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HQ 544687


August 13, 1992

VAL CO:R:C:V 544687 DPS

CATEGORY: VALUATION

District Director
Los Angeles, California

RE: Application for Further Review of Protest No. 2704-87-004022; foreign inland freight

Dear Sir:

The subject protest and application for further review concerns the appraisement of luggage imported from Taiwan by J.C. Penney Purchasing Corp. ("Penney" or "protestant").

FACTS:

The protestant protests the assessment of duty based on the entered value of xxxxxxxxxx. Penney claims that the inland freight charges associated with the imported luggage should not be included in the dutiable value of the merchandise, and that the entered value should be xxxxxxxxxx.

In support of its position, Penney cites T.D. 84-235, submits copies of the Customs Entry Summary and special Customs invoice associated with the entry, and provides assorted documents including a "packing/weight list" and a "combined transport bill of lading".

ISSUE:

Based on the information presented by the protestant, whether the subject merchandise was shipped on a through bill of lading so as to make the foreign inland freight charges nondutiable in accordance with T.D. 84-235 and section 152.103(a)(5), Customs Regulations [19 CFR 152.103(a)(5)].

LAW & ANALYSIS:

As amended by T.D. 84-235, section 152.103(a)(5), Customs Regulations, reads as follows:

(5) Foreign inland freight and other inland charges incident to the international shipment of merchandise.

(i) Ex-factory sales. 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 merchandise (an ex- factory price), those charges will not be added to the price.

(ii) Sales other than ex-factory. As a general rule, in those situations where the price actually paid or payable for imported merchandise includes a charge for foreign inland freight, whether or not itemized separately on the invoices or other commercial documents, that charge will be part of the transaction value to the extent included in the price. However, 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 section 152.102(f) 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 United States.

(iii) Evidence of sale for export and placement for through shipment. A sale for export and placement for through shipment to the United States under paragraph (a)(5)(ii) of this section shall be established by means of a through bill of lading to be presented to the district director. Only in those situations where it clearly would be impossible to ship merchandise on a through bill of lading (e.g., shipments via the seller's own conveyance) will other documentation satisfactory to the district director showing a sale for export to the

United States and placement for through shipment to the United States be accepted in lieu of a through bill of lading...

In numerous rulings issued by Customs construing the language set forth above, Customs has adopted the requirement that a through bill of lading be presented in order to establish through shipment from the point of manufacture to the port of importation in the United States. Absent such documentation, foreign inland freight charges are not deductible from the price actually paid or payable. See Headquarters Ruling Letter (HRL) 544003, dated January 21, 1988, HRL 543744, dated July 30, 1986, and HRL 544393, dated November 3, 1989, among others.

In HRL 543744, dated July 30, 1986, we discussed T.D. 84-235 in detail. There, we pointed out:

The intent of the T.D. in question was to permit foreign inland freight to be nondutiable where such charges are identified separately, and they occur after merchandise has been sold for export to the United States and placed with a carrier for through shipment to the United States. To ensure that the above criteria have been met Customs mandated in the T.D. that a "through bill of lading" be presented. "Through bill of lading" for the purpose of the T.D. was defined in field instructions dated February 6, 1985, as "a contract, waybill, invoice, issued by one carrier or forwarder which controls the manner of shipment from the point or place of manufacture or origin to the U.S. port of importation or beyond (although the shipment may extend over two or more lines of connecting carriers), shows the origin and destination of the shipment, consignor and consignee, route of movement and applicable rate or rates."

The documentation submitted with the protest fails to meet the criteria of a through bill of lading. No information concerning the foreign inland freight charges is provided on the submitted documents. The documents show that the merchandise was purchased on an FOB basis. No documentation is provided indicating that the FOB charges were incident to international shipment or were, in any way associated with the ocean freight transaction. The documents show, instead, that these charges were incident to the purchase of the merchandise.

HOLDING:

Absent documentation in the form of a through bill of lading, showing specifically the charges incurred for foreign inland freight, the foreign inland freight charges the protestant seeks to have deducted from the dutiable value are not deductible.

Accordingly, you are directed to deny the protest. A copy of this decision should be attached to the Customs Form 19, Notice of Action, sent to the protestant.

Sincerely,

John Durant, Director

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