HQ 0544008 - Decision of Application for Further Review of Protest No. 3801-6-001587 - United States International Trade Commision Rulings

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HQ 544008

August 17, 1988

CLA-2 CO:R:C:V 544008 DHS

CATEGORY: VALUATION

Area Director of Customs
Detroit, Michigan

RE: Decision of Application for Further Review of Protest No. 3801-6-001587

Dear Sir:

The above-referenced protest and application for further review concerns whether a bona-fide buying agency exists and whether commissions paid to the foreign corporation are non- dutiable buying commissions.

FACTS:

The importer has submitted a buying agency agreement as well as documentation from the foreign corporation denying the request of the importer to present a copy of the invoice from the manufacturer or seller. There has not been any evidence submitted which describes the relationships of the parties involved or the duties and responsibilities of each.

ISSUE:

Is the submission of a buying agency agreement without the existence of other evidence sufficient to find a buying agency relationship?

LAW AND ANALYSIS:

Transaction value is defined in section 402, Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a), as the price actually paid or payable for the merchandise when sold for exportation to the United States, plus amounts for the items specifically enumerated in section 402(b)(1) of the TAA. Although selling commissions are one of the items listed therein, buying commissions are not included as an item to be added to the price actually paid or payable. While buying commissions cannot be added to the price actually paid or payable, neither may they be deducted if the price actually paid or payable includes a buying commission. The term "price actually paid or payable" is defined in section 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.

It is clear from the statutory language that in order to establish transaction value one must know the identity of the seller and the amount actually paid or payable to him. Whether or not the purported agent is the seller is to be determined by the documents presented. Furthermore, the totality of the evidence must demonstrate that the purported agent is in fact a bona fide buying agent and not a selling agent or an independent seller. See TAA No. 7, dated September 29, 1980 (542141).

The burden is placed upon the importer to prove the existence of a bona fide agency relationship and that the charges paid were, in fact, bona fide buying commissions. B & W Wholesale Co. v. United States, 58 CCPA 92, C.A.D. 1010, 436 F.2d 1399 (1971); New Trends, Inc. v. United States, 10 CIT_, 645 F. Supp. 957 (1986); J.C. Penney Purchasing Corporation et al v. United States, 80 Cust. Ct..84, C.D. 4741 (1978), 451 F. Supp. Ct. 1008, A.R.D. 251 (1969). If plaintiff does not clearly establish that such a relationship existed, then the relationship is not that of an agency. Globemaster Midwest, Inc. v. United States, 67 Cust. Ct. 539, R.D. 11758, 337 F. Supp. 465 (1971). The failure to produce documentary evidence of a transaction which is normally reduced to writing, and that would be indicative of agency status weakens the probative value. A & A Trading Corp. v. United States, 65 Cust. Ct. 785, A.R.D. 276 (1970).

The importer relies upon the submission of the buying agency agreement to support his contention that an agent/principal relationship exists. No further evidence has been offered to support this contention.

It is well settled that a bona fide agency agreement is not dispositive of the determination that a bona fide buying agency exists. New Trends, Inc. v. United States, supra. The buying agency agreement is only evidence that the parties intended to create an agency relationship. The agreement must be supported by sufficient evidence. Rosenthal-Netter, Inc v. United States,

12 CIT ____, Slip. Op. 88-9 (1988). In Hub Floral Mfg. v. United States, 60 Cust. Ct 905, R.D. 11544 (1968), the court noted that "Acts may support, or they may cast doubt upon, the words which parties speak or reduce to writing." Accordingly, in the absence of evidence demonstrating that the party did, in fact, operate as a buying agent, we see no basis for providing relief.

HOLDING:

In view of the foregoing, we are unable to find that a buying agency exists. The importer has the burden of proving the existence of a principal-agent relationship and he has failed to provide sufficient evidence to meet this burden. Therefore, we hold the commissions in question to be dutiable. Accordingly, you are directed to deny the protest in accordance with the terms of this decision. A copy of this decision should be attached to the Customs From 19 to be sent to the protestant.

Sincerely,

John Durant, Director

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