HQ 545716 - Application for Further Review of Protest No. 5501-94- 100083; Price Actually Paid or Payable; Obsolete Merchandise; 19 USC 1401a(b) - United States International Trade Commision Rulings

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HQ 545716

Janaury 31, 1995

VAL CO:R:C:V 545716 LPF

CATEGORY: VALUATION

District Director
U.S. Customs Service
P.O. Box 619050
1205 Royal Lane
DFW Airport TX 75261-0950

RE: Application for Further Review of Protest No. 5501-94- 100083; Price Actually Paid or Payable; Obsolete Merchandise; 19 USC 1401a(b)

Dear Sir:

This is a decision on an application for further review of a protest filed March 29, 1994, against your decision concerning the appraisement of various computer components. The entry was liquidated on January 3, 1994. We regret the delay in responding.

FACTS:

On July 26, 1993, computer components were entered at Dallas/Fort Worth Airport, TX. An invoice dated July 22, 1993 from Adelantos De Tecnologia, S.A. de C.V. (Adtec) of Guadalajara, MX to Emery Customs Broker of Grapevine, TX indicates a price of $1,937,895.36 for mother board parts as per submitted list. We note that the relevant Customs Form (CF) 7501 indicates SCI Systems of Huntsville, AL as the importer of record and SCI Adtec of Grapevine, TX as the ultimate consignee. Based on the price reflected on the original CF 7501, you found that the dutiable value of the merchandise was $1,321,584.00.

The protestant, SCI Systems, asserts that the merchandise should be appraised at $40,265.23, the price reflected on an invoice dated December 9, 1993 from Adtec to Danari International (Danari) of Santa Cruz, CA for lot Hewlett-Packard material. It is our understanding that the protestant amended the CF 7501 to reflect this value. This price also is included on a purchase order dated July 14, 1993 from Danari to Adtec. In addition, the file contains a bill of lading dated July 28, 1993 from SCI Adtec, consigning merchandise to Danari. In support of its position, the protestant has submitted a letter from Adtec dated October 8, 1993 stating that the merchandise shipped on July 26, 1993 was obsolete material.

ISSUE:

Based on the facts provided, was the merchandise appropriately appraised using the original Adtec/Emery Customs Broker invoice price.

LAW AND ANALYSIS:

As you are aware, the preferred method of appraisement is transaction value pursuant to section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA), codified at 19 U.S.C. 1401a. Section 402(b)(1) of the TAA provides, in pertinent part, that the transaction value of imported merchandise is the "price actually paid or payable for the merchandise when sold for exportation to the United States" plus enumerated statutory additions. Although it is our understanding that the buyer and seller of the merchandise at issue are related parties pursuant to section 402(g) of the TAA, because that particular issue currently is not before us and we do not possess information in this regard, this decision will not address the acceptability of the related party pricing.

In sum, the protestant has provided the following documentation to substantiate its position: 1) an invoice dated December 9, 1993 from Adtec to Danari for lot Hewlett-Packard material; 2) a purchase order dated July 14, 1993 from Danari to Adtec; and 3) a letter from Adtec dated October 8, 1993 stating that the merchandise was obsolete material. It is our position that these documents do not provide satisfactory evidentiary support for the protestant's claim.

We do not believe the invoice, dated after entry, from Adtec to Danari of Santa Cruz, CA for lot Hewlett-Packard material serves to discredit the price on the invoice, dated before entry, from Adtec to Emery Customs Broker, apparently for shipment to SCI Adtec, for mother board parts. The protestant has not adequately demonstrated a meaningful nexus between the Adtec/Danari invoice, and the accompanying purchase order, to the instant transaction. Moreover, the letter from Adtec indicating that the merchandise was obsolete material does not, in and of itself, substantiate the fact that the mother board parts were obsolete and should be devalued to approximately three percent of the value based on the original invoice.

HOLDING:

Based on the information provided, we cannot find that the merchandise was incorrectly appraised using the original Adtec/Emery Customs Broker invoice price. You are directed to deny 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, the Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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