(a) Calculating the value of materials. Except as provided in §10.1024 of this subpart, for purposes of calculating the regional value content of a good under General Note 33 HTSUS, and for purposes of applying the de minimis (see §10.1018 of this subpart) provisions of General Note 33, HTSUS, the value of a material is:
(1) In the case of a material imported by the producer of the good, the adjusted value of the material;
(2) In the case of a material acquired by the producer in the territory where the good is produced, the value, determined in accordance with Articles 1 through 8, Article 15, and the corresponding interpretative notes of the Customs Valuation Agreement, of the material, i.e., in the same manner as for imported goods, with reasonable modifications to the provisions of the Customs Valuation Agreement as may be required due to the absence of an importation by the producer (including, but not limited to, treating a domestic purchase by the producer as if it were a sale for export to the country of importation); or
(3) In the case of a self-produced material, the sum of:
(i) All the costs incurred in the production of the material, including general expenses; and
(ii) An amount for profit equivalent to the profit added in the normal course of trade.
(b) Examples. The following examples illustrate application of the principles set forth in paragraph (a)(2) of this section:
(c) Permissible additions to, and deductions from, the value of materials—(1) Additions to originating materials. For originating materials, the following expenses, if not included under paragraph (a) of this section, may be added to the value of the originating material:
(i) The costs of freight (“cost of freight” includes the costs of all types of freight, including in-land freight incurred within a Party's territory, regardless of the mode of transportation), insurance, packing, and all other costs incurred in transporting the material within a Party's territory or between the Parties to the location of the producer;
(ii) Duties, taxes, and customs brokerage fees on the material paid in the territory of one or both of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable; and
(iii) The cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or byproducts.
(2) Deductions from non-originating materials. For non-originating materials, if included under paragraph (a) of this section, the following expenses may be deducted from the value of the non-originating material:
(i) The costs of freight (“cost of freight” includes the costs of all types of freight, including in-land freight incurred within a Party's territory, regardless of the mode of transportation), insurance, packing, and all other costs incurred in transporting the material within a Party's territory or between the territories of the Parties to the location of the producer;
(ii) Duties, taxes, and customs brokerage fees on the material paid in the territory of one or both of the Parties, other than duties and taxes that are waived, refunded, refundable, or otherwise recoverable, including credit against duty or tax paid or payable;
(iii) The cost of waste and spoilage resulting from the use of the material in the production of the good, less the value of renewable scrap or by-products; and
(iv) The cost of originating materials used in the production of the non-originating material in the territory of a Party.
(d) Accounting method. Any cost or value referenced in General Note 33, HTSUS, and this subpart, must be recorded and maintained in accordance with the Generally Accepted Accounting Principles applicable in the territory of the Party in which the good is produced.