HQ 0544773 - Application For Further Review of Protest No. 1704-91100091, concerning the Appraisement of Wearing Apparel Based on Visaed Invoices - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0544687 - HQ 0545117 > HQ 0544773

HQ 544773

April 3, 1992

VAL CO:R:C:V 544773 ILK

CATEGORY: VALUATION

District Director
Savannah, GA

RE: Application For Further Review of Protest No. 1704-91100091, concerning the Appraisement of Wearing Apparel Based on Visaed Invoices

Dear Sir:

This protest decision was filed against your appraisement decision in the liquidation of four entries made by xxxxx xxxxxxxxxxxxx (hereinafter referred to as the "importer"). The merchandise was manufactured in Indonesia, and sold by P.T. Bintang Busanamas, for whom P.T. Kartini and P.T. Alas Comodo Garment (hereinafter collectively referred to as the "seller") acted as exporters of record.

FACTS:
The importer imported 1248 dozen pairs of ladies cotton/ramie shorts. Upon entry, the importer presented Customs with visaed invoices, issued by the seller, showing 600 dozen shorts at $44.40 per dozen and 648 dozen shorts at $50.40 per dozen. The visaed invoices show The Hartwell Company (hereinafter referred to as "Hartwell") as the consignee or party to be notified. According to the importer, the shorts had been originally ordered by Hartwell at $50.40 and $44.40 per dozen, who then subsequently cancelled the order. After Hartwell cancelled its order, the importer purchased the shorts at the "cancellation price" of $25.00 per dozen, as stock lot goods. The importer states that P.T. Kartini and P.T. Alas Comodo Garment acted as exporters of record to facilitate export.

It is claimed by the importer that upon entry Customs was also presented with invoices for the 1248 dozen pairs of shorts at the "cancellation price", and that these second invoices were rejected because they did not match the visaed prices of the goods. There is no record of Customs having been presented with the invoices, at the "cancellation price", until after entry. The importer, also, acting upon its understanding of instructions from local Customs, obtained invoices from P.T. Kartini and P.T. Alas Comodo Garment that reflected prices to the importer that matched the visaed prices of the goods. Of these four invoices two are dated January 11, 1989, one is dated February 1, 1990, and one is undated. According to the importer, payment was never intended to be made against these new invoices.

Of the four non visaed invoices with the "cancellation price", two are undated, one is dated February 1, 1990 and one is dated January 11, 1989. The visas on the four visaed invoices are dated as shown below, with respect to each entry:

Entry # Export date Import date Visa date
xxxxxxxxxxxxx 01/19/90 02/17/90 02/22/90
xxxxxxxxxxxxx 02/02/90 02/24/90 02/16/90
xxxxxxxxxxxxx 02/02/90 02/24/90 03/06/90
xxxxxxxxxxxxx 02/02/90 02/24/90 03/06/90

The importer provided Customs with a contract dated August 8, 1990, between it and P.T. Bintang Busanamas, confirming a sale of 1248 dozen ladies ramie cotton shorts at $25.00 per dozen. In response to a Request for Information the importer has provided Customs with a debit note from the importer's buying agent referencing the subject transaction, documentation of negotiations between the importer and the seller showing a unit price of $25.00, and the importer's instructions for payment by wire transfer to the seller and a corresponding debit note for the subject merchandise, corresponding to the unit price of $25.00 per dozen.

The merchandise was appraised at the visaed invoice prices of $50.40 and $44.00 per dozen. The importer takes the position that the merchandise should be appraised at the "cancellation price" of $25.00 per dozen.

ISSUE:

Whether the appraised value of the merchandise is properly determined based on the visaed invoice prices when nonvisaed commercial invoices with inconsistent amounts are presented to Customs subsequent to entry.

LAW and ANALYSIS:

The importer states that the "price actually paid or payable" for purposes of determining transaction value (section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979, TAA; 19 U.S.C. 1401a(b)), is the price of
the merchandise, at the "cancellation price", as represented by one of the sets of nonvisaed invoices.

Treasury Decision (T.D.) 86-56,dated March 6, 1986, stated that:
[A]ny differences or inconsistencies in the information contained in documents presented to Customs in connection with the importation of merchandise shall be considered as an indication that one or more of such documents contains false or erroneous information. In such circumstances, the entry documentation will not be accepted by Customs but will instead be returned to the importer for correction.
... In situations where the visaed invoice or document presented to Customs (and necessary for the entry of the merchandise) contains erroneous value or price information, such invoice or document can only be corrected by the presentation to Customs of a new, corrected invoice or document stamped with the visa of the government of the country of origin. Customs will not accept pro forma invoices in any case involving apparent differences in price or value information in the documents required to be submitted to Customs and which involve the production of a document which is required to contain a foreign country's visa.

Instructions regarding the implementation of T.D. 86-56 were issued by this office on May 1, 1986, Headquarters Ruling Letter ("HRL") 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. As stated in C.S.D. 90-37 (HRL 544432, dated January 17, 1990) "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."

The facts before us are distinguishable from those present in C.S.D. 90-37, which ruling is cited in support of the importer's position. In C.S.D. 90-37 the importer had not produced any of the commercial documents to Customs, the "stock lot" sale had not yet taken place, an importation had not occurred, and the visas had already been issued. In the instant case a sale and exportation and/or importation has occurred prior to the issuance of the visas, and subsequent to entry Customs has been presented with documents inconsistent with those presented upon entry. In this case it is admitted by the importer that the invoices to the importer in the amount of the visaed invoices, which were provided to Customs are essentially pro forma documents. This makes even more likely the possibility that the invoices to the importer for shorts at the "cancellation price" are also pro forma documents.

Given the post exportation dates on the visas (and post importation dates in all but one instance), there does not appear to be any commercially reasonable explanation for the inconsistent documents. The visas were not issued prior to the sale to the importer. Further, there is no evidence that any invoices other than the visaed invoices were presented to Customs at the time of entry. The invoices with the "cancellation price" were submitted to Customs only subsequent to entry. Thus, the application of T.D. 86-56 did not arise with respect to the entry of the merchandise, but has arisen with respect to the value of the merchandise. The "contract" between the importer and P.T. Bintang Busanamas does not warrant any consideration as evidence as it is dated after the dates of the invoices and the dates of importation, is not binding and appears to be a pro forma document itself.

Section 484(a), Tariff Act of 1930, as amended (19 U.S.C. 1484(a)) requires importers to file with Customs such documentation as is necessary to enable Customs "to assess properly the duties on the merchandise...." As stated in C.S.D. 90-37 although "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."

In HRL 544581 dated February 25, 1991, merchandise had been allowed entry where the visaed invoices were inconsistent with documentation submitted, however, the merchandise was appraised based upon the visaed invoice amounts. In view of the inconsistencies between the visaed invoices and the nonvisaed commercial invoices, the lack of a commercially reasonable explanation for the inconsistencies, and the submission of invoices with the "cancellation price" only subsequent to entry, a proper appraisement of the merchandise should be based on the invoice prices contained in the visaed invoices.

On the basis of the information submitted, we find that the appraised value of the imported merchandise was properly determined using the invoice prices as reflected in the visaed invoices.

HOLDING:

Based on the foregoing, we find that the merchandise was properly appraised using the amount on the visaed invoices for the merchandise. The values on the commercial invoices were inconsistent with those on the visaed invoices, and no acceptable explanation of the inconsistencies was provided.

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

Previous Ruling Next Ruling