HQ 545579 - Application for Further Review of Protest No. 1303-93-100249 and 1303-93-100331; estimated versus actual freight charges - United States International Trade Commision Rulings

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HQ 545579

September 14, 1994

VAL CO:R:C:V 545579 ILK

CATEGORY: VALUATION

District Director
Baltimore, Maryland

RE: Application for Further Review of Protest No. 1303-93-100249 and 1303-93-100331; estimated versus actual freight charges

Dear Sir:

The following is in response to the above-referenced Applications for Further Review.

FACTS:

These protests concern footwear imported from Romania by H H Brown (hereinafter referred to as "the protestant"), from Clujana (hereinafter referred to as "the manufacturer"), a Romanian company. According to the protests, the ocean freight deducted at the time the entries were made was incorrect. Requests from the District and from Headquarters for further information regarding the documentation provided in support of the protests were not responded to by the broker. The entries which are the subject of Protest No. 1303-93-100249 are also the subject of Protest No. 1303-93-100331, in addition to other entries.

The documentation submitted with one entry shown on protest No. 1303-93-10331 indicates that the imported merchandise consisted of pineapples from Thailand. The date of entry shown on the respective entry summary is different from that indicated in the protest. According to the entry, the importer of the pineapples is not the same as the importer identified on the protest. We have insufficient information to take any other action but to deny the protest with respect to this particular entry.

The invoices for the imported merchandise indicate that the delivery terms are either C&F or CFR. C&F commonly means that the charges and international freight are included in the price. According to the concerned import specialist, CFR has the same meaning as C&F. The invoices contain what appear to be amounts for inland freight and international freight handwritten onto the invoices. The international freight figure is shown as a nondutiable charge on the entry summary.

The protestant has submitted invoices from the freight consolidator. Each of these invoices corresponds to each one of the entries which is the subject of Protest No. 1303-93-100249, and those which are duplicated in Protest No. 1303-93-100331. There are no freight consolidator invoices submitted that correspond to the remaining entries which are the subject of Protest No. 1303-93-100331. Each freight invoice shows a total amount billed for freight from Cluj to Baltimore, a documentation fee and a discount for payment upon arrival. The freight charge on each of the freight consolidator invoices is for the same amount regardless of the quantity of merchandise shipped. The quantity of merchandise shipped ranged from 388 cartons to 601 cartons. The amount deducted for international freight on the original entries varied with each entry.

According to a September 20, 1993 statement to the protestant from the freight service, the merchandise is shipped from the factory in Cluj, Romania to the German port of Bremerhaven for shipment to New York. The freight service's statement breaks down the various components of the freight charges to 51% of the invoice representing "precarriage" from Cluj to Bremerhaven, of which 5% accounts for transportation from Cluj to the Romanian-Hungarian border and 46% accounts for transportation from the Romanian-Hungarian border to Bremerhaven. Transportation from Bremerhaven to New York accounts for 49% of the freight charges (the statement refers to shipment to New York, but the statement initially references its subject matter as being "transportation costs from Cluj to Baltimore," and the merchandise was entered into Baltimore).

The District has appraised the merchandise at the invoiced unit values, less international freight charges claimed at the time of entry. According to the District, the protestant has not provided a copy of any bill to show actual freight charges paid for the international freight. The protestant takes the position that the international freight charges deducted from the entries were incorrect amounts and that the merchandise should be appraised at the invoiced unit values less 49% of the charges billed by the freight consolidator. The 49%, according to the statement from the freight service, accounts for the freight from Bremerhaven to Baltimore.

ISSUE:

Whether the transaction value was properly determined in this case.

LAW AND ANALYSIS:

Transaction value 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, 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 imported merchandise by the buyer to, or for the benefit of, the seller.

In this case, the importer has failed to provide Customs with any documentation showing the actual shipping charges incurred. The amount to be deducted for international freight charges from the entered value of the imported merchandise is the actual cost of such freight. See Headquarters Ruling Letter (HRL) 542467 dated August 15, 1981. In this case the freight costs submitted by the protestant based on 49% of the total freight costs are estimates and do not reflect actual costs. Further, the importer has submitted only the freight consolidators invoices, and has failed to submit any documentation regarding the actual costs charged by the shipper.

The importer has not provided Customs with any documentation that supports the protest. The documentation that has been submitted contains inconsistencies such as identifying the port of entry as both New York and Baltimore, and identical freight charges for shipments of varying sizes. The importer's broker has been unresponsive to Customs' requests for clarification of existing documents and additional information. In addition, some of the entry documents are incomplete.

In this case, Customs has not been provided with any basis for finding that the imported merchandise was appraised incorrectly.

HOLDING:

Consistent with the decision set forth above, you are hereby directed to deny the protests. 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 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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