HQ 545487 - Application for Further Review of Protest No. 2304-93-100290; determination of price actually paid or payable - United States International Trade Commision Rulings

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HQ 545487

June 14, 1994
VAL CO:R:C:V 545487 ILK

CATEGORY: VALUATION

District Director
Laredo, Texas

RE: Application for Further Review of Protest No. 2304-93-100290; determination of price actually paid or payable

Dear Sir:

The subject protest and application for further review ("AFR") concerns the amounts to be included in the transaction value of merchandise imported by Seaveg, Ltd. and Inn Foods, Inc. (hereinafter collectively referred to as the "protestant" ) from Mexico. According to the concerned import specialist, Seaveg and Inn Foods are related companies. We regret the delay in responding.

FACTS:

Protest is made against the liquidation of entries of frozen broccoli, cauliflower and strawberries at the entered value plus additional amounts determined as a result of a Regulatory Audit report. According to Audit Report #631-91-FRO-001 the protestant's payments to its Mexican growers, reflected on the protestants books were higher than the entered values of the merchandise. The protest specifically concerns merchandise imported from three growers, Empacadora Chapala, Empacadora Del Celio and Industrias Horticolas (hereinafter collectively referred to as the "growers"), between December 6, 1988 through June 30, 1989. The merchandise was entered on the basis of an initial invoice price and the audit revealed that additional payments were made by the protestant to the growers. The Assistant District Director of Commercial Operations, the cognizant import specialist and the case agents agree with the conclusions and recommendations of the Audit Report. On the basis of the conclusions of the Audit Report, the imported merchandise was appraised on the basis of the entered value plus the additional amounts paid by the protestant to the growers.

According to the protestant, the entered value of the imported merchandise was based on "Divisa" invoices, which it claims are routinely prepared for the Mexican government, and are "in no way related to the prices actually paid or payable for the goods." The protestant takes the position that the imported merchandise can be appraised on the basis of transaction value.

The Protest was timely filed on July 8, 1993, and an amendment to the protest was received by Customs on September 7, 1993. As this "amendment" contains additional information on a claim raised when the protest was filed originally filed, it is timely submitted. The protestant also takes the position that numerous entries were deemed liquidated pursuant to Customs regulations, 19 C.F.R. 159.12(f), prior to the date the entries were liquidated by Customs. With respect to the entries claimed to have been deemed liquidated at their entered value, there is no dispute, that the imported merchandise which was entered on or prior to April 9, 1989, was deemed liquidated on April 8, 1993, and is not subject to appraisement determinations made in this decision.

ISSUE:

Whether the transaction value was properly determined in this case.

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.

In this case, the imported frozen vegetables were appraised under transaction value on the basis of the total payment made by the protestant to the growers. This amount was determined on the basis of the actual payments recorded in the importer's accounting records. Consequently, we conclude that this merchandise was correctly appraised.

The protestant argues that the growers incurred inland freight costs on behalf of the protestant. The protestant states that the terms of sale indicated on the divisa invoices are FOB the growers plant (i.e. ex-factory), and therefore, the freight costs incurred by the growers should be deducted from the price actually paid or payable for the imported merchandise. The documentation submitted on behalf of the protestant does not support a finding that freight costs were a part of the initially agreed upon price, therefore Customs has no authority to allow any deductions for freight costs from the price actually paid or payable.

HOLDING:

Consistent with the decision set forth above, you are hereby directed to deny the 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
Commercial Rulings Division

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