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HQ 544283

February 23, 1989

CLA-2 CO:R:CV:V 544283 VLB

CATEGORY: VALUATION

District Director of Customs
Detroit, Michigan 48226-2568

RE: Decision on Application for Further Review of Protest No. 3801-6-001460

Dear Sir:

This protest was filed against your decision in the lumber distributor (hereinafter referred to as the "distributor"). The merchandise was appraised pursuant to sections 402(b) and 402(f) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(b) and (f); TAA).

FACTS:

The merchandise in question is waferboard (particle board) that is manufactured in Canadian mills. You appraised several of the entries under section 402(b) of the TAA using the amount that the distributor's U.S. customer paid to the distributor as the price actually paid or payable for the merchandise.

You appraised the remaining entries under section 402(f) of the TAA due to the fact that the distributor had failed to produce the invoice to its U.S. customer. It appears that you used the price paid by other U.S. customers to U.S. distributors, for identical or similar merchandise, as the starting point for the appraisements.

The distributor contends that all of the entries should be appraised pursuant to section 402(b) of the TAA, and that the transaction value is the price that it paid to the Canadian manufacturer.

ISSUES:

(1) Whether transaction value is the proper method for the appraisement of the merchandise.

(2) Whether the sale between the manufacturer and the distributor, or the sale between the distributor and its customer, is the price actually paid or payable for the merchandise when it was sold for exportation to the United States.

LAW AND ANALYSIS:

The first issue involves what appraisal method should be used to determine the value of the merchandise for duty purposes. In Headquarters Ruling 554998 dated January 24, 1989, we held that if the documentation shows that the distributor sold the merchandise from the reload center, e.g. the distributor invoiced its customer at the time the merchandise is exported from the reload center, or shortly thereafter, transaction value is the proper method of appraisement.

In this case, the documentation submitted for the entries that were appraised under section 402(b) of the TAA shows that the distributor's invoice was dated shortly after the merchandise was exported. Based on this information and ruling 554998, we hold that the merchandise was appraised properly under section 402(b) of the TAA.

In addition, we hold that Customs correctly used the price that the distributor's U.S. customer paid for the merchandise as the price actually paid or payable under transaction value.

The importer has submitted documentation for one entry that was appraised under section 402(f) of the TAA. The submission does not include the distributor's invoice to its U.S. customer.

In ruling 544284 dated January 26, 1989, we held that the importer failed to submit any documentation or explanation supporting its claim that waferboard was improperly appraised under section 402(f) of the TAA. The facts and the lack of documentation in this case are the same as in ruling 544284. Based on that ruling we find that the distributor has failed to prove its claim that the merchandise was appraised improperly.

If the distributor's invoice to its U.S. customer is
available, then transaction value is the appropriate method of appraisement. Please note that you must determine whether the sale between the distributor and its customer occurred before the distributor placed the order with the mill or occurred after the goods reached the reload center.

HOLDING:

(1) Transaction value is the proper appraisement method for the entries that contain the distributor's invoice to its U.S. customer. For the entries appraised under section 402(f) of the TAA, the distributor has not submitted this documentation or an explanation of when the sale to its U.S. customer occurred. Therefore, the distributor has failed to support its claim that the merchandise was appraised incorrectly.

(2) The evidence in the transactions appraised under section 402(b) of the TAA shows that the distributor invoiced its customer for the merchandise on the date of exportation from the reload center or shortly thereafter. Thus, we conclude that the sale between the distributor and its U.S. customer is the sale that directly caused the merchandise to be exported from Canada to the U.S. The amount of that sale is the price actually paid or payable for the goods under transaction value.

You are directed to deny the protest. 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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