Protest 5501-07-100541; Valuation

HQ H033861 December 12, 2008 OT-RR:CTF:VS H033861 GOB CATEGORY: Valuation U.S. Customs and Border Protection Port Director Attn.: Team 683 P.O. Box 619050 Dallas/Fort Worth, TX 75261 RE: Protest 5501-07-100541; Valuation Dear Port Director: This is in response to your memorandum of July 8, 2008, forwarding for our review the application for further review of the above-referenced protest filed on behalf of Small Miracles, Inc. Our decision follows. FACTS: The evidence of record indicates the following. The protest concerns an entry of merchandise (wearing apparel, shoes, hats, etc.) filed on July 17, 2006. The relevant parties include Small Miracles, Inc. (the “protestant”); the seller of the goods, Wong Hau Plastic Works & Trading Co., Ltd. (“Wong Hau”); and the ultimate consignee. Customs and Border Protection (“CBP”) appraised the goods based upon the amount paid by the ultimate consignee to Wong Hau, $187,000. The file contains an invoice dated June 17, 2006 in the amount of $187,000 from Wong Hau to the ultimate consignee. The protestant claims that the transaction value is the price of $93,250 paid by it to the seller, Wong Hau. It states that all of the parties are unrelated. It states in pertinent part as follows: Small Miracles contracted with Wong Hau for the purchase of the shipment for the price of $93,250.00. Small Miracles took title and ownership of the shipment and imported the products. It then sold the shipment, domestically, to its Customer, [the ultimate consignee], for the price of $187,000.00. In describing the transactions, the protestant also states: . . . [The ultimate consignee] had paid the amount it owed to Small Miracles through Wong Hau. Initially, [the ultimate consignee] sent 80 percent of the purchase price, or $149,600 to Wong Hau through HSBC Bank in Hong Kong, which had factored the transaction. HSBC remitted the $93,250 it was owed by Small Miracles to Wong Hau and forwarded the remainder of $56,300 to Small Miracles (the difference of $50 representing the charge for the bank wire transfer). The remaining 20 percent of the $187,000 total [the ultimate consignee] owed to Small Miracles was handled in a similar fashion. The protestant has submitted various documents in support of its claim. ISSUE: The issue presented is whether the payment made by the ultimate consignee to Wong Hau constitutes the price actually paid or payable for the purpose of determining the transaction value of the imported merchandise. LAW AND ANALYSIS: Initially, we note that the information in the file indicates that the protest, with application for further review, was timely filed under the statutory provision for protests. 19 U.S.C. § 1514(c)(3). Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as the "price actually paid or payable for the merchandise when sold for exportation to the United States," plus certain statutorily enumerated additions thereto. 19 U.S.C. § 1401a(b)(1). For the purpose of this ruling we assume that transaction value is the proper basis of appraisement. The term “price actually paid or payable” is defined 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 on importation in the United States) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller.” 19 U.S.C. § 1401a(b)(4)(A). Several court cases have addressed the meaning of the term "price actually paid or payable." In Generra Sportswear Co. v. United States, 905 F.2d 377, 8 Fed. Cir. (T) 132 (1990), rev’g 715 F. Supp. 1101 (1989), the court considered whether quota charges paid to the seller on behalf of the buyer were part of the price actually paid or payable for the imported goods. In reversing the decision of the lower court, the appellate court held that the term "total payment" is allinclusive and that "as long as the quota payment was made to the seller in exchange for merchandise sold for export to the United States, the payment properly may be included in transaction value, even if the payment represents something other than the per se value of the goods." [Emphasis supplied.] The court also explained that it did not intend the Customs Service (now CBP) to engage in extensive factfinding to determine whether separate charges, all resulting in payments to the seller in connection with the purchase of imported merchandise, were for the merchandise or something else. Accord, Tikal Distributing Corp. v. United States, 24 CIT 149 (2000). It has been CBP’s position that, based on Generra, there is a presumption that all payments made by a buyer to a seller, or a party related to the seller, are part of the price actually paid or payable for the imported merchandise. However, this presumption may be rebutted by evidence which clearly establishes that the payments are completely unrelated to the imported merchandise. The evidence of record includes an invoice from Wong Hau to the ultimate consignee in the amount of $187,000. The evidence of record indicates that this amount was paid to Wong Hau in two installments. Consequently, based on Generra, it is CBP’s position that the price paid or payable for the subject goods is $187,000. Therefore, we find that the protestant’s claim is without merit. HOLDING: The payment made by the ultimate consignee to the manufacturer constitutes the price actually paid or payable for the purpose of determining the transaction value of the imported merchandise. You are instructed to deny the protest. In accordance with the Protest/Petition Processing Handbook (CIS HB, December 2007), you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Myles B. Harmon Director Commercial and Trade Facilitation Division