Appraisement of Zircon from Australia; Computed Value Method

H354212
May 28, 2026
OT:RR:CTF:VS H354212 RMC
CATEGORY: Valuation Lachlan Smith Global Trade Consulting 580 Hay St. Perth, WA Australia RE: Appraisement of Zircon from Australia; Computed Value Method Dear Mr. Smith: This is in response to your correspondence of September 6, 2025, in which you request a ruling on behalf of Iluka Resources Limited (“Iluka”) on the appraisement of zircon imported from Australia. FACTS: You describe Iluka as an “Australian global critical minerals company that is one of the world’s largest producers of zircon.” Zircon is a zirconium silicate mineral found in small quantities in many rocks. It is noted for its hardness (which makes it useful as an abrasive), its high melting point of over 2500° Celsius (which leads to its use in the steel industry to line furnaces), and its corrosion resistance (resulting in use in pipes for harsh chemicals, nuclear reactor cladding, heat exchangers, and specialty alloys). In addition, Zircon is also a popular gemstone because of its availability in a variety of colors. See Geoscience Australia, Zircon, https://www.ga.gov.au/ education/minerals-energy/australian-mineral-facts/zircon (last visited May 7, 2025). In your submission, you state that Iluka will extract zircon from mines in Australia. While zircon is a generic mineral, you claim that the actual product traded is rarely uniform across mines because zircon deposits differ significantly due to different geographies, geologies, and differing ore formations. These differences produce distinct physical, chemical, and performance attributes that directly influence the marketability, industrial suitability, and price of zircon. According to the information provided, Iluka plans to export zircon to the United States. In the proposed transaction, Iluka will act as both the exporter in Australia and the nonresident importer of record in the United States. At the time of importation, the goods are not destined to be sold to any particular price to any particular U.S. customer. Iluka will retain title to the goods after importation, storing them in a warehouse in customs territory of the United States for up to 90
2 days before selling them to customers in the United States or exporting them to other customers abroad. ISSUE: What is the correct method of appraisement of the zircon imported into the United States? LAW AND ANALYSIS: Merchandise imported into the United States is appraised for customs purposes in accordance with Section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. § 1401a). The primary method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. See 19 U.S.C. § 1401a(b)(1). When transaction value cannot be applied, the appraised value is determined based on the other valuation methods in the order specified in 19 U.S.C. § 1401a(a). In order for transaction value to be used as a method of appraisement, there must be a bona fide sale between the buyer and seller. In VWP of America, Inc. v. United States, 175 F.3d 1327 (Fed. Cir. 1999), the Court of Appeals for the Federal Circuit found that the term “sold” for purposes of 19 U.S.C. § 1401a(b)(1) means a transfer of title from one party to another for consideration, (citing J.L. Wood v. United States, 62 C.C.P.A. 25, 33, C.A.D. 1139, 505 F.2d 1400, 1406 (1974)). In this case, Iluka contends that “given Iluka’s no-sale transaction structure, there is no arm’s length transaction to form the basis of transaction value.” While a “sale” may occur after importation if a U.S. buyer is eventually identified, any such sales are domestic, rather than “for exportation to the United States.” Accordingly, we agree that the goods cannot be appraised under the transaction value method. When imported merchandise cannot be appraised on the basis of transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in the following sequential order: the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with the “fallback method.” 19 U.S.C. § 1401a(f). 19 U.S.C. § 1401a(c) provides that: (1) The transaction value of identical merchandise, or of similar merchandise, is the transaction value (acceptable as the appraised value for purposes of this chapter under subsection (b) but adjusted under paragraph (2) of this subsection) of imported merchandise that is— (A) with respect to the merchandise being appraised, either identical merchandise or similar merchandise, as the case may be; and (B) exported to the United States at or about the time that the merchandise being appraised is exported to the United States.
