HQ 545532A - Application for Further Review of Protest No. 3126-93- 100006; Price Actually Paid or Payable; Post Importation Adjustments. - United States International Trade Commision Rulings

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HQ 545532
September 14, 1994

VAL CO:R:C:V 545532 er

CATEGORY: VALUATION

District Director
Anchorage, Alaska

RE: Application for Further Review of Protest No. 3126-93- 100006; Price Actually Paid or Payable; Post Importation Adjustments.

Dear Sir:

This is in response to the above-referenced protest, which was filed with your office on February 26, 1993, by xxxxxxxxxxxxxxx on behalf of their client, [protestant] ("importer"). We regret the delay in responding.

FACTS:

The imported merchandise consists of 87 cases of caviar (.986 tons) sold to the importer from xxxxxxxxxxxxxxxxxxxxxxx ("seller"). The merchandise was appraised, and the entry subsequently liquidated on December 28, 1992, based on the stated invoice value, at $y ($x less non-dutiable charges).

The merchandise was entered on June 22, 1992. On October 8, 1992, the importer filed a complaint against the seller in the Superior Court for the Third Judicial District at Anchorage, which complaint arose out of certain alleged acts or omissions by the seller in connection with the sales contract between the parties involving the subject merchandise. On December 18, 1992, the parties entered into a settlement agreement which provides that in consideration of the payment terms called for in the settlement agreement, the parties agreed to discharge each other from any and all obligations arising from the contract for the purchase of the subject merchandise. The terms in the settlement agreement arguably create a lower sales price for the imported merchandise than that originally stated on the invoice. Protestant argues that the merchandise should be appraised based on the terms outlined in the settlement agreement and that, accordingly, the imported merchandise should be valued at $z per ton.

ISSUE:

Whether the post importation payment terms contained in the settlement agreement may form the basis of transaction value.

LAW AND ANALYSIS:

As you know, transaction value, the preferred method of appraisement, is defined in section 402(b) of the Trade Agreements Act of 1930, as amended ("TAA"), as "the price actually paid or payable for the merchandise when sold for exportation to the United States...", plus certain statutory additions.

The "price actually paid or payable" is defined in section 402(b)(4)(A) of the TAA 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 the international shipment of the merchandise from the country of exportation to the place of importation in the United States) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller."

Section 402(b)(4)(B) of the TAA provides that "[a]ny rebate of, or other decrease in, the price actually paid or payable that is made or otherwise effected between the buyer and seller after the date of importation of the merchandise into the United States shall be disregarded in determining the transaction value ..." of the imported merchandise. The corresponding Customs regulation is found in 19 CFR 152.103(a)(4).

In considering the issue presented we are of the opinion that the terms outlined in the settlement agreement, to the extent they may represent a decrease in price which occurs subsequent to the importation of the imported merchandise, may not form the basis of transaction value. This position is in accord with section 402(b)(1) of the TAA, which defines transaction value to be "the price actually paid or payable for the merchandise when sold for exportation to the United States, ..." (emphasis added). This language precludes the consideration of the terms outlined in the settlement agreement from forming the basis of transaction value. (See, TAA 31, published as 542275 and dated June 11, 1981).

HOLDING:

You are directed to deny this protest in full. In accordance with section 3A(11) 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

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