secondary methods as prescribed in Articles 31 through 35 of the Customs Act.

Legal Basis for Alternative Valuation

When the customs value cannot be established through the value of identical or similar goods (Articles 31-34) due to a lack of import records or domestic sales data, Article 35 (Reasonable Basis) and Article 7-5 of the Enforcement Rules are applied to determine a fair market value.

Valuation Methods under Enforcement Rule Article 7-5

According to the regulations, used goods can be valued based on the following criteria:

• Appraisal Value: The value determined by a professional appraisal institution according to relevant laws.
• Market Reversal Method: A value calculated by applying a price reversal rate to the domestic wholesale price.
• Depreciated Value: The customs value of a new or used item at the time of import, adjusted by deducting the reduction in value over time (depreciation).
• Other Reasonable Methods: Any other price that the Head of the Customs Office deems reasonable and appropriate.

Practical Guidance for Commercial Invoices

It is important to note that even if the goods are used and imported free of charge, the price on the Commercial Invoice (CI) cannot be indicated as zero. Even if a specific price is declared, customs authorities will verify if that amount was appropriately calculated based on valuation Methods 2 through 6.

Key recommendations for importers include:

• Price Justification: Ensure you have a clear logical basis for the price indicated on the invoice.
• Market Comparison: Research whether there are import prices for identical or similar goods currently available in the market.
• Documentation: If no market comparison exists, use the calculation methods outlined in the Enforcement Rules. Maintaining a detailed record of these calculations will provide a sufficient explanation during any potential customs audits or review processes.