Ruling Request Regarding Depreciation of Assists

HQ 544256 November 15, 1988 CLA-2 CO:R:C:V 544256 EK CATEGORY: Valuation Mark R. Kopp Sr. Customs/Freight Admin. 233 Broadway New York, New York 10279-0099 RE: Ruling Request Regarding Depreciation of Assists Dear Sir: This is in response to your letter of October 19, 1988, requesting a ruling as to the proper valuation of certain assists which your company (importer) is providing to the seller of imported merchandise. FACTS: The importer is considering importing leather shoe uppers from the People's Republic of China. The imported uppers will be lasted and soled by one of six domestic companies. The importer will be providing to the Chinese factory, free of charge, manufacturing machinery. The machinery is 12-15 years old and has been fully depreciated by the importer in accordance with generally accepted accounting principles. ISSUE: What is the proper valuation of the machinery sent abroad, free of charge, to the seller? LAW AND ANALYSIS: As you correctly indicate, the machinery is con- sidered an assist pursuant to section 402(h) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(h)). Regarding the value of the assist, section 152.103(d)(1) and (2), Customs Regulations (19 CFR 152.103(d)(1) and (2)), states that, depending upon - 2 - the type of assist, the value is either the cost of its acquisition or the cost of its production. In either case, the value of the assist includes transportation costs to the place of production. It is possible to depreciate an assist to a zero value. In Headquarters Ruling No. 543233 dated August 9, 1984, the books and records of the importer reflected a zero value for a mold in accordance with generally accepted accounting principles. In that case, we held that the value of the assist was limited to the costs and expenses incurred in transporting the assist to the place of production. In this case, if in accordance with generally accepted accounting principles, the value of the assist has been fully depreciated according to the importer's records, then the value of the assist will be equal to the cost of transporting the assist to the place of production. Sincerely, John Durant, Director, Commercial Rulings Division