HQ 0544157 - Valuation of Exempted Component - United States International Trade Commision Rulings

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HQ 544157

June 22, 1988

CLA-2 CO:R:C:V:TLL 544157

CATEGORY: VALUATION

David Newman, Esq.
Siegel, Mandell & Davidson
One Whitehall Street
New York, New York 10004

RE: Valuation of Exempted Component

Dear Mr. Newman:

This is in reply to your letter dated December 1, 1987, regarding the value of fabricated components under section 10.17, Customs Regulations (19 CFR 10.17)

ISSUE:

Whether the Harbor Maintenance Tax which attaches pursuant to 26 U.S.C. 4461 et seq. is part of the value of fabricated components to be subtracted from the full value of an assembled article.

LAW AND ANALYSIS:

19 CFR 10.17, the applicable portion of the Customs Regulations provides:

10.17 Valuation of exempted components.

The value of fabricated components to be subtracted from the full value of the assembled article is the cost of the components when last purchased, f.o.b. United
States port of exportation or point of border crossing as set out in the invoice and entry papers, or, if no purchase was made, the value of the components at the time of their shipment for exportation, f.o.b. United States port of exportation or point of border crossing, as set out in the invoice and entry papers.

However, if the appraising officer concludes that the cost or value of the fabricated components so ascertained does not represent a reasonable cost or value, then the value of the components shall be determined in accordance with section 402 or section 402a,
Tariff Act of 1930, as amended
(19 U.S.C. 1401a, 1402).

The applicable portion of 26 U.S.C. 4461 provides:

(a) General Rule - there is hereby imposed a tax on any port use.
(b) Amount of Tax. - The amount of the tax imposed by subsection (a) on any port use shall be an amount equal to 0.04 percent of the value of the commercial cargo involved.
(c) Liability and Time of Imposition of Tax. - (1) Liability. - The tax imposed by subsection (a) shall be paid by-
(A) in the case of cargo entering the United States, the importer,
(B) in the case of cargo to be exported from the United States, the exporter, or
(C) in any other case, the shipper.
(2) Time of Imposition. - Except as provided by regulations, the tax imposed by subsection (a) shall be imposed-
(A) in the case of cargo to be exported from the United States, at the time of loading, and
(B) in any other case, at the time of unloading.

Under section 4462, the term "port use" is defined as:

(A) the loading of commercial cargo on, or

(B) the unloading of commercial cargo from, a commercial vessel at a port.

Insofar as the definition of F.O.B. is concerned, the Customs Service would consider an F.O.B. sale as one in which the seller's unit price includes all costs and risks of the goods until such time as they are delivered on board the exporting carrier. Accordingly, since F.O.B. charges include all costs accruing on goods until such time as they are delivered on board the exporting carrier, and since the tax basis under 26 U.S.C.

4461 depends upon "port use", and port use is defined to include the loading of commercial cargo, the value of fabricated components under 19 CFR 10.17 would include the Harbor Maintenance Tax established under 26 U.S.C. 4461.

HOLDING:

The value of fabricated components set forth in 19 CFR 10.17 would include the Harbor Maintenance Tax established under 26 U.S.C. 4461.

Sincerely,

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