Discrepancies between visaed and commercial invoices; T.D. 86-56.
Issued August 3, 1993 by U.S. Customs and Border Protection.
Tariff classification
Product description
******* ("the buyer") is in the process of launching a new line of imported clothing and accessories under a brand name that as yet has no recognition in the United States. The merchandise will be purchased through a related company ("Company X"). The price of each type of imported clothing was negotiated between the buyer and Company X prior to the latter having ordered the merchandise from a factory. The price of the imported articles was derived by the buyer by subtracting an amount for profit and expenses from the price at which the buyer determined it could sell the merchandise in the United States. Although Company X did not negotiate prices with a manufacturer before contracting to supply merchandise to the buyer, it agreed to structure the transaction in this manner in order to launch the new line. Due to the structure of this transaction, there will be a difference between the visaed invoice value and the commercial invoice value for some of the merchandise imported by the buyer. Attached to your submission as Appendix 1 is an affidavit from the buyer's import liaison manager stating that the prices reflected on the commercial invoices are the prices buyer actually pays for the imported merchandise. The affidavit also specifies the articles for which there will be a difference in price between the visaed invoice and the commercial invoice, as well as the prices the buyer will pay Company X. At the time of entry the buyer will provide Customs with Company X's purchase orders to the manufacturer and the manufacturer's invoice to Company X, both of which will reflect the same price for the merchandise as that reflected on the visaed invoice. The situation described above is due solely to the launch of the new line of merchandise. You state that once the new line is established this situation should not occur.
CBP rationale
Under T.D. 86-56, any differences or discrepancies in the information in the entry documentation presented to Customs in connection with imported merchandise raise the presumption that the documents contain false or erroneous information. T.D. 86-56 provides further that entry documentation containing erroneous price or value information will not be accepted and must be returned to the importer for correction. 20 Cust. B. & Dec. 175, 177. However, the field instructions implementing T.D. 86-56, issued by this office on May 1, 1986, state that Customs may accept an entry so long as an importer can provide an acceptable explanation for any differences in the price or value information contained in the entry documentation. You contend the discrepancy that will result between the visaed and commercial invoices submitted in connection with the buyer's merchandise are acceptable under T.D. 86-56. In support of this you have submitted an affidavit from the buyer's import manager stating that the commercial invoice price will reflect the actual price paid by the buyer for the merchandise. In addition, proof that the visaed invoice price correctly reflects the price paid by Company X to the manufacturer for the imported apparel will be supplied at the time of entry. On the basis of the information presented, and provided the documentation described above is presented at the time of entry, we agree that the differences in the invoice values will have been adequately explained in accordance with T.D. 86-56, and that consequently, the documents need not be returned for correction. A copy of this
Full text
HQ 545263 August 3, 1993 VAL CO:R:C:V 545263 CRS CATEGORY: Valuation Donald J. Unger, Esq. Michele E. McGuire, Esq. Barnes Richardson & Colburn 200 East Randolph Drive Suite 7920 Chicago, IL 60601 RE: Discrepancies between visaed and commercial invoices; T.D. 86-56. Dear Mr. Unger and Ms. McGuire: This is in reply to your letter of March 12, 1993, on behalf of ********, in which you requested a ruling regarding the acceptability of entry documentation where there are differences between the visaed and commercial invoice prices. Your request for confidential treatment of the information contained in your submission has been approved pursuant to section 177.2(b)(7), Customs Regulations (19 C.F.R. 177.2(b)(7)). FACTS: ******* ("the buyer") is in the process of launching a new line of imported clothing and accessories under a brand name that as yet has no recognition in the United States. The merchandise will be purchased through a related company ("Company X"). The price of each type of imported clothing was negotiated between the buyer and Company X prior to the latter having ordered the merchandise from a factory. The price of the imported articles was derived by the buyer by subtracting an amount for profit and expenses from the price at which the buyer determined it could sell the merchandise in the United States. Although Company X did not negotiate prices with a manufacturer before contracting to supply merchandise to the buyer, it agreed to structure the transaction in this manner in order to launch the new line. Due to the structure of this transaction, there will be a difference between the visaed invoice value and the commercial invoice value for some of the merchandise imported by the buyer. Attached to your submission as Appendix 1 is an affidavit from the buyer's import liaison manager stating that the prices reflected on the commercial invoices are the prices buyer actually pays for the imported merchandise. The affidavit also specifies the articles for which there will be a difference in price between the visaed invoice and the commercial invoice, as well as the prices the buyer will pay Company X. At the time of entry the buyer will provide Customs with Company X's purchase orders to the manufacturer and the manufacturer's invoice to Company X, both of which will reflect the same price for the merchandise as that reflected on the visaed invoice. The situation described above is due solely to the launch of the new line of merchandise. You state that once the new line is established this situation should not occur. ISSUE: The issue presented is whether the discrepancies between the visaed and commercial invoice price are acceptable under Treasury Decision 86-56. LAW AND ANALYSIS: Under T.D. 86-56, any differences or discrepancies in the information in the entry documentation presented to Customs in connection with imported merchandise raise the presumption that the documents contain false or erroneous information. T.D. 86-56 provides further that entry documentation containing erroneous price or value information will not be accepted and must be returned to the importer for correction. 20 Cust. B. & Dec. 175, 177. However, the field instructions implementing T.D. 86-56, issued by this office on May 1, 1986, state that Customs may accept an entry so long as an importer can provide an acceptable explanation for any differences in the price or value information contained in the entry documentation. You contend the discrepancy that will result between the visaed and commercial invoices submitted in connection with the buyer's merchandise are acceptable under T.D. 86-56. In support of this you have submitted an affidavit from the buyer's import manager stating that the commercial invoice price will reflect the actual price paid by the buyer for the merchandise. In addition, proof that the visaed invoice price correctly reflects the price paid by Company X to the manufacturer for the imported apparel will be supplied at the time of entry. On the basis of the information presented, and provided the documentation described above is presented at the time of entry, we agree that the differences in the invoice values will have been adequately explained in accordance with T.D. 86-56, and that consequently, the documents need not be returned for correction. A copy of this decision should be attached to the documentation presented with entries of the imported merchandise. HOLDING: The discrepancies that are expected to arise between the visaed and commercial invoices due to the launch of the buyer's new line of merchandise have been adequately explained for the purposes of T.D. 86-56. Sincerely, John Durant, Director Commercial Rulings Division
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