Significance of the U.S. retail price of imported merchandise appraised on the basis of transaction value

HQ 545737 August 11, 1994 VAL CO:R:C:V 545737 ILK CATEGORY: Valuation M. Barry Levy, Esq. Sharretts, Paley, Carter & Blauvelt, P.C. 67 Broad St. New York, NY 10004 RE: Significance of the U.S. retail price of imported merchandise appraised on the basis of transaction value Dear Mr. Levy: This is in response to your request for a ruling, dated August 3, 1994, on behalf of your client Panalpina, Inc. for its client Ermenegildo Zegna Corp. (hereinafter referred to as "the importer"). FACTS: The imported merchandise at issue consists of wearing apparel purchased by the importer from a related seller. The imported merchandise bears a retail price tag in an amount greater than the invoice price to the importer. You cite as an example a men's suit bearing a retail price tag showing that the suit will be sold in the U.S. for $400, while the seller's invoice to the importer, accompanying the suit is in the amount of $200.00. According to your ruling request, there are no amounts that should be added to the price actually paid or payable pursuant to 402(b)(1) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(b); TAA), no other payments (direct or indirect) other than the invoice price have been made to the seller by the importer and appraisement on the basis of transaction value is not precluded under TAA 402(b)(2)(A). You ask us to determine, whether in light of the foregoing facts, the price tag attached to the imported merchandise showing a U.S. retail price is relevant. ISSUE: Whether a price tag showing a U.S. retail price that is attached to imported merchandise is relevant in determining the transaction value of imported merchandise. LAW AND ANALYSIS: Transaction value, the preferred method of appraisement, is defined by TAA 402(b)(1) as "the price actually paid or payable for the merchandise when sold for exportation to the United States..." plus certain additions specified in 402(b)(1)(A) through (E). The term "price actually paid or payable" is defined in TAA 402(b)(4)(A) 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. According to the statute quoted above, the price actually paid or payable is the amount paid by the buyer, exclusive of certain costs, to or for the benefit of the seller. Under the facts described above, assuming that the importer is able to establish payment of the invoice price, the transaction value of the imported merchandise is the invoice price, less any charges or costs incident to international shipment of the merchandise. HOLDING: Under the facts presented, the U.S. retail price as shown on a price tag attached to the imported merchandise is not relevant to determining the transaction value of the imported merchandise. Sincerely, John Durant, Director Commercial Rulings Division