HQ 545416 - T.D. 86-56; visaed invoice; price actually paid or payable; 19 U.S.C. ? 1484(a); trade statistics - United States International Trade Commision Rulings

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HQ 545416

December 10, 1993

VAL CO:R:C:V 545416 CRS

CATEGORY: VALUATION

Matthew T. McGrath, Esq.
Barnes, Richardson & Colburn
1819 H Street, N.W.
Washington, D.C. 20006

RE: T.D. 86-56; visaed invoice; price actually paid or payable; 19 U.S.C. ? 1484(a); trade statistics

Dear Mr. McGrath:

This is in reply to your letter of July 15, 1993, on behalf of American Tourister, Inc., concerning visa invoice requirements for textile luggage imported from Thailand through the port of Los Angeles. A second submission, dated December 2, 1993, was submitted following a meeting at Customs on November 23, 1993. The transaction described below is based on the information set forth in your letter of December 2nd.

FACTS:

American Tourister contracts with J.C. Penney Co., Inc. (the importer) to supply certain luggage to be sold in the importer's department stores. American Tourister subsequently contracts with a Thai manufacturer to produce the luggage and export it to the U.S.

In your letter of December 2, 1993, you state that the importer will establish a letter of credit (L/C) in favor of American Tourister in the amount of the purchase price of the luggage. American Tourister will assign its rights under the L/C to the Thai manufacturer which will in turn draw on the L/C in full payment for the luggage. Under a separate arrangement, the Thai manufacturer will subsequently pay a portion of this amount, i.e. the amount it receives under the L/C for each shipment, to American Tourister as compensation for its role in the transaction. American Tourister will not take title to the merchandise. Instead, the manufacturer will send the merchandise via a freight consolidator to the port of export, at which point the importer will take title and assume risk of loss. American Tourister, J.C. Penney and the Thai manufacturer are not related within the meaning of 19 U.S.C. ? 1401a(g).

The amount reflected on the commercial and visaed invoices will be the full price paid by the importer for the imported merchandise. The invoices will identify the manufacturer as the exporter and J.C. Penney as the importer and consignee. You submit that the visaed invoice will accurately reflect the transaction and should be acceptable under Treasury Decision (T.D.) 86-56, 20 Cust. B. & Dec. 175 (1986). Moreover, you contend that the price paid by American Tourister for the merchandise constitutes a valid transaction value.

ISSUES:

The issues presented are whether the total contract price represents the transaction value of the imported merchandise; and whether the visaed invoices submitted with the imported merchandise are acceptable under T.D. 86-56.

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 (TAA; 19 U.S.C. ? 1401a). The preferred method of appraisement under the TAA is transaction value, which is defined as the "price actually paid or payable for the merchandise when sold for exportation to the United States," plus certain enumerated additions, if applicable. 19 U.S.C. ? 1401a(b)(1). The price actually paid or payable means 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. ? 1401a(b)(4)(A). For the purposes of this ruling we have assumed that transaction value is the appropriate basis of appraisement.

For Customs purposes, the word "sale" has been defined as a transfer of ownership in property from one party to another for a consideration. J.L. Wood v. United States, 62 CCPA 25, 33; C.A.D. 1139 (1974). While J.L. Wood was decided under the prior appraisement statute, Customs adheres to this definition under the TAA. The primary factors to consider in determining whether there has been a transfer of property or ownership are whether the alleged buyer has acquired title and assumed the risk of loss. E.g., Headquarters Ruling Letter (HRL) 5443708 dated April 21, 1988.

The circumstances of the instant transaction are as follows. The importer establishes a L/C in favor of American Tourister in the full amount of the contract price. American Tourister assigns its rights under the L/C to the Thai manufacturer (the seller). The seller draws on the L/C and subsequently remit a portion of the amount received to American Tourister as compensation for its role in the transaction. American Tourister never takes title to the luggage and thus there is no sale between the seller and American Tourister. Accordingly, for appraisement purposes, the total contract price, i.e., the amount drawn under the L/C, represents the price actually paid or payable for the imported merchandise.

Under T.D. 86-56, differences or discrepancies contained in entry documentation presented to Customs raise the presumption that the documents contain false or erroneous price or value information. Such documentation will not be accepted and will be returned to the importer for correction. You contend that the documentation submitted in connection with the instant transaction will be acceptable under T.D. 86-56 since the visaed invoice will state the full price paid by the buyer for the merchandise. In the circumstances you set forth in your letter of December 2nd the visaed invoice will accurately reflect the purchase price received by the seller, i.e., the total payment by the buyer to the seller.

As noted in T.D. 86-56, section 484(a) of the Tariff Act of 1930, as amended (19 U.S.C. ? 1484(a)(1)), provides in pertinent part that importers must file such documentation as is necessary to enable Customs, inter alia, to collect accurate statistics with respect to the merchandise. The visaed invoices submitted in connection with the instant transaction will satisfy the requirement imposed by 19 U.S.C. ? 1484(a)(1)(B). Accordingly, based on the information set forth in your letter of December 2nd, the visaed invoice and other entry documentation submitted in connection with the instant transaction will be acceptable under T.D. 86-56.

HOLDING:

The total contract price of each shipment, i.e., the amount of the L/C, represents the transaction value of the imported merchandise.

The visaed invoice submitted with the imported merchandise pursuant to the transaction described above is acceptable under T.D. 86-56.

Sincerely,

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