Understanding Bona Fide Sales in U.S. Imports

Overview

Importing goods into the United States involves more than simply shipping products across borders. One of the most important parts of the import process is determining the customs value of merchandise. U.S. Customs and Border Protection (CBP) uses the concept of bona fide sales and sales for exportation to the United States to determine whether the transaction value method can be used. Below are answers to some common questions about these requirements.

What is a bona fide sale?

A bona fide sale is a legitimate transaction where ownership of goods is transferred from a seller to a buyer in exchange for payment. The buyer must assume ownership rights, such as taking on the risk of loss and paying for the merchandise through commercially accepted methods like bank transfers or checks. Transactions involving gifts, samples, consigned goods, leased items, or loans are generally not considered bona fide sales.

Why is a bona fide sale important?

CBP's preferred method for determining customs value is transaction value, which is based on the price actually paid or payable for merchandise sold for export to the United States. However, transaction value can only be used if there is both a bona fide sale, and a sale specifically for exportation to the United States. If either requirement is not met, CBP must use another valuation method.

How does CBP determine whether a sale is bona fide?

There is no single factor that determines whether a sale is bona fide. Instead, CBP reviews the entire transaction to determine whether the parties are acting as an independent buyer and seller.

Some factors include:

• Whether ownership and risk of loss transferred to the buyer.

• Whether payment was made specifically for the imported merchandise.

• Whether the buyer had the freedom to set resale prices and choose customers.

• Whether contracts, invoices, purchase orders, bills of lading, and proof of payment consistently support the transaction.

CBP evaluates all available evidence rather than relying on one document or label.

What role do shipping terms play?

Shipping terms, such as FOB (Free on Board) or CIF (Cost, Insurance, and Freight), help indicate when ownership and the risk of loss transfer between parties. While these terms are important, CBP considers them alongside contracts, invoices, and other documentation to determine whether a bona fide sale occurred.

What is a sale for exportation to the United States?

After establishing that a bona fide sale occurred, CBP must also determine whether the merchandise was specifically intended for export to the United States. The goods must be clearly destined for the U.S. at the time of sale not simply redirected there later in the transaction.

Evidence may include:

• Products manufactured to U.S. specifications.

• U.S. labels, logos, or barcodes.

• Contracts showing the United States as the intended destination.

• Direct shipment to the United States.

How are multi-tiered transactions handled?

Some imports involve multiple parties, such as a manufacturer, a middleman, and a U.S. importer. In these situations, CBP generally assumes the customs value is based on the price paid by the U.S. importer.

However, an importer may be able to use the manufacturer's lower selling price if they can prove:

• The manufacturer-to-middleman sale was a bona fide sale.

• The sale occurred at arm's length (without price manipulation).

• The merchandise was clearly destined for export to the United States.

This is commonly referred to as the first-sale rule, established through the Nissho Iwai court decision.

What documentation should importers keep?

To support a transaction value claim, importers should maintain a complete paper trail, including:

• Sales contracts

• Purchase orders

• Commercial invoices

• Bills of lading

• Proof of payment

• Shipping documents

• Correspondence between parties

The documentation should consistently show the parties involved, pricing, dates, merchandise, and the flow of the transaction.

What does "reasonable care" mean for importers?

Importers are responsible for exercising reasonable care when declaring the value of imported goods. This means ensuring all supporting documentation is accurate, complete, and available if requested by CBP. Failure to provide sufficient evidence may result in CBP rejecting the declared transaction value, using a different valuation method, or imposing penalties.

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