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Origin and trade agreements

Commercial invoices for replacement and warranty items

How to invoice a free warranty replacement or a reshipped missing item, what value to declare, and the US, EU and UK reliefs that avoid or refund the duty.

Updated · 11 official sources

A free replacement still needs an invoice with a real value: send it on a pro forma invoice marked "warranty replacement, no charge", with the price the item normally sells for and the original order number. It's a new import, so duty and tax are worked out on that value, not on the nothing you charged.

Rules as of 30 October 2026.

What value goes on a replacement's invoice?#

A replacement shipped free has no sale price, so customs value it another way, starting from what the same goods sell for. US invoices for goods not sold must give the value each item would fetch in the ordinary course of trade (19 CFR 141.86(a)(6)), and the EU and the UK fall back on their secondary valuation methods.

  • In the US, the pro forma invoice states the value and what it's based on, such as knowledge of the market in the country of export or the values of earlier shipments (19 CFR 141.85).
  • In the EU, the value comes from identical goods, then similar goods, then the deductive, computed or fallback methods (Union Customs Code, Article 74).
  • In the UK, HMRC says free-of-charge goods can't normally use Method 1, so a replacement sent in a later shipment is valued under Methods 2 to 5; you can also ask HMRC to amend the customs value of the original shipment.

What should a replacement invoice say?#

A replacement invoice should let a customs officer see at once that nothing was sold and why the item is moving. Title it as a pro forma invoice, link it to the original sale, state the reason and the value for customs, and describe, classify and give the origin of the replacement exactly as you would for a sale.

A faulty item the customer sends back is a separate export with its own paperwork; keep it, because the reliefs below depend on proving where the item went.

Can you avoid paying duty twice on a replacement?#

You can sometimes avoid paying duty twice, but only through a specific relief, and each one has conditions. Most of them refund the duty paid on the faulty item once it leaves the country under customs control, or relieve duty on an item repaired or replaced free under a guarantee. Shipping a replacement doesn't trigger any of them automatically.

Relief Where What it does Main conditions
Rejected merchandise drawback US Refunds 99% of duty, taxes and fees on goods defective at import, not as ordered, or returned after retail sale Exported or destroyed under CBP supervision within 5 years of import (19 USC 1313(c); 19 CFR 190.51)
Warranty repairs, HTSUS 9802.00.40 US Duty only on the repair's value when goods repaired abroad under warranty come back The same article must come back; the repairer declares no substitution was made (19 CFR 10.8)
Repayment for defective goods EU Repays import duty on goods rejected as defective or not matching the contract Unused, taken out of the EU, claimed within one year (Union Customs Code, Articles 118 and 121)
Outward processing and standard exchange EU Total relief for goods repaired free under a guarantee; a replacement product can stand in for the repaired one Authorization; the replacement has the same 8-digit CN code, quality and technical characteristics (Articles 260 to 262)
Rejected imports UK Repays duty on goods that were defective or didn't comply with the contract Unused and unsold, re-exported or destroyed, claimed within one year, applied for 48 hours before packing
Outward processing UK No duty on authorized goods repaired or replaced free of charge under a guarantee Warranty evidence with the import declaration; VAT still due on a replacement's full value

Under 9802.00.40, the repair's value is what the importer paid or, if nothing was charged, its invoiced value (HTSUS chapter 98, U.S. note 3 to subchapter II); a substitute article doesn't qualify.

Worked example#

You sell a $400 espresso grinder to a customer in Denver and ship it DDP, with you as importer of record. Say the entry paid $60 in duty, taxes and fees. The grinder arrives faulty, you send a replacement, and the customer sends the faulty unit back.

Step Amount
Original entry $60.00 paid
Replacement entry, valued at its $400 selling price $60.00 paid again
Rejected merchandise drawback on the faulty unit, exported under CBP supervision: 99% of $60.00 $59.40 refunded
Net duty cost of the replacement $0.60

Drawback is claimed on its own drawback entry, so it pays best when faulty units are batched into one claim. See US returns and refunds for other refund routes, the commercial invoices guide for invoice fields, and the commercial invoice generator to make the pro forma.

Common questions#

Do I pay duty again on a replacement item?#

Usually yes: the replacement is a new import valued at what it normally sells for. The reliefs above can refund the duty paid on the faulty item.

Can I write "no commercial value" on a replacement?#

No. US rules require the value that goods not sold would fetch (19 CFR 141.86(a)(6)). Mark it "no charge" and give the value for customs purposes.

What if the original parcel was short an item?#

HMRC says no duty is due on goods shown to have been short-shipped, with three years to claim it back. Send the missing item on a pro forma invoice that names the original order.

Sources#