HQ 0544874 - Protest and Application for Further Review of Protest No. 1001-90-002200; assists; incorporated in imported merchandise; belts; women's trousers - United States International Trade Commision Rulings

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HQ 544874

October 22, 1993

VAL CO:R:C:V 544874 CRS

CATEGORY: VALUATION

Area Director
U.S. Customs Service
J.F.K. Airport
Building 178
Jamaica, NY 11430

RE: Protest and Application for Further Review of Protest No. 1001-90-002200; assists; incorporated in imported merchandise; belts; women's trousers

Dear Sir:

This is in response to your memorandum dated November 26, 1991, under cover of which you forwarded an application for further review of the above-referenced protest, filed by Siegel, Mandell & Davidson, on behalf of protestant Liz Claiborne, Inc.

FACTS:

The protested merchandise consists of seven styles of women's 100 percent cotton woven trousers manufactured in Hong Kong. The trousers were imported with PVC belts of foreign origin that were supplied free of charge by the protestant (the buyer) to the manufacturer (the seller). Documentation representative of the protested entries was submitted with the instant protest.

The protestant maintains the belts constitute an assist, the value of which can be apportioned over the first shipment of a given style. However, you maintain that the belts do not constitute an assist. Moreover, even if they did, you contend that protestant's method of apportionment is unacceptable since it would be administratively complex and unwieldy for the value of the assist to be apportioned on one entry, while the actual merchandise to which the assist relates could be entered through different ports. Accordingly, you believe the trousers and belts were correctly appraised on an entry-by-entry basis.

ISSUE:

The issue presented is whether belts, provided by the buyer to the seller, and imported with trousers, are assists such that the total value of the belts may be apportioned over the first shipment of the imported merchandise.

LAW AND ANALYSIS:

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 (19 U.S.C. 1401a; TAA). The preferred method of appraisement is transaction value, which is defined as the "price actually paid or payable for [imported] merchandise when sold for exportation to the United States," plus certain enumerated additions, including the value, apportioned as appropriate, of any assists. 19 U.S.C. 1401a(b)(1)(A).

The term "assists" includes materials, components, parts and similar items incorporated in imported merchandise, and supplied by the buyer use in connection with the production or sale for export to the U.S. of the merchandise. 19 U.S.C. 1401a(h)(1). In the instant case, the protestant supplied belts of foreign origin, procured from a third party, free of charge to the manufacturer of the trousers. The belts were placed through loops on the trousers sized to accommodate the width of the belt and were imported, and will be sold with, with the trousers. It is the position of this office that the belts are therefore incorporated into the imported merchandise within the meaning of section 402(h)(1)(A)(i) of the TAA. Accordingly, the belts supplied by the protestant to the seller of the imported trousers constitute an assist.

Pursuant to section 152.103(e), Customs Regulations (19 CFR 152.103(e)), if the entire anticipated production in which an assist is used is for exportation to the U.S., the total value of the assist may be apportioned in one of several ways, to include apportionment over the first shipment if the importer wishes to pay duty on the entire value at once. The belts are an assist, the value of which should be added to the price actually paid or payable for the imported trousers. However, the method of apportionment actually accepted by Customs will depend upon the documentation submitted by the importer. 19 CFR 152.103(e)(1). Based on the documentation for a representative entry that was attached to the instant protest we are unaware of anything that would invalidate the protestant's method of apportionment. Accordingly, unless the balance of the entry documentation should indicate to the contrary, protestant's method of apportionment is acceptable.

However, in certain instances such an apportionment might not be acceptable. For example, if in addition to the trousers, the belts themselves were also subject to quota/visa requirements (e.g., belts made of the same fabric as the trousers) the total value of the assist could not be apportioned over the first shipment of the imported merchandise since quota priority and status are determined at the time of presentation of the entry summary for consumption. 19 CFR 132.11(a). Consequently, in such a case the assist would have to be apportioned on an entry by entry basis.

HOLDING:

Belts incorporated in imported trousers constitute an assist, the value of which may be apportioned over the first shipment of a given style.

You are instructed to allow the protest in full. A copy of this decision should be attached to the Form 19 Notice of Action.

Sincerely,

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