HQ 0544432 - Discrepancies Between the Visa Amount and the Invoice Amount - United States International Trade Commision Rulings

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HQ 544432

January 17, 1990

CLA-2 CO:R:C:V 544432 DHS

CATEGORY: VALUATION

David Serko, Esq.
Serko & Simon
One World Trade Center
New York, New York 10048

RE: Discrepancies Between the Visa Amount and the Invoice Amount

Dear Mr. Serko:

This is in reply to your letter dated December 15, 1989, and other incorporated submissions, requesting a ruling regarding the entry of merchandise in which the visa price and the invoice concerning the imported merchandise are not the same and the effect of T.D. 86-56 on this situation. The merchandise is to be appraised under section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.

FACTS:

You state that several middlemen purchased certain men's and lady's apparel from various manufacturers located primarily in China at various prices depending on the apparel in order to fulfill their contracts with a third-party purchaser. You state that the third-party purchaser has breached the contract and will not take delivery of the merchandise. In order to quickly relinquish themselves of this seasonal merchandise the middlemen have contracted with your client for their purchase at the greatly reduced rate of 38 cents on the dollar. You have added that the approximate value of the merchandise is estimated at $8 million dollars. All entries with respect to this merchandise will occur at the port of Columbus, Ohio. These shipments are to be received by the purchaser within a four to six week period.

As part of your submission, you have provided an affidavit from the vice-president of your clients' company which describes the above circumstances that lead to the sale of the merchandise to your client.

ISSUE:

Does the discrepancy between the visaed invoice which represents the original price of the goods and the quota and the invoice to the ultimate purchaser mandate rejection of the entries.

LAW AND ANALYSIS:

Instructions regarding the implementation of T.D. 86-56 were issued by this office on May 1, 1986 (Headquarters Ruling No. 543731). The instructions indicated that if an importer provides an acceptable explanation for differences in the price or value information in visas and invoices, then the entry may be accepted by Customs. Several examples were listed which set forth acceptable scenarios in light of T.D. 86-56. Although the list was not exhaustive, the instructions stated that additional legitimate reasons for differences in the entry documentation may exist, and in these cases, Customs will act in accordance with the policy set forth in T.D. 86-56.

Headquarters Ruling No. 543792 dated August 14, 1986, in citing the T.D., stated:

The "action" section of the T.D. clearly and unambiguously indicates that, "any differences or inconsistencies in the information presented to Customs . . . shall be considered as an indication that one or more of such documents contains false or erroneous information." Additionally, it is indicated that where a visaed invoice or document is presented to Customs containing erroneous price or value information, such invoice or document can only be corrected by the presentation to Customs of a new and corrected document or invoice stamped with the visa of the country of origin. (emphasis added)

The policy consideration regarding the adoption of T.D. 86- 56 is the proposition that false or erroneous documents are not to be presented to Customs. This will inevitably result in the facilitation of the appraisement and entry process.

The scenario you have presented is similar to that addressed in T.D. 86-56. You suggest, however, that since these documents are not false or erroneous that this situation does not fall within the provisions of the treasury decision. While we agree that T.D. 86-56 was intended to prevent false or erroneous invoicing, it was also intended to place upon the importer the burden of proving the validity of information on the documents and veracity of the transaction in question in order to properly appraise the merchandise. Presently, you have not provided the invoices or other information evidencing the original contract for the purchase of the merchandise, any information of cancellation of this contract, or any invoice or other evidence of the subsequent purchase from your client. In order to find that the invoice price paid by your client to the middlemen is the proper price for appraisement purposes and not the price displayed on the visaed invoice, the importer is required to provide these invoices and notices of cancellation. The affidavit which you have submitted while sustaining your submission of the facts does not provide any evidentiary support for the appropriate invoice price.

You have indicated that your client is able to obtain the relevant commercial documents. Assuming that to be the case, then we would agree that transaction value as represented by the "settlement price" would be appropriate. Also, assuming that your client is able to produce the relevant commercial documentation set forth above, we would agree that entry could be made using the original visaed invoice and transaction value as represented by the "settlement price."

The District Director for the concerned port of entry will make the final determination as to whether you have established the transaction value to be represented by the "settlement price."

Sincerely,

John Durant, Director
Commercial Rulings Division

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