HQ 0544238 - Internal Advice Request Regarding the Dutiability of an Injection Mold - United States International Trade Commision Rulings

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HQ 544238

October 24, 1988

CLA-2 CO:R:C:V 544238 EK

CATEGORY: VALUATION

Area Director of Customs
New York Seaport Area
New York, New York 10048

RE: Internal Advice Request Regarding the Dutiability of an Injection Mold

Dear Sir:

This is in reference to your memorandum of August 22, 1988, requesting our response to an internal advice initiated on behalf of (company name) (hereinafter referred to as importer). The importer is inquiring as to the dutiability of a certain injection mold pursuant to section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(b).

FACTS:

The importer is a U.S. thermometer manufacturer who is involved with a Japanese compass manufacturer in producing a thermometer/compass. The parties are not related within the meaning of section 402(g) of the TAA. The importer and the Japanese manufacturer have jointly purchased an injection mold which will be used to produce a plastic component to be used to house the thermometer/compass. The mold was purchased for $15,000, the importer paying its share of $7,500.

You indicate that the injection mold is of Japanese origin and the manufacturer will use the same mold to produce plastic housings for sale in Japan.

Although we are referring to this item as a mold, it appears from the description provided by the importer that the item is actually incorporated into the final imported product.

ISSUE:

Whether the cost of the mold is part of the "price actually paid or payable" in determining the transaction value of the final imported product.

LAW AND ANALYSIS:

Transaction value, the preferred method of appraisement, is defined as the "price actually paid or payable" for imported merchandise when sold for exportation to the United States. An addition to the "price actually paid or payable" will be made for the value of any assist. Section 402(b)(1) of the TAA.

The definition of an assist (in pertinent parts) is as follows:

The term 'assist' means any of the following if supplied directly or indirectly, and free of charge or at a reduced cost, by the buyer of the imported merchandise for use in connec- tion 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.

Section 402(h)(1)(A)(i) of the TAA.

Although you have cited rulings which indicate that when the importer pays the manufacturer to provide tools necessary to produce the imported merchandise the payment constitutes an indirect payment rather than an assist, the circumstances here are slightly different. In this case, the importer is not supplying the manufacturer money to pay for the mold but rather, the importer is providing the manufacturer with the actual mold, albeit half-ownership rights which the importer has acquired.

With respect to the valuation of the assist, section 152.103(d)(1) of the Customs Regulations, 19 CFR 152.103(d)(1), provides for the following:

If the assist consists of materials . . . incorporated in the imported merchandise . . . acquired by the buyer from an unrelated seller, the value of the assist is the cost of its acquisition. . . . [T]he value of the assist would include transportation costs to the place of production.

In this case, the value of the assist should be $7,500, the cost of acquisition, plus the transportation costs incurred by the importer in transporting the assist to the place of production.

With respect to the importer's inquiry regarding amortization, please note section 152.103(e)(1) of the Customs regulations regarding apportionment. The method of apportionment is to be made in a reasonable manner and in accordance with generally accepted accounting principles. If the anticipated production is only partially for exportation to the United States, then the method of apportionment will depend upon documentation submitted by the importer.

Any questions regarding the applicability of this decision to previously entered merchandise should be directed to the district director responsible for the concerned port of entry.

Sincerely,

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