MorseCompliance ManagerThe Men’s Wearhouse40650 Encyclopedia CircleFremont CA 94538-2453

HQ H049855 June 26, 2009 VAL OT:RR:CTF:VS HO49855 KSG Jeffrey Morse Compliance Manager The Men’s Wearhouse 40650 Encyclopedia Circle Fremont CA 94538-2453 Dear Mr. Morse: This is in response to your letter dated January 12, 2009, requesting a ruling on your proposal to change The Men’s Wearhouse method of apportioning assists to certain imported goods. FACTS: You state that The Men’s Wearhouse (“the company”) uses transaction value. The company provides fabric free of charge to vendors and acknowledges that these are dutiable assists. Fabric is allocated to specific style numbers and purchase orders. The entire anticipated production of these orders are sold for exportation to the U.S. The value of the assist includes the price paid for the fabric, any transportation costs paid by the company to deliver the fabric to the factory and pro-rated marine insurance costs. The company instructs its suppliers to declare the value of the assists on commercial invoices apportioned over the entire anticipated production. The company proposes to change its method of apportionment to declare the entire value of the assists on the first dutiable shipment as per 19 CFR 152.103(e)(i). In addition, the company would declare existing inventories of fabric on the next dutiable shipment. ISSUE: Whether apportioning the value of assists described above to declare the entire value of the assists on the first dutiable shipment is an acceptable method for CBP appraisement purposes. LAW AND ANALYSIS: For the purposes of this decision, we assume that transaction value is the proper basis of appraisement. 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 enumerated additions, including the value apportioned as appropriate, of any assist. 19 U.S.C. 1401a(b)(1)(C). In this case, there is no dispute over the fact that the fabric provided by the company is an assist and it is conceded that the assist is dutiable. The only question is whether the company’s proposed method of apportionment is acceptable. CBP has authority under section 152.103(e)(1) of the Customs Regulations (19 CFR 152.103(e)(1)) to accept a method of apportionment that is: …made in a reasonable manner appropriate to the circumstances and in accordance with generally accepted accounting principles. The method of apportionment actually accepted by Customs will depend upon the documentation submitted by the importer. If the entire anticipated production using the assist is for exportation to the United States, the total value may be apportioned over (i) the first shipment, if the importer wishes to pay duty on the entire value at once, (ii) the number of units produced up to the time of the first shipment, or (iii) the entire anticipated production. In addition to these three methods, the importer may request some other method of apportionment in accordance with generally accepted accounting principles. The company currently apportions its assists utilizing method (iii) but proposes to utilize method (i). In addition, the company proposes to utilize method (i) for all remaining fabric in inventory for the transition period in order to avoid the confusion that could result from having two methods of apportionment within a single invoice. In this case, you state that the entire anticipated production using the assists is for exportation to the U.S. and you propose using suggested apportionment method (i). We find that the apportionment proposed by the company in this case is acceptable and is in accordance with generally accepted accounting principles. HOLDING: We find that the apportionment proposed by the company in this case, to pay the total duty on the value of the assist on the first entry of merchandise, is an acceptable method for CBP appraisement purposes. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation and Special Programs Branch