HQ 0545296 - Application for Further Review of Protest No. 1001-91- 103317; inclusion of commission in price actually paid or payable for imported merchandise - United States International Trade Commision Rulings

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HQ 545296
August 16, 1993
VAL CO:R:C:V 545296 ILK

CATEGORY: VALUATION

Area Director
Kennedy Airport Area
Jamaica, New York 11430

RE: Application for Further Review of Protest No. 1001-91- 103317; inclusion of commission in price actually paid or payable for imported merchandise

Dear Sir:

The subject protest and application for further review concerns the inclusion of an agency commission in the price actually paid or payable for merchandise imported by --------, - --. (hereinafter referred to as the "protestant").

FACTS:

Protest is made against the liquidation of an entry of men's wearing apparel at the invoiced price which includes a six percent buying commission. On November 2, 1990 the protestant entered men's wearing apparel. The entry documents include a -- invoice for men's zipper pullover jackets. The invoice total is $45,570.00, and includes a separately itemized commission of $2,278.50. The protestant requests that the entry be reliquidated based on the invoice price exclusive of the commission. Submitted with the protest is a copy of a buying agency agreement dated December 1990 between protestant and WEC. The agreement sets forth the obligations of each party, including the protestants compensation of WEC at the rate of six percent of the FOB price of the merchandise ordered and shipped according to the agreement. It is the protestant's position that WEC is a bona fide buying agent. No other documents have been submitted on behalf of the protestant.

ISSUE:

Whether the relationship between protestant and WEC meet the criteria of a bona fide buying agency relationship.

LAW AND ANALYSIS:

The preferred method of appraisement is transaction value which is defined by 402(b)(1) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C. 1401a(b)) as "the price actually paid or payable for the merchandise when sold for exportation to the United States..." plus certain additions specified in 402(b)(1) (A) through (E). The term "price actually paid or payable" is defined in TAA

...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.

For the purpose of this ruling, we are assuming that transaction value is the appropriate basis of appraisement. It is clear from the statutory language that in order to establish transaction value one must know the identity of the seller and the amount actually paid or payable to him.

In a general notice published in the Customs Bulletin on March 15, 1989, Customs provided an explanation of its position on buying commissions:

While bona fide buying commissions are nondutiable, evidence must be submitted to Customs which clearly establishes that fact. In this regard, Headquarters Ruling Letter 542141, dated September 29, 1980, also cited as TAA No. 7, provided: ...an invoice or other documentation from the actual foreign seller to the agent would be required to establish that the agent is not a seller and to determine the price actually paid or payable to the seller. Furthermore, the totality of the evidence must demonstrate that the purported agent is in fact a bona fide buying agent and not a selling agent or an independent seller.

In this case the protestant has not provided Customs with an invoice or other documentation from a party that it claims is the seller of the imported merchandise. Customs has only been provided with an invoice from the purported agent and that is insufficient to establish that WEC is not a seller. The only price that Customs has upon which to base appraisement under transaction value is the total invoice price on the WEC invoice. While buying commissions cannot be added to the price actually paid or payable, neither may they be deducted. See TAA #7. In this case, the price actually paid or payable includes the payment to WEC for the alleged commission, and Customs has no authority to deduct the purported commission from the price.

Generally additional factors are considered in determining the existence of a bona fide buying agency, however in this case we do not reach those factors as we have only been provided the one invoice from the purported buying agent.

HOLDING:

Consistent with the foregoing, we are not satisfied that the protestant and WEC meet the criteria of a bona fide buying agency, and that WEC is not the seller of the imported merchandise, therefore the "commission" is included in the price actually paid or payable for the imported merchandise.

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 mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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