Lead crystal ornament; payment for mold; apportionment of payment; NY I81694; HRL 546771

HQ 548196 December 13, 2002 RR:IT:VA 548196 CC CATEGORY: Valuation Ms. Michelle Kias Traffic Administrator Princess House, Inc. 470 Myles Standish Blvd. Taunton, MA 02780 RE: Lead crystal ornament; payment for mold; apportionment of payment; NY I81694; HRL 546771 Dear Ms. Kias: This is in response to your letter of May 14, 2002, to the National Commodity Specialist Division in New York, NY, requesting a ruling concerning the classification and appraisement of a lead crystal item. The National Commodity Specialist Division issued a classification ruling, NY I81694, dated August 20, 2002, and forwarded your request concerning the appraisement of the item, which we received on September 18, 2002. FACTS: The subject article, which is from the Czech Republic and is identified as item number 6534, is a lead crystal heart ornament, which includes a textile tassel and pouch. In NY I81694, the subject article was classified under subheading 7013.91.2000 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for glassware of a kind used for table, …office, indoor decoration or similar purposes…other glassware: of lead crystal: valued over $1 but not over $3 each. In your letter, you requested appraisement of the subject article. You state that you pay the supplier a set amount for each article and a tooling/mold charge. You anticipate purchasing 10,000 units from the supplier. Specifically, you ask whether you should pay duty on the tooling charges on the first shipment imported or should it be prorated over all shipments. ISSUES: Whether payment from the buyer to the supplier of the mold cost is part of the price actually paid or payable pursuant to 19 U.S.C. § 1401a(b)(4). If so, what is the proper method for apportioning this payment. LAW AND ANALYSIS: Imported merchandise is appraised in accordance with section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA: 19 U.S.C. § 1401a), and the preferred method of appraisement is transaction valuation. Transaction value is the “price actually paid or payable for merchandise when sold for exportation to the United States,” plus five statutorily enumerated additions. The term “price actually paid or payable” is defined as the “total payment (whether direct or indirect…) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller.” In Headquarters Ruling Letter (HRL) 546771, dated March 27, 1998, we ruled on the appraisement of a lead crystal item classified under subheading 7013.91, HTSUS. That ruling contained the same issues present in this ruling. We found in HRL 546771 that based on the meaning of the term “price actually paid or payable,” as found in Generra Sportswear Company v. United States, 905 F.2d 377 (Fed. Cir. 1990), there is a rebuttable presumption that all payments made by a buyer to a seller, or a party related to a seller, are part of the price actually paid or payable. Since the buyer paid the seller for the cost of the mold, there was a rebuttable presumption that the payment was part of the price actually paid or payable for the imported merchandise. Concerning the issue of apportionment, HRL 546771 stated that the issue was addressed in Chrysler Corporation v. United States, 17 CIT 1049 (1993). In Chrysler, the court found that for tooling expenses the costs should be apportioned over the value of the total number of items intended to be produced based on the intent of the parties and the evidence presented. Therefore, in application of Chrysler, we found in HRL 546771 that the cost of the mold should be apportioned over the number of items intended to be produced. The merchandise you import and the issues you raise are similar to those of HRL 546771. Based on that ruling, the mold cost paid by the buyer to the supplier is part of the price actually paid or payable and should be apportioned over the value of the total number of items intended to be produced. For a more complete discussion of the issues you raise, we are enclosing a copy of HRL 546771. Finally, based on the information you provided, this decision on the apportionment of the mold charges does not change the classification of the subject merchandise found in NY I81694. HOLDING: Payment from the buyer to the supplier for the mold cost is part of the price actually paid or payable pursuant to19 U.S.C. § 1401a(b)(4). The mold cost should be apportioned over the value of the total number of items intended to be produced. Sincerely, Virginia L. Brown Chief, Value Branch Enclosure