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HQ 545628

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July 29, 1994

VAL CO:R:C:V 545628 CRS

CATEGORY: VALUATION

Mr. John Joerger
Import/Traffic Manager
Winning Ways, Inc.
9700 Commerce Parkway
Lenexa, KS 66219

RE: Discrepancies between visaed and commercial invoices; T.D. 86-56

Dear Mr. Joerger:

This is in reply to your letter of April 22, 1994, in which you requested a ruling on the acceptability of entry documentation where there are differences in the prices reflected on the visaed and commercial invoices.

FACTS:

Winning Ways, Inc., imports wearing apparel from various Asian countries, including Hong Kong, Taiwan, China and Indonesia. The company recently negotiated a new air freight contract that gives it control of costs and routing. Whenever circumstances call for a shipment to be sent by air rather than by sea, Winning Ways will pay the costs of air freight, and the suppliers will reduce the price of the merchandise accordingly. Neither the original nor the renegotiated price will include shipping costs. In each case Winning Ways will issue a new purchase order that reflects the renegotiated price of the merchandise. The suppliers will confirm the new purchase order, and any letters of credit will be amended to reflect the revised pricing, as will the commercial invoices. The re-negotiation will occur prior to exportation.

However, it may not be possible in all instances to obtain revised visaed invoices. In such cases, the export licenses or visaed invoices that accompany the foreign commercial invoices and the air bills of lading will reflect higher prices for the merchandise than will actually have been paid by Winning Ways.

ISSUE:

The issue presented is whether entry documentation is acceptable to Customs where there are discrepancies in the visaed and commercial invoice prices resulting from a re-negotiated price.

LAW AND ANALYSIS:

Customs has held that if a buyer and seller subsequently agree to a lower price for imported merchandise than was originally negotiated, the lower price will be accepted as the basis of transaction value provided it can be established that the lower, renegotiated price was agreed to before the merchandise was exported to the U.S. E.g., Headquarters Ruling Letter 544645 dated July 16, 1991. However, if there is no evidence to show that price reductions were effected before the date of exportation, Customs may properly appraise on the basis of the price originally negotiated. Esprit de Corp v. United States, 817 F.Supp. 975 (Ct. Int'l Trade 1993). In consequence of the new air freight contract negotiated with your vendors you have advised that should it be necessary to ship by air rather than by sea, the price of the imported merchandise will be reduced. In neither case will the price include shipping costs and therefore no adjustment to the price will be necessary in this respect. Accordingly, provided that the evidence submitted establishes that any price reductions were agreed to before the merchandise is exported to the U.S., the renegotiated price will constitute the price actually paid or payable for such merchandise.

Under Treasury Decision (T.D.) 86-56, any differences or discrepancies in the information in the entry documentation presented to Customs in connection with imported merchandise raise the presumption that the documents contain false or erroneous information. T.D. 86-56 provides further that entry documentation containing erroneous price or value information will not be accepted and must be returned to the importer for correction. 20 Cust. B. & Dec. 175, 177. However, the field instructions implementing T.D. 86-56, issued by Headquarters on May 1, 1986, state that Customs may accept an entry so long as an importer can provide an acceptable explanation for any differences in the price or value information contained in the entry documentation.

You have asked whether any discrepancies between the visaed and commercial invoices prices that may occur as a result of the circumstances described above will render the entry documentation unacceptable under T.D. 86-56. In the instant case, the discrepancies will be attributable from the re-negotiated price due to the change from ocean freight to air freight. On the basis of the information presented, and provided the transaction conforms to the facts set forth above, the differences in the invoice values have been adequately explained in accordance with T.D. 86-56. Consequently, the documents need not be returned for correction. A copy of this decision should be attached to the documentation presented with entries of the imported merchandise. HOLDING:

Pursuant to the foregoing, the renegotiated price will constitute the price actually paid or payable of the imported merchandise. In addition, the discrepancies between the visaed and commercial invoices have been adequately explained for the purposes of T.D. 86-56.

Sincerely,


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