HQ 0545141 - Application for Further Review of Protest No. 2704-92- 101570; appraisement of reimported merchandise under - United States International Trade Commision Rulings

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HQ 545141
April 15, 1994
VAL CO:R:C:V 545141 ILK

CATEGORY: VALUATION

District Director
Los Angeles, California

RE: Application for Further Review of Protest No. 2704-92- 101570; appraisement of reimported merchandise under

Dear Sir:

The subject protest and application for further review concerns the appraisement of bicycle parts reimported by Europa Bicycle (hereinafter referred to as the "protestant), a U.S. company, from Colnago (hereinafter referred to as the "exporter"), an Italian company. We regret the delay in responding.

FACTS:

The protestant purchased the bicycle parts from the exporter and imported them from 1985 through 1987. On the basis of transaction value, the appraised value for the parts entered from 1985-1987 amounted to $48,550.00. The protestant was unable to sell the merchandise in the U.S. and did not pay the exporter for the parts. According to the protestant, subsequent to the importation of the merchandise, Japanese technology for the manufacture of bicycles became more prevalent, and the protestant could not sell the merchandise. Litigation between the protestant and exporter resulted in a settlement between the parties pursuant to which the protestant returned the merchandise to the exporter in Italy. However, the exporter refused the merchandise and returned it to the protestant in the U.S. The merchandise was entered in the U.S. on September 16, 1991, valued at $48,550.00 and duty-free treatment was claimed under Harmonized Tariff Schedule of the United States Item 9801.00.25003. The entry was denied duty-free treatment because more than three years had passed since the merchandise was originally imported. The reimported merchandise, was appraised by Customs on the basis of the original invoice price of $48,550.

The commercial invoices accompanying the entry for the reimported merchandise were prepared by the protestant, and the unit prices for the merchandise were based upon the original invoices for the merchandise when it was originally imported. Upon reimportation of the merchandise, the protestant consigned the merchandise to King's Bicycles on behalf of the exporter. According to correspondence from King's Bicycles, it was estimated that the merchandise could be sold for between $8,000 and $9,000.

According to the protestant there is no imported merchandise identical or similar to the merchandise imported in September 1991 because the subject merchandise was outdated at that time. The protestant claims that the computed value information for the subject merchandise cannot be obtained from the exporter, and that there is no deductive value for the imported merchandise as it was delivered to King's Bicycles only after settlement of the litigation between the parties. It is the protestant's position that the merchandise should be appraised under 402(f) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C. 1401a(f)) based on the estimated $8,000 to $9,000 resale value of the imported merchandise.

ISSUE:

Was the appraisement of the imported merchandise appropriate under the circumstances presented.

LAW AND ANALYSIS:

Transaction value, the preferred basis of appraisement under the TAA, is defined in 402(b) as "the price actually paid or payable for the merchandise when sold for exportation to the United States." In this case, as no sale transaction took place in connection with the reimportation of the merchandise, it cannot be considered to be "sold for exportation to the United States" as required under 402(b) of the TAA. Therefore, transaction value is eliminated as the basis of appraisement.

The second appraisement method in order of statutory preference is transaction value of identical and similar merchandise under 402(c) of the TAA. According to the protestant, no identical or similar merchandise is imported into the U.S. If the imported merchandise cannot be appraised under this method the succeeding methods of appraisement are deductive value under 402(d) or computed value under 402(e) of the TAA. Upon importation the merchandise was placed for sale on consignment. It appears from Kings' letter dated February 3, 1992 that as of that date the merchandise had not been sold. Therefore as the merchandise was not sold within 90 days of entry, the merchandise cannot be appraised under 402(d). According to the protestant records are not available to determine computed value. Therefore, based on the information provided in the request, it appears that none of the appraisement methods provided for in 402(b)-(e) can be used with respect to the imported merchandise.

Section 402(f) of the TAA provides that if the value of imported merchandise cannot be determined under subsections (b) through (e):

...the merchandise shall be appraised for the purposes of this Act on the basis of a value that is derived from the methods set forth in such subsections, with such methods being reasonably adjusted to the extent necessary to arrive at a value.

The merchandise may properly be appraised based on a value derived pursuant to section 402(f) by means of an independent appraiser. In Headquarters Ruling Letter (~HRL~) 543265 dated July 2, 1985, we found that the value, as determined by an independent appraiser, of a used drilling rig imported into the U.S., could be used to establish an alternate value under TAA 402(f). In HRL 543970 dated March 13, 1989, we determined that appraisement on the basis of an independent appraisal would be reasonable and appropriate.

Based on the foregoing, we find that the value, as determined by an independent appraiser may be used to establish an alternate value under TAA 402(f). In this case, the appraisal received from King~s Bicycles can be used provided the import specialist is satisfied that the appraiser is independent.

HOLDING:

The merchandise can properly be appraised under 402(f) based on a value derived pursuant to section 402(f) as determined by an independent appraiser.

Consistent with the decision set forth above, you are hereby directed to grant the subject protest. 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 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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