HQ 0543908 - Internal Advice Request - United States International Trade Commision Rulings

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HQ 543908

April 19, 1988

CLA-2 CO:R:CV:V 543908 EK

CATEGORY: VALUATION

District Director of Customs
Los Angeles, California

RE: Internal Advice Request

Dear Sir:

This is in response to an internal advice request initiated on behalf of a certain company (hereinafter referred to as importer) regarding the applicability of T.D. 86-56 to merchandise imported into the United States. This T.D. precluded the acceptance of entry documents in connection with the importation of merchandise which contain inconsistencies or differences. In such circumstances, the entry documentation is not accepted by Customs and is returned to the importer for correction.

FACTS:

The importer proposes to import merchandise from Taiwan using the following procedure. First, the importer agrees with a quota broker to obtain a particular quota allocation and merchandise at a stated price. The quota holder or shipper prepares commercial invoices and Special Customs Invoices to be used for visa purposes which indicate an F.O.B. Taiwan price which totals that for the merchandise plus that for the quota. The manufacturer of the merchandise will issue a separate invoice to the importer which includes the price for the merchandise exclusive of the charge for quota. A document will be submitted to Customs which is prepared which itemizes for each purchase the following information: the purchase order number, style number, quantity, the relationship of the quota holder to the manufacturer, the name of the quota holder/shipper, the F.O.B. Taiwan value of the goods, i.e., the price of the goods plus quota, the name of the manufacturer of the goods, the manufacturer's price for the goods (the price exclusive of quota charges), the name of the quota broker used, and the relationship of the quota broker to the manufacturer.

The discrepancy in the documents is that between the manufacturer's invoice which the importer alleges to be the value of the goods for appraisement purposes, and the visaed invoice which corresponds with the quota seller's invoice representing both the price of the goods and the cost of the quota.

ISSUE:

Whether the discrepancy in the documentation between the visaed invoice and the commercial invoice mandates rejection of the entry documents in light of T.D. 86-56.

LAW AND ANALYSIS:

The importer states that the "price actually paid or payable" for purposes of determining transaction value (section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(b)), is the price of the goods exclusive of the expense incurred for quota. For the sole purpose of determining whether this situation is covered by the T.D., we are assuming that the "price actually paid or payable" for the goods is represented by the manufacturer's invoice, i.e., the price of the goods exclusive of quota. The visaed invoice indicates a total value, i.e., the price of the goods plus the quota. There is no indication on the visaed invoice which represents the fact that a portion of the value is an amount for quota. Therefore, the visaed invoice indicates an amount higher than that which the importer purports the transaction value of the merchandise to be.

In Headquarters Ruling No. 543809 dated November 5, 1987, we ruled that the situation indicated above is in fact covered by T.D. 86-56 which requires rejection of entry documentation containing inconsistent or erroneous information.

The importer, through counsel, argues that Ruling No. 543809 is inconsistent with a prior ruling issued by Headquarters (No. 543825 dated July 7, 1987). However, No. 543825 presents a different factual scenario. In No. 543825, the visaed invoice submitted by the importer indicated the price for the merchandise with no reference to the quota paid by the importer. The commercial invoice indicated both the price of the goods and the quota. In that ruling, we did not reject the documentation and allowed entry of the merchandise. In Ruling No. 543809, the amount on the visaed invoice was a total amount, with no indication as to what portion of that total represents the price of the merchandise or the amount of the quota.

The situation covered by Ruling No. 543825 is not the same as the instant case. The case at hand is on point with Ruling No. 543809.

HOLDING:

In view of the foregoing, it is the position of the Customs Service that the entries with respect to the merchandise should be rejected until documents which are not inconsistent are received by Customs.

Sincerely,

John Durant

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