3 (2) Transaction values determined under this subsection shall be based on sales of identical merchandise or similar merchandise, as the case may be, at the same commercial level and in substantially the same quantity as the sales of the merchandise being appraised. If no such sale is found, sales of identical merchandise or similar merchandise at either a different commercial level or in different quantities, or both, shall be used, but adjusted to take account of any such difference. Any adjustment made under this paragraph shall be based on sufficient information. If in applying this paragraph with respect to any imported merchandise, two or more transaction values for identical merchandise, or for similar merchandise, are determined, such imported merchandise shall be appraised on the basis of the lower or lowest of such values. For purposes of this method of appraisement, identical merchandise is “identical in all respects to, and produced in the same country and by the same person as, the merchandise being appraised.” Similar merchandise is “merchandise produced in the same country and by the same person as the merchandise being appraised, like the merchandise being appraised in characteristics and component material, and commercially interchangeable with the merchandise being appraised.” Here, you state that, to your knowledge, no other Australian-origin zircon is currently being imported into the United States. Moreover, even if it were, the unique qualitative and technical attributes of Iluka’s zircon mean that it is not commercially interchangeable with other zircon. Accordingly, no transaction values of “identical or similar” merchandise exist on which to base appraisement under this method. Pursuant to 19 U.S.C. § 1401a(a)(2), if the value cannot be determined on the basis of the transaction value of identical or similar merchandise, the merchandise shall be appraised on the basis of the computed value, rather than the deductive value, if the importer makes a request to that effect to the customs officer concerned. See also 19 C.F.R § 152.101(c). Here, Iluka has requested to bypass the deductive value method and proceed directly to the computed value method. 19 U.S.C. § 1401a(e) provides that: (1) The computed value of imported merchandise is the sum of— (A) the cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise; (B) an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by the producers in the country of exportation for export to the United States; (C) any assist, if its value is not included under subparagraph (A) or (B); and (D) the packing costs. (2) For purposes of paragraph (1)— (A) the cost or value of materials under paragraph (1)(A) shall not include the amount of any internal tax imposed by the country of exportation that is directly applicable to the materials or their disposition if the tax is remitted or refunded upon the exportation of the merchandise in the production of which the materials were used; and
4 (B) the amount for profit and general expenses under paragraph (1)(B) shall be based upon the producer’s profits and expenses, unless the producer’s profits and expenses are inconsistent with those usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by producers in the country of exportation for export to the United States, in which case the amount under paragraph (1)(B) shall be based on the usual profit and general expenses of such producers in such sales, as determined from sufficient information. 19 U.S.C. § 1401a(e). The Statement of Administrative Action (“SAA”), adopted by Congress with the passage of the TAA, provides that with respect to computed value: The cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise will be determined on the basis of information supplied by, or on behalf of, the producer and will be based upon the commercial accounts of the producer, if such accounts are consistent with the generally accepted accounting principles applied in the country where the goods are produced. The “amount for profit and general expenses” will be determined on the basis of information supplied by, or on behalf of, the producer and will be based upon the commercial accounts of the producer, provided that such accounts are consistent with the generally accepted accounting principles applied in the country where the goods are produced and unless the figures provided are inconsistent with those usually reflected in sales, of merchandise of the same class or kind as the imported merchandise, that are made by producers in the country of exportation for export to the United States. Statement of Administrative Action, H.R. Doc. No. 153, Pt. II, 96th Cong., 1st Sess. (1979), reprinted in Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 (1981). In Headquarters Ruling (“HQ”) H283855, dated April 17, 2026, we applied the computed value method to lumber imported from Canada. In that case, the exporter shipped rough green lumber of various widths to a wholly owned subsidiary in the United States to be manufactured into boards. After ruling out preceding methods of appraisement, and considering the importer’s request to bypass the deductive value method, we examined the importer’s proposal to apply the computed value method on the basis of the sum of the prices at which the importer purchased the two-inch cut rough green from unrelated sawmills in Canada, plus the importer’s general expenses, profit, and packing costs. We held that the importer was required to use the actual cost of the one-inch rough green lumber based on the commercial accounts of the producer, if such accounts are consistent with the generally accepted accounting principles applied in the country where the goods are produced. Here, Iluka proposes to base its computed value calculation on the actual cost or value of materials, plus amounts for profit and general expenses, any assists, and packing costs. Consistent with HQ H283855, we hold that the computed value method is appropriate, provided that the actual “cost or value of materials and the fabrication and processing of any kind employed in the production of the imported [zircon]” is based on the commercial accounts of the producer, kept in accordance with Australian generally accepted accounting principles.
5 HOLDING: The imported zircon should be appraised based on the computed value of merchandise under 19 U.S.C. § 1401a(e), provided that the importer is prepared to present CBP with documentation to support appraisement under this method. The documentation is also subject to any verification deemed necessary in accordance with 19 C.F.R. § 141.88 and 19 C.F.R. § 177.9(b)(1). Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika Brenner, Chief Valuation & Special Programs Branch