HQ 0544019 - Decision on Application for Further Review of Protest No. 3801-7-000075 - United States International Trade Commision Rulings

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HQ 544019

January 3, 1989

CLA-2 CO:R:CV:V 544019 VLB

CATEGORY: VALUATION

District Director of Customs
477 Michigan Avenue
Detroit, Michigan 48226-2568

RE: Decision on Application for Further Review of Protest No. 3801-7-000075

Dear Sir:

This application for further review was filed against your decision in the liquidation of entries made by ------------ (hereinafter referred to as the "importer"). The merchandise was appraised pursuant to section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA).

FACTS:

The merchandise in question is a Tag Isolated Phase Bus and hardware for its assembly. The purchase and assembly of the phase bus was a large project with many subcontractors, including Entries were made through both Detroit and Buffalo. This protest, as previously mentioned, involves the Detroit entries.

The merchandise was appraised under transaction value. However, you and the importer disagree on the amounts that should be included in the transaction value. We have prepared the following table that outlines your respective positions:

Importer Customs

Contract Value $1,052,143.00 $1,574,011.00

Value of Detroit entries appraised in this protest 788,892.00 788,892.00

Value of Buffalo entries on contract reconciliation 273,423.00 273,423.00

Importer Customs

Total FOB duty paid value 1,044,687.00 1,062,315.00

On Site Services
(Installation) (119,504.30) (34,371.00)

Direct Shipments from
Trench (221,825.00) (221,825.00)

U.S. Origin Materials (100,725.00) (0.00)

Freight and Brokerage (6% of dutiable (6% of dutiable value) value)

You began the appraisement of the merchandise by taking the total contract price (1,574,011.00) less on-site services (34,371.00) and direct shipments from Trench (221,825.00) to arrive at 1,317,815. You then calculated the difference between the dutiable value (1,317,815) and the total entered FOB duty paid price (1,062,135) to arrive at $255,500.00. You state that this is the amount that was not covered by the entries in the importer's contract reconciliation. You, therefore, divided 255,500.00 by 788,892.00 (the Detroit entries) and arrived at 32.388%. This percentage represents the unappraised entries that were necessary to complete the contract.

The importer on the other hand, alleges that 1,044,687.00 is the proper appraised value. The importer contends that the total invoice price of all of the entries is 1,052,143.00 which is 7,456.00 greater than the total adjusted contract price (1,044,687.00), including duty. Therefore, the importer alleges that "all of the entries should be reliquidated at the invoice price, U.S. funds, less .71%, less duty included". The .71% was calculated by dividing 1,052,143.00 by 1,044,687.00.

ISSUE:

Whether the merchandise was properly appraised.

LAW AND ANALYSIS:

The preferred method of appraisement is transaction value which is defined in section 402(b)(1) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. section 1401a(b)) as the "price actually paid or payable for the merchandise when sold for exportation to the United States . . . ." The merchandise at issue was appraised under transaction value. From the information provided, it appears that transaction value was the proper basis of appraisement.

You and the importer agree that under transaction value, the on-site services for the installation of the phase bus are deductible. We agree that under section 402(b)(3)(A) of the TAA the cost of these services incurred after importation of the merchandise are not included in the transaction value.

However, you and the importer disagree on the value of these services. The importer alleges that the installation cost is $119,504.30 while you contend that the value is $34,371.00. The invoices submitted to us on this issue total $34,371.00. Therefore, we hold that your appraisal of the installation costs is correct.

A second issue in the appraisement is the value of the direct shipments for Tr. to the importer. You and the importer agree that these amounts should not be included in the transaction value of the merchandise. Based on the information in the file, it appears that these payments do constitute part of the transaction value and were omitted properly from the dutiable value of the merchandise.

A third issue involves the importer's allegation that certain U.S. origin materials should not be included in the dutiable value of the merchandise. You contend that the importer has not complied with any of the statutory provisions that allow for U.S origin materials to be imported into the United States duty free. We find that the importer has failed to supply any information that verifies its claim that the merchandise was comprised of U.S. origin materials. Therefore, we hold that your appraisement on this issue is correct.

The final issue involved in the appraisement of the merchandise is a deduction for freight and brokerage. You and the importer agree that the deduction should be 6% of the dutiable value of the merchandise. We find nothing in the file indicating that there is an error in this method of calculation.

HOLDING:

In light of the foregoing, it is our conclusion that the importer has failed to submit any documentation that supports its claim that the dutiable value is less than your appraisement. Therefore, the protest should be denied.

A copy of this decision should be attached to Form 19, Notice of Action to be sent to the protestant.

Sincerely,

John Durant, Director,
Commercial Rulings Division

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