HQ 0544383 - Application for Further Review of - United States International Trade Commision Rulings

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HQ 544383

January 18, 1991

VAL CO:R:C:V 544383 DPS

CATEGORY: VALUATION

Area Director
Minneapolis, Minnesota

RE: Application for Further Review of
Protest No. 3501-8-000124

Dear Sir:

The subject protest and application for further review concerns the appraisement and classification of merchandise described as "security lights," imported from Taiwan by Euro- Am Enterprise, Inc. (importer).

FACTS:

The merchandise at issue is an electrical lighting fixture consisting of fittings for two spotlights, a mounting bracket and an infrared sensor contained within a control module. The infrared sensor automatically turns on the lights when it detects a change in temperature caused by a moving person or object within a parameter of 50 feet long by 60 feet wide. The importer claims that this lighting product is classifiable as a signalling apparatus under item 685.73, Tariff Schedules of the United States (TSUS). The Area Director determined that the security light is essentially a lighting device meant to illuminate an area, and classified it under item 653.39 TSUS, consistent with previous Customs rulings on similar merchandise. The entries in question predate the conversion from TSUS to the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

Euro-Am consists of two entities, Euro-Am Taiwan and Euro-Am U.S. In this case, Euro-Am Taiwan buys the security lights from the Taiwanese manufacturer and resells the merchandise for export to the United States. Euro-Am U.S., the related importer of record, states that it just processes the entry, does not pay nor receive payment for the goods, and that the entire transaction is handled directly by Euro-Am Taiwan. The documentation submitted with the protest and in response to Customs information requests establishes that the seller in this transaction is Euro-Am Taiwan, and the buyer is C.O.M.B. Co., an unrelated U.S. purchaser. The terms of sale are C & F to Plymouth, Minnesota.

C.O.M.B. Co. remits payment of $22.50 per unit directly to Euro-Am Taiwan, as evidenced by a copy of a purchase order and a letter of credit in favor of Euro-Am Taiwan. Further information suggests that the C & F price for certain models of the security lights is $24.00. Customs officials at the port of entry state that appraisement should be in accordance with Section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(b); TAA), under the transaction value method of appraisement. Customs in Minneapolis appraised the merchandise at $22.50 and $24.00, depending on the model, less non-dutiable charges. Euro-Am U.S., the claimed importer of record, states that appraisement should be in the amount of $15.00 per unit, the amount paid to the manufacturer.

ISSUES:

(1) Classification: Whether the subject merchandise is classifiable as a signalling apparatus or as an illuminating apparatus.

(2) Valuation: Whether the subject merchandise was properly appraised.

LAW & ANALYSIS:

Classification

The classification of automatic security lights, practically identical to the merchandise at issue, was the subject of Headquarters Ruling Letter (HRL) 080758 JAS, dated June 24, 1988 (copy attached), where we concluded that for classification purposes, automatic security lights did not qualify as signalling apparatus. Rather, they were found to be classifiable under the tariff provisions covering illuminating apparatus.

Inasmuch as the classification of merchandise similar in all material respects was the subject of HRL 080758, the request for further review fails to meet the criteria set forth in section 174.24(b) Customs Regulations (19 CFR 174.24(b), and therefore, should be denied.

Valuation

Section 402(b)(1) of the Tariff Act of 1930, as amended by the TAA, defines transaction value, the preferred method of appraisement, as the price actually paid or payable for imported merchandise when sold for exportation to the United States, plus amounts for five specified items to the extent that they are not already included in that price. In applying transaction value to the circumstances surrounding the Euro-Am transactions, it is necessary to determine which sale is the sale for exportation to the United States.

The facts presented by Euro-Am U.S. indicate that the transaction involving the sale for exportation to the United States is between Euro-Am Taiwan, the seller, and C.O.M.B. Co., the U.S. buyer. Invoices and written responses to Customs information requests support this finding. Furthermore, statements by Euro-Am U.S. acknowledge that it does not pay for nor receive payment for the imported merchandise. Its main purpose is to process the entry and serve as the importer of record. The price of $15.00 per unit paid to the manufacturer by Euro-Am Taiwan is not the price actually paid for the merchandise when sold for exportation to the U.S. Rather, the price paid when sold for exportation to the U.S. is the price paid by the U.S. buyer to the foreign distributor/seller. In this case, $22.50 or $24.00, depending upon the model. Accordingly, the merchandise at issue should be appraised at the C & F price of $22.50 and/or $24.00, less any allowable deductions.

HOLDING:

You are directed to deny the subject protest in accordance with the decision set forth above. 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
Commercial Rulings Division

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