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HQ 544177

September 19, 1988

CLA-2 CO:R:CV:V 544177, 544178 EK

CATEGORY: VALUATION

District Director of Customs
Pembina, North Dakota

RE: Decision on Application for Further Review of Protest Nos. 3303-7-000024, 3303-7-000025

Dear Sir:

These protests were filed against your decision in the liquidation of various entries made by (company name) (hereinafter referred to as importer). The merchandise was appraised pursuant to section 402(f) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(f); TAA). This was determined by Customs to be equal to the invoice price, plus an additional 18 percent.

FACTS:

The merchandise in question consists of rowing machines. The importer states that it purchased the rowing machines from H.C. Enterprises. This company subsequently changed its name to Weslo International (hereinafter referred to as WI).

In a joint venture between WI and the importer, Pro-X was established to monitor production and insure quality control. The importer indicates that its purchases were invoiced by WI to Pro-X and then re-invoiced by Pro-X to the importer.

The importer states that although Pro-X is related to WI, Pro-X was neither the seller nor the manufacturer of the merchan- dise. The importer alleges that in prior transactions, Pro-X had received a commission for the services it rendered. However, the importer states that the commissions were discontinued and that the services of Pro-X were subsequently terminated.

It is the position of the importer that transaction value pursuant to section 402(b) is applicable in appraising the merchandise. The importer asserts that the "price actually paid or payable" for the merchandise when sold for exportation to the United States is the price paid by the importer to WI, through Pro-X.

ISSUE:

Whether transaction value pursuant to section 402(b) of the TAA is proper in appraising the imported merchandise.

LAW AND ANALYSIS:

Transaction value, the preferred method of appraisement, is defined in section 402(b) of the TAA as the "price actually paid or payable for the merchandise when sold for exportation to the United States . . . plus amounts equal to any selling commission incurred by the buyer with respect to the imported merchandise." The addition to the "price actually paid or payable" for the selling commission must be based upon sufficient information. If sufficient information is not available, then transaction value of the imported merchandise cannot be determined. See, section

In this case, it is our conclusion that Pro-X is a selling agent for WI. The importer claims that Pro-X had received a commission in connection with prior transactions; however, the commission payments were discontinued. Although the importer claims that the services of Pro-X were discontinued, the documentation submitted clearly establishes that Pro-X was still involved with the transactions in question.

Transaction value pursuant to section 402(b) was properly eliminated as a means of appraisement because the amount of the commission paid to Pro-X could not be determined.

However, prior to resorting to a section 402(f) appraisement, it is necessary to proceed sequentially through the remaining bases of appraisement. Please note that if it becomes necessary to appraise pursuant to section 402(f) of the TAA, resort should be made to a previously determined customs value, if available. Values which are determined pursuant to section 402(f) will be based, to the greatest extent possible, on previously determined values. See, Statement of Administrative Action.

Under the circumstances, the method established by Customs used to liquidate the subject entries was proper. The 18 percent added to the invoice unit values is not an arbitrary figure as alleged by the importer. The figure was based upon the importer's records of the last quarter of 1984. The difference reflects the amount paid to Pro-X by the importer and the amount remitted by Pro-X to WI, the seller, i.e., the selling commission.

HOLDING:

In view of the foregoing, it is our conclusion that transaction value pursuant to section 402(b) of the TAA was properly rejected as a means of appraisement. Moreover, if it becomes necessary to appraise the merchandise pursuant to section 402(f), the method established by Customs in liquidating the subject entries was proper under the circumstances presented. To this date, a Request for Information dated January 1985, has yet to be answered by the importer.

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

Sincerely,

John Durant, Director,

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