HQ 0544098 - Salary Costs of Employees for Services Rendered Outside the United States - United States International Trade Commision Rulings

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HQ 544098

June 10, 1988

CLA-2 CO:R:C:V 544098 DHS

CATEGORY: VALUATION

(address)

RE: Salary Costs of Employees for Services Rendered Outside the United States

Dear Mr.

This is in response to your letter of November 10, 1987, in which you request a ruling as to whether salaries of United States employees working in Mexico will be considered dutiable assists under section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a).

FACTS:

You state that the merchandise is to be assembled in Mexico and entered into the United States under item 807.00 of the Tariff Schedules of the United States (TSUS). Three employees of the United States corporation are to be temporarily transferred to the Mexican assembly operation. You informally state that these employees are to remain on the payroll of the United States corporation. They are to hold the positions of plant manager, materials manager and production engineer.

ISSUE:

Do salary costs of employees for services rendered outside the United States constitute assists?

LAW AND ANALYSIS:

The term 'assist' is defined in section 402(h)(1)(A) of the Tariff Act as:

. . . any of the following if supplied directly or indirectly, and free of charge or at reduced cost, by the buyer of imported merchandise for use in connection with the production or the sale for export to the United States of the merchandise:

(i) Materials, components, parts, and similar items incorporated in the imported merchandise.

(ii) Tools, dies, molds, and similar items used in the production of the imported merchandise.

(iii) Merchandise consumed in the production of the imported merchandise.

(iv) Engineering, development, artwork, design work, and plans and sketches that are undertaken elsewhere than in the United States and are necessary for the production of the imported merchandise.

With respect to the services described above, it has consistently been the position of the Customs Service that management services of the type described above are not assists within the definition of section 402(h)(1)(A) of the Tariff Act. See, TAA Nos. 4, 29, 46 and Headquarters Ruling Nos. 543820 dated December 22, 1986, and 543877 dated March 17, 1987.

HOLDING:

In view of the foregoing, it is our conclusion that the services to be rendered in Mexico by the United States employees, as a plant manager, a materials manager and a production engineer, are not assists.

This conclusion is based upon the facts as provided in your letter of November 10, 1987. If any changes occur prior to the application of this ruling, this ruling may be ineffective. Since you have not presented any information on the applicability of transaction value as a method of appraisement, we refrain from addressing the issue of its applicability at this time.

Sincerely,

John Durant, Director

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