Dutiability of $5 Customs fee for the processing of commercial trucks arriving in the U.S.

HQ 544215 August 11, 1988 CLA-2 CO:R:C:V 544215 CW CATEGORY: Valuation Mr. William C. Cain Cain Customs Brokers, Inc. Progreso International Bridge P.O. Box 10 Progreso, Texas 78579 RE: Dutiability of $5 Customs fee for the processing of commercial trucks arriving in the U.S. Dear Mr. Cain: This is in response to your letter of June 30, 1988, in which you request a ruling concerning the dutiability of the $5 fee payable to the Customs Service for services provided in connection with the arrival of a commercial truck. FACTS: You state that you represent several growers of fresh okra in Mexico who have entered into contracts with U.S. freezing plants for the purchase of okra on a fixed price per pound basis. The contracts provide that for the growers to receive the purchase price, they must deliver the okra to the purchasers' facilities in the U.S. You advise that in delivering the okra to the U.S. purchasers, the growers are required to pay the $5 Customs processing fee upon the arrival of each truck at the U.S. port of entry. Under these circumstances, you maintain that the $5 fee should be deductible from the purchase price as a non- dutiable charge in determining the appraised value of the imported okra. ISSUE: Whether the $5 Customs fee collected upon arrival of a commercial truck containing fresh okra from Mexico is included in the appraised value of the imported okra where the terms of sale are CIF U.S. purchaser's plant. - 2 - LAW AND ANALYSIS: Section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (Pub. L. 99-272) establishes a schedule of fees chargeable to users of various services provided by the Customs Service in connection with the processing of persons, aircraft, vehicles, vessels, and merchandise arriving in the U.S. Section 13031(a)(2) of Pub L. 99-272 specifically authorizes Customs to collect $5 upon the arrival of a commercial truck at a U.S. port of entry. Section 24.22(c)(2), Customs Regulations (19 CFR 24.22(c)(2)), states that the $5 fee shall be collected from the driver or other person in charge of the commercial truck. We are assuming for purposes of this ruling that the imported okra will be appraised on the basis of transaction value, the primary basis of appraisement under the valuation statute, section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA). Transaction value is defined in section 402(b) of the TAA as "the price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts" for certain specified items if they are not already included in that price. The words "price actually paid or payable" are defined in section 402(b)(4)(A) of the TAA as: ...the total payment (whether direct or indirect, and exclusive of any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. In a ruling dated November 10, 1986 (543842), this office addressed the issue of the dutiability of the merchandise processing user fee, which is an ad valorem fee established by the Omnibus Budget Reconciliation Act of 1986 (Pub. L. 99-509). We concluded that where the overall transaction price between the buyer and foreign seller for imported merchandise includes the user fee, the fee would not be considered to be part of "the price actually paid or payable for the merchandise." Therefore, we held that, under these circumstances, the fee would not be dutiable as part of transaction value. Similarly, we believe that in a situation in which the overall purchase price for imported merchandise includes the $5 Customs fee payable upon the arrival of a commercial truck (e.g., - 3 - a CIF U.S. delivered price), the fee would not form part of the "price actually paid or payable," as those words are defined in section 402(b)(4)(A) of the TAA. HOLDING: Under circumstances in which the terms of sale between a Mexican grower and a U.S. purchaser for imported okra require that the grower incur all costs necessary to deliver the produce to the U.S. purchaser's plant (a CIF U.S. delivered price), then the $5 commercial truck processing fee paid by the grower in connection with the imported okra would not be dutiable as part of transaction value. Sincerely, John Durant Director, Commercial Rulings Division