Regulatory Examination
Post-import reviews verify that the price paid for imported textile goods matches the value declared to government authorities for duty assessment. A customs valuation audit typically focuses on the relationship between the buyer and the seller to ensure that no hidden discounts were excluded from the taxable total. Authorities use these inspections to prevent the loss of revenue caused by under-invoicing or misdeclared shipping costs.
Verification Process
Inspecting officers compare purchase orders against bank transfer records to confirm that the transaction value is accurate. Reviewers examine commercial contracts during a customs valuation audit to check for clauses regarding research fees or design costs. Verification often extends to checking if the mill provided free raw materials to the factory.
Financial Liability
Discrepancies found during the review period result in back taxes and high interest charges for the importer of record. Because a customs valuation audit covers several years of transactions, the total liability can exceed the value of a single shipment. Companies maintain detailed financial records to prove that their declared prices align with the fair market value of the apparel.
Audit Boundary
Inspections stop at the point where the transaction value is proven to be an arm’s length deal.
