HQ 545308 - Application for Further Review of Protest No. 1001-2-104390; transaction value of identical or similar merchandise - United States International Trade Commision Rulings

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HQ 545308

January 19, 1995
VAL CO:R:C:V 545308 IOR

CATEGORY: VALUATION

Area Director
Kennedy Airport Area
Bldg. 178, Room 330B
Jamaica, New York 11430

RE: Application for Further Review of Protest No. 1001-2-104390; transaction value of identical or similar merchandise

Dear Sir:

The subject protest and application for further review concerns the appropriate appraisement method for caviar imported by xxx xxxxxxxxxx xxxxxxxxxxx (hereinafter referred to as the "protestant"). Our file also includes a supplemental submission dated October 14, 1993. A meeting with this office was requested on behalf of the protestant, however due to the unavailability of the protestant, counsel for the protestant was unable to arrange a meeting. We regret the delay in responding.

FACTS:

On May 31, 1991 the protestant entered 4070 90-gram tins of caviar produced in the former Soviet Union, purchased from xxxxxxx xxxxx xxxxxxxxxxxxtxxx. (hereinafter referred to as the "seller") of Poland. The merchandise was entered at a value of $3.30 per tin. The entry was liquidated on April 10, 1992 at a value of $20.00 per tin based on the transaction value of a similar product.

In its memorandum in support of the protest (hereinafter referred to as the "memorandum"), the protestant states that the merchandise was purchased on consignment. The protestant does not agree that there is identical or similar caviar on which to base appraisement, because it believes that the $20.00/tin price represents a purchase of superior quality caviar with an adequate shelf life from a source other than the former Soviet Union. The protestant states that the subject caviar was not first quality and had a shelf life which would expire on September 1, 1991, three months after importation.

The protestant has provided a copy of a contract between the protestant and seller dated May 23, 1991, translated from Russian to English. The contract provides that the price of the caviar is fixed at $3.30 per tin and that the payment will be made after the merchandise is sold. The contract further provides that the shelf life of the caviar expires on September 1, 1991, and the price per tin may be decreased from $3.30 when the shelf life of the caviar has expired.

The concerned import specialist takes the position that the imported merchandise was sold for exportation to the U.S. and was not consigned. However, because the protestant has failed to prove the amount it paid for the caviar the import specialist takes the position that the merchandise should be appraised on the basis of the transaction value of similar merchandise, as provided by ?402(c) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C. 1401a(c)), for an appraised value of $20.00 per tin, or a total of $81,400.

In support of its position that the subject caviar was not identical or similar to the $20.00/tin caviar, the protestant's supplemental submission contains a copy of an advertisement taken from a Russian-language newspaper published in New York, dated November 7-8, 1992. According to the English translation, the advertisement was placed by a wholesale-retail warehouse, and was for 90 gram tins of black caviar at $12.00 per tin. The advertised $12.00/tin caviar is not the caviar at issue, but according to the protestant, it demonstrates the retail prices of caviar of the same general quality. The wholesale/retail warehouse is one of the protestant's customers. Consequently, the protestant asserts that the merchandise should have been appraised on the basis of deductive value.

According to the import specialist, there are three grades of caviar from the former Soviet Union. The three grades are beluga, which is of the highest quality, ocetra, and sevruga, which is of the least quality. The subject caviar was appraised based on a previously examined and accepted transaction value of sevruga caviar, produced in the former Soviet Union, imported in 90-gram tins. According to the import specialist, within grade distinctions of quality are impossible without expert tasters.

The documents provided also include a copy of an invoice from the protestant to the seller. The invoice refers to tins of pickles with a unit price of $3.30, but contains the Harmonized Tariff Schedule of the United States classification number, 1604 30 20008, for caviar. Customs has not been provided with any proof of payment by the protestant.

ISSUE:

Was the imported merchandise properly appraised?

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).

Under the facts presented, the merchandise cannot be appraised on the basis of transaction value whether or not the merchandise was sold on consignment. Transaction value cannot be used as a basis for appraisement of consigned imported merchandise. See e.g. Headquarters Ruling Letter (HRL) 543403 dated September 24, 1984. It is Customs' position that when there is insufficient information to prove the amount of payment for the imported merchandise, the price actually paid or payable cannot be proved and the merchandise cannot be appraised on the basis of transaction value. In this case, the protestant has failed to prove the amount paid for the imported merchandise, consequently the imported merchandise cannot be appraised on the basis of transaction value.

The next alternative bases of appraisement in order of statutory preference are transaction value of identical merchandise and transaction value of similar merchandise under similar merchandise upon which appraisement is based be exported to the U.S. at or about the time that the merchandise being appraised is exported to the U.S. According to the protestant no identical or similar merchandise imported into the U.S. can be determined due to the nature of the caviar in question.

In TAA ?402(h)(2) the term "identical merchandise" is defined as:

(A) merchandise that is identical in all respects to, and was produced in the same country and by the same person as, the merchandise being appraised; or

(B) if merchandise meeting the requirements under subparagraph (A) cannot be found..., merchandise that is identical in all respects to, and was produced in the same country as, but not produced by the same person as, the merchandise being appraised.

In TAA ?402(h)(4) the term "similar merchandise" is defined as:

(A) merchandise that-
(i) was produced in the same country and by the same person as the merchandise being appraised,

(ii) is like the merchandise being appraised in characteristics and component material, and

(iii) is commercially interchangeable with the merchandise being appraised; or

(B) if merchandise meeting the requirements of subparagraph (A) cannot be found..., merchandise that-

(i) was produced in the same country as, but not produced by the same person as, the merchandise being appraised, and

(ii) meets the requirement set forth in subparagraph (A) (ii) and (iii).

In this case we have insufficient evidence to determine that the imported caviar is identical in all respects to the $20.00/tin caviar, and there is no evidence that both caviars were produced by the same person. However, according to the protestant, the subject caviar was produced in the former Soviet Union, the same country of production as the $20.00/tin caviar.

The requirement of TAA ?402(h)((4)(B)(i) is met by the fact that both caviars were produced in the former Soviet Union. The subject caviar was appraised on the basis of the lowest grade of caviar exported from the former Soviet Union. Based on the evidence presented, the importer has not established that the caviar being appraised is of a different grade from the $20.00/tin caviar, or that the standard of comparison employed by Customs was inadequate. Therefore, we have assumed that the $20.00/tin caviar is like the caviar being appraised "in characteristics and component material" and is "commercially interchangeable" with the caviar being appraised.

Accordingly, we find that the caviar was correctly appraised on the basis of the transaction value of similar merchandise, using the transaction value of sevruga caviar as the appraised value of the caviar in question. In addition, in accordance with T.D. 91-15, the imported merchandise was appraised on the basis of the transaction value of identical or similar merchandise, which value was fully acceptable at the time of the liquidation of the subject merchandise. Of course, if there exist two or more transaction values for identical merchandise, or for similar merchandise, the subject merchandise shall be appraised on the basis of the lower or lowest of such values in accordance with TAA ?402(c)(2). Consequently, we do not reach the issue of deductive value.

HOLDING:

The imported merchandise was appropriately appraised on the basis of the transaction value of similar merchandise.

Consistent with the decision set forth above, you are hereby directed to deny 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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director
Commercial Rulings Division

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