HQ 545494 - Transaction value; price actually paid or payable; freight - United States International Trade Commision Rulings

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HQ 545494

December 9, 1994
VAL CO:R:C:V 545494 RSD

CATEGORY: VALUATION

Area Director of Customs
JFK Airport Area
Building 178
Jamaica, New York 11430

RE: Transaction value; price actually paid or payable; freight

Dear Sir:

This is in response to your memoranda dated December 6, 1994, concerning applications for further review on protest numbers 1001-92-105890, 1001-92-106980, and 1001-92-106981 filed on behalf of the importer, N.V.W. Steel, by its attorney, Powell, Goldstein, Frazier, and Murphy, on September 17, 1992 and November 19, 1992. These protests concern the appraisement of carbon steel products imported from Holland. We regret the delay in responding.

FACTS:

This case involves three entries of steel products imported by N.V.W. from the Netherlands. N.V.W. is a related party selling agent of Hoogovens Ijmuiden Verkoopkantor, B.V. ("Hoogovens), the producer of the steel products, imported under the three entries involved in this case. The first entry which consisted of 1,854 coils of cold rolled sheets of carbon steel was made on January 14, 1992, under entry number G34/0001257-8. The entry, comprised the entire cargo of the vessel "Finnwood" which was contracted by Hoogovens under a charter party agreement. The second entry was made on February 14, 1993, under entry number G34/000129666. The entry consisted of 1,372 of coils of carbon steel, sheets which was shipped to the United States on the vessel Mangal Desai. The vessel was contracted through a charter party agreement between Hoogovens and the shipbroker Nebam B.V.

The third entry consisting of 1424 coils of hot rolled sheet carbon steel was made on March 3, 1992. The vessel "Necat A" was used to ship the cargo to the United States under a charter party.

On April 17, 1992, the Customs Service sent a Notice of Action (Customs Form 29) to N.V.W. regarding the first entry. The notice advised the importer that the entry will be value advanced in the absence of documents substantiating the freight charges. It further stated that unless the importer furnished in writing the reasons why it disagreed with the proposed action within 20 days, the entry would be liquidated as proposed. The importer made a submission, but the submission was considered not timely, and it was returned advising the importer that the entry had been forwarded for liquidation. On June 19, 1993, the entry was liquidated as proposed in the Notice of the Action, resulting in an additional duty assessment of $60,533.97 and an additional harbor maintenance fee of $15,29.93.

Another Notice of Action was issued in connection with the second entry on June 30, 1992, proposing a value advance in the absence of substantiating documentation of the freight costs. The importer attempted to obtain the documentation from its overseas suppliers and requested additional time to respond to the Notice of Action. The request for additional time was denied with an explanation that the entry had been forwarded to residual liquidation. On August 21, 1992, the entry was liquidated as proposed in the Notice of Action, resulting in an additional assessment of duties and fees totalling $58,860.44.

A third notice of action was issued on June 24, 1993, regarding the third entry which again indicated that the entry will be value advanced in the absence of substantiating documentation for freight costs. On August 21, 1992, the entry was liquidated as proposed in the Notice of Action, resulting in an additional assessment of duties and fees totalling $58,152.32.

ISSUE:

Whether the protestant has established that it is entitled to a adjustment in the appraised value of the imported merchandise for the freight costs associated with the above referenced entries?

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 402(b)(4)(A) as:

...the total payment (whether direct or indirect and exclusive of any costs, charges or expenses incurred for transportation, insurance, and related services incident to international shipment of the merchandise from the country of exportation to place of importation in the United States or to be made, for imported merchandise by the buyer to, or for the benefit of the seller.

In other words price actually paid or payable does not include those charges, costs, or expenses incurred for transportation, insurance and related service incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States.

Previously, the importer provided a breakdown of the non-dutiable freight charges on the special steel summary invoices for the imported merchandise. In addition, the importer provided copies of the charter party agreements with Nebam B.V. and of the invoices from Nebam B.V. for loading charges. At the request of this office, the protestant submitted additional records to show that the freight costs for the three entries involved in this case were paid. These records consisted of freight orders, invoices, and bank statements issued by ABN-AMRO Bank, N.V. of Amsterdam. The records demonstrate that funds were transferred from the Hoogovens' account to pay the shipping line for the freight costs involved in transporting the merchandise on the vessels Finnwood, Mangal Desai, and Necat A. We find that these records are sufficient to establish that the freight costs alleged were paid. Therefore, the actual freight costs should have been excluded in determining the transaction value of the imported merchandise.

HOLDING:

Consistent with the foregoing, the actual freight costs are to be deducted from the transaction value of the imported steel products.

You are directed to grant the protest. A copy of this decision with the Form 19 should be sent to the protestant. 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 to the public via the Diskette Subscription Service, Lexis the Freedom of Information Act and other public access channels.

Sincerely,

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