HQ 0224611 - Protest 4101-92-100081; refund of voluntary tender; 19 U.S.C. 1514(a); U.S. v. Utex International; HQ 223089; Ambassador Division of Florsheim Shoes v. U.S.; Hambro Automotive Corporation v. U.S.; 19 U.S.C. 1401a; transaction value; price actually paid or payable; engineering services. - United States International Trade Commision Rulings

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HQ 224611

January 17, 1993

ENT-1-03-CO:R:C:E 224611 AJS

CATEGORY: ENTRY

District Director of Customs
Protest Section
55 Erieview Plaza
Cleveland, Ohio 44114

RE: Protest 4101-92-100081; refund of voluntary tender; 19 U.S.C. 1514(a); U.S. v. Utex International; HQ 223089; Ambassador Division of Florsheim Shoes v. U.S.; Hambro Automotive Corporation v. U.S.; 19 U.S.C. 1401a; transaction value; price actually paid or payable; engineering services.

Dear District Director:

This is our decision in protest 4101-92-100081, dated November 27, 1992, concerning a voluntary tender of duties.

FACTS:

On December 2, 1991, the protestant imported machinery for assembling electric lamps. On July 22, 1992, a voluntary tender was received in the amount of $6,771.67 based on some additional charges for this machinery. Includ-ed in this voluntary tender were charges for engineering services performed on this equipment after its importation. The protestant claims that the voluntary tender covering these services was based on an incorrect interpretation of Customs valuation law. On October 30, 1992, Customs liquidated the entry covering the subject merchandise with the voluntary tender included as part of the liquidated amount.

ISSUE:

Whether the refusal to refund the subject voluntary tender is protestable pursuant to 19 U.S.C. 1514. More specifically, whether the subject voluntary tender may be refunded.

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed pursuant to 19 U.S.C. 1514(c)(2). The subject entry was liquidated on October 30, 1992, and this protest was filed on November 27, 1992.

19 U.S.C. 1514(a) provides that decisions of the appropriate customs officer, including the legality of all orders and findings entering into the same, as to-

(1) the appraised value of merchandise;

(5) the liquidation or reliquidation of an entry, or any modification thereof:
shall be final and conclusive upon all persons (including the United States and any officer thereof) unless a protest is filed in accordance with this section, or unless a civil action contesting the denial of a protest, in whole or part, is commenced in the United States Court of International Trade in accordance with chapter 169 of Title 28 within the time prescribed by section 2636 of that title.

In this case, the protestant submitted a voluntary tender for additional duties which they believed were owed on charges for engineering services performed on the subject merchandise in the United States. Customs liquidated the entry covering this merchandise and included the voluntary tender as part of the liquidated amount. Your district refused to refund the voluntary tender claiming it was not protestable under section 1514. We disagree with this conclusion for the following reasons. All findings involved in a district director's decision merge in the liquidation. R. Sturm, Customs Law & Administration, section 8.3 at 32 (3d ed. 1982); See also United States v. Utex International Inc., 6 Fed. Cir. (T) 166, 168 (1988). Liquidation of an entry constitutes the final computation by Customs of all duties accruing on that entry. See generally, Ambassador Division of Florsheim Shoes v. United States, 748 F. 2d 1560, 1652 (Fed. Cir. 1984). It is the liquidation which is final and subject to protest, not the preliminary findings or decisions of customs officers. Customs Law at 32. Therefore, the findings which included the subject voluntary tender as part of the liquidated amount merged in the liquidation, which is itself subject to protest under section 1514(a)(5). This conclusion is supported by HQ 223089 (September 16, 1991) in which Customs ruled that additional duties tendered prior to liquidation of a consumption entry became part of the final computation by Customs of all duties accruing on that entry.

In addition, the courts have stated that errors which arise from mistaken value information supplied to Customs are also protestable under section 1514. Hambro Automotive Corporation v. United States, 81 Cust. Ct. 29, 30, C.D. 4761 (1978), aff'd 66 CCPA 113, 120, C.A.D. 1231 (1979). The subject protest involves this type of error. Thus, the voluntary tender is also protestable under section 1514(a)(1) as an error concerning the appraised value of merchandise.

Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a). The preferred method of appraisement is transaction value defined as the price actually paid or payable for the merchandise when sold for exportation to the United States plus certain enumerated additions. 19 U.S.C. 1401a(b)(1). For the purposes of this protest we assume that transaction value is the appropriate basis of appraisement.

The term "price actually paid or payable" is defined as the total payment (whether direct or indirect . . .) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. 19 U.S.C. 1401(b)(4)(A). However, transaction value does not include any reasonable cost or charge that is incurred for the construction, erection, assembly, or maintenance of, or the technical assistance provided with respect to, the merchandise after its importation into the U.S., provided such costs or charges are separately identified from the price actually paid or payable.

With regard to the instant protest, the buyer maintains that payments to the seller for engineering services related to the installation of imported machinery are not included in the transaction value of the merchandise. The work was performed by the seller at the buyer's Euclid, Ohio plant. Invoices from the seller to the buyer confirm that payments were for technical assistance rendered by the seller. Accordingly, since the costs or charges at issue were incurred for technical assistance performed in the U.S., and were separately identified from the price actually paid or payable, they are not included in the transaction value of the imported merchandise. Consequently, the subject voluntary tender concerning these costs should be refunded.

HOLDING:

The protest is granted. The refusal to refund the subject voluntary tender is protestable under either 19 U.S.C. 1514(a)(1) or (5). In addition, the subject voluntary tender should be refunded pursuant to 19 U.S.C. 1515(a).

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed, with the Customs Form 19, by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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