Sec. 146.65  Classification, valuation, and liquidation.

    (a) Classification--(1) Privileged foreign merchandise. Privileged 
foreign merchandise provided for in this section will be subject to 
tariff classification according to its character, condition and 
quantity, at the rate of duty and tax in force on the date of filing, in 
complete and proper form, the application for privileged status. 
Classification of merchandise subject to a tariff-rate import quota will 
be made only at

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the higher non-quota duty rate in effect on the date privileged foreign 
status was granted. Notwithstanding the grant of privileged status, 
Customs may correct any misclassification of any such entered 
merchandise when it posts the bulletin notice of liquidation under 
Sec. 159.9 of this chapter.
    (2) Nonprivileged foreign merchandise. Nonprivileged foreign 
merchandise provided for in this section will be subject to tariff 
classification in accordance with its character, condition and quantity 
as constructively transferred to Customs territory at the time the entry 
or entry summary is filed with Customs.
    (b) Valuation--(1) Total zone value. The total zone value of 
merchandise provided for in this section will be determined in 
accordance with the principles of valuation contained in sections 402 
and 500 of the Tariff Act of 1930, as amended by the Trade Agreements 
Act of 1979 (19 U.S.C. 1401a, 1500). The total zone value shall be that 
price actually paid or payable to the zone seller in the transaction 
that caused the merchandise to be transferred from the zone. Where there 
is no price paid or payable, the total zone value shall be the cost of 
all materials and zone processing costs related to the merchandise 
transferred from the zone.
    (2) Dutiable value. The dutiable value of merchandise provided for 
in this section shall be the price actually paid or payable for the 
merchandise in the transaction that caused the merchandise to be 
admitted into the zone, plus the statutory additions contained in 
section 402(b)(1) of the Tariff Act of 1930, as amended by the Trade 
Agreements Act of 1979 (19 U.S.C. 1401a(b)(1)), less, if included, 
international shipment and insurance costs and U.S. inland freight 
costs. If there is no such price actually paid or payable, or no 
reasonable representation of that cost or of the statutory additions, 
the dutiable value may be determined by excluding from the zone value 
any included zone costs of processing or fabrication, general expenses 
and profit and the international shipment and insurance costs and U.S. 
inland freight costs related to the merchandise transferred from the 
zone. The dutiable value of recoverable waste or scrap provided for in 
Sec. 146.42(b) will be the price actually paid or payable to the zone 
seller in the transaction that caused the recoverable waste or scrap to 
be transferred from the zone.
    (3) Allowance. An allowance in the dutiable value of zone 
merchandise may be made by the port director in accordance with the 
provisions of subparts B and C of part 158 of this chapter, for damage, 
deterioration, or casualty while the merchandise is in the zone.
    (c) Liquidation; extension to update cost data. When the declared 
value or values of the merchandise are based on an estimate or 
estimates, the person making entry may request an extension of 
liquidation pending the presentation of updated or actual cost data. A 
request for an extension may be granted at the discretion of the port 
director.

[T.D. 86-16, 51 FR 5049, Feb. 11, 1986, as amended by T.D. 91-79, 56 FR 
46372, Sept. 12, 1991; T.D. 95-35, 60 FR 20632, Apr. 27, 1995]