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HQ 544308


May 5, 1989

CLA-2 CO:R:C:V 544308 DHS

CATEGORY: VALUATION

Ann L. Newton
Fabrique de Fer de
Charleroi (USA), Inc.
88 Danbury Road
Wilton, Connecticut 06897

RE: Valuation

Dear Ms. Newton:

This is in reference to your letter of February 14, 1989, regarding the valuation used by the Customs Service of imported steel plates.

You state that your company purchases steel from a Danish steel mill. The steel is manufactured in Denmark then shipped by vessel directly from the mill on the Danish coast to various European ports. The steel is then placed upon another vessel and subsequently shipped to the United States. In a majority of cases the bill of lading listing both vessels is dated when the steel leaves Denmark.

At the present time, you allege that Customs is excluding the freight costs incurred as a result of shipping the steel from the mill to the European port as "foreign inland freight".

You inquire whether the freight charges are dutiable as an addition to the transaction value as foreign inland freight or whether the charges are excluded as international freight from the "price actually paid or payable."

The information you have submitted is too general for us to make a definitive determination on this issue. Consequently, this letter is being treated as an information letter under section 177.1(d)(2), Customs Regulations (19 CFR 177.1(d)(2)).

As provided in section 152.101, Customs Regulations (19 CFR 152.101), the primary basis of appraisement is transaction value. Transaction value is defined as the "price actually paid or payable" for imported merchandise when sold for exportation to the United States. This is more specifically defined in section 402(b)(4)(A) of the Trade Agreements Act of 1979, (TAA; 19 U.S.C. 1401a(b)(4)(A), as the following:

The term "price actually paid or payable" means the total payment (whether direct or indirect, and
exclusive of any costs, charges, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. (emphasis added)

It is clear freight costs involved in the international movement of merchandise from the country of exportation are to be excluded from the dutiable value of imported merchandise appraised using the transaction value basis. The expenses related to foreign inland freight charges, however, are not covered by this provision.

Section 152.103(a)(5), Customs Regulations (19 CFR 152.103(a)(5)), regarding foreign inland freight provides:

(i) If the price actually paid or payable by the buyer to the seller for the imported merchandise does not include a charge for foreign inland freight and other charges for services incident to the international shipment of the merchandise (an ex-factory price), those charges will not be added to the price.

(ii) ...Charges for foreign inland freight and other services incident to the shipment of the merchandise to the United States may be considered incident to the international shipment of that merchandise within the meaning of the price actually paid or payable if they are identified separately and they occur after the merchandise has been sold for export to the United States and placed with a carrier for through shipment to the U.S..

Absent more detailed information regarding the ports involved in the movement of the imported merchandise, we are unable to make any additional comments regarding the dutiability [A the transportation charges.

Sincerely,

John Durant, Director

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