HQ 546104 - Application for Further Review of Protest No. 2304-95-100046; Computed Value under 19 U.S.C. ?1401a(e); Timeliness and Extension of Liquidation under 19 U.S.C. ?1504(a) and (b) - United States International Trade Commision Rulings

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HQ 546104

March 7, 1996

VAL RR:IT:VA 546104 LPF

CATEGORY: VALUATION ENTRY

Port Director
U.S. Customs Service
P.O. Box 3130
Laredo, TX 78044

RE: Application for Further Review of Protest No. 2304-95-100046; Computed Value under 19 U.S.C. ?1401a(e); Timeliness and Extension of Liquidation under 19 U.S.C. ?1504(a) and (b)

Dear Director:

This is a decision on an application for further review of a protest filed by the importer of record's surety on March 24, 1995, against your decision concerning the entry and appraisement of men's shorts. The entry at issue was liquidated on September 23, 1994. On January 3, 1995, Customs made formal demand on the surety for payment.

FACTS:

Men's shorts imported by BCI, Inc. of McAllen, TX were manufactured and assembled in a Mexican facility owned by BCI. Because your office felt the relationship between the importer and manufacturer influenced the price for the merchandise, 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, was found to be an inappropriate method of appraisement. We note that the importer of record designated the parties as related on the Entry Summary (CF 7501). After considering the alternative methods of appraisement, you decided to appraise the merchandise based on computed value, ?402(e). On April 13, 1994, BCI submitted a Computed Value Actual Cost Report (CF 247). Previously, in a fax to Customs dated March 24, 1994, BCI had requested that they be given until April 15, 1994, to complete the CF 247. Once all such actual costs had been reported, you determined they were 2.6% greater than the estimated costs from which BCI based its declared value for the merchandise. To this effect, BCI was notified in an August 24, 1994 Notice of Action (CF 29) that a value advance occurred.

Pursuant to 19 U.S.C. ?1504(a) and (b), the protestant claims the liquidation of the subject entry was null and void because it was made after the expiration of one year from the date of liquidation and the suspension or extension of liquidation for the subject entry was not properly issued and was improper for citing a reason other than one authorized by statute or regulation. Because Customs did not have the authority to extend the period for liquidation, the protestant submits that the entry liquidated "as entered" by operation of law, in each case, prior to the attempted liquidation.

ISSUES:

1. Whether the entry at issue was liquidated in a timely manner and whether the time period for liquidation properly was extended in accordance with 19 U.S.C. 1504(a) and (b).

2. Whether the merchandise was appropriately appraised under computed value.

LAW AND ANALYSIS:

1. Liquidation pursuant to 19 U.S.C. ?1501 and ?1504

Initially, we note that this protest was timely filed pursuant to 19 U.S.C. ?1514(c)(2)(A). The entry was liquidated on September 23, 1994, formal demand for payments was made on the surety on January 3, 1995, and the surety filed its protest on March 24, 1995. See 19 U.S.C. unsatisfied legal claim under its bond may be filed within 90 days from the date of mailing of notice of demand for payment against its bond.

Liquidation has been defined as "the final computation by the Customs Service of all duties (including any antidumping or countervailing duties) accruing on that entry." American Permac, Inc. v. United States, 10 CIT 535, 537 (1986). Generally, an entry of merchandise not liquidated within one year from the date of entry of such merchandise, "shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record." 19 U.S.C. ?1504(a). However, pursuant to 19 U.S.C. ?1504(b) Customs may extend this period if: 1) information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer; 2) liquidation is suspended as required by statute or court order; or 3) the importer, consignee, or his agent requests such extension and shows good cause therefor.

In the present matter, Customs had the authority to extend the initial one year time period for liquidation. From the Customs "ACS Entry Archive" and "Extension Suspension History File Locate" records for entry C23-XXXX059-9, it is evident that liquidation was extended one time and the notice of extension was given to the importer of record as well as the surety. The fax sent from BCI not only demonstrates that BCI knew Customs required additional information before liquidation could occur, but also that such information would not be made available from BCI until one year after entry. It appears, in this case, that the extension was done under "EXT CDE 01" which meant that "information needed for the proper appraisement or classification of the merchandise is not available to the appropriate customs officer." See 19 U.S.C. [Carreon] v. United States, 799 F. Supp. 120 (CIT 1992), rev'd, 6 F3d 763 (Fed. Cir. 1993). According to documents in the file, in particular the CF 29 and CF 247, the extensions of liquidation were proper because there was a question as to the valuation of the merchandise at issue.

2. Appraisement under computed value

As you are aware, the preferred method of appraising merchandise imported into the United States is transaction value pursuant to section 402(b) of the TAA. However, imported merchandise is appraised under transaction value only if the buyer and seller are not related, or if related, the transaction value is deemed to be acceptable.

In this case, it is our understanding that the parties are related pursuant to section 402(g). Section 402(b)(2)(B) provides that a transaction value between related parties will be deemed acceptable if an examination of the circumstances of sale indicates that the relationship between the parties did not influence the price actually paid or payable or where the transaction value closely approximated certain "test" values. Insofar as no evidence has been presented in this regard which supports the acceptability of transaction value, it is appropriate to proceed sequentially through the subsequent provisions of section 402 of the TAA for an alternative method of appraisement.

As it is our understanding that no transaction values of identical or similar merchandise exist from which it would be possible to base a value for the instant merchandise, it is appropriate to utilize a method of appraisement other than ?402(c). Thus, it is proper to proceed to computed value, ?402(e), as requested by the importer.

Specifically, section 402(e) provides that the computed value of imported merchandise is the sum of:

(A) the cost or value of the materials and the fabrication and other processing of any kind employed in the production of the imported merchandise;

(B) an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind as the imported merchandise that are made by the producers in the country of exportation for export to the United States;

(C) any assist, if its value is not included under subparagraph (A) or (B); and

(D) the packing costs.

The Statement of Administrative Action (SAA), adopted by Congress with the passage of the TAA, further explains that the cost or value of the materials and the fabrication and other processing employed in the production of the imported merchandise as well as the amount for profit and general expenses will be determined on the basis of information supplied by, or on behalf of, the producer and will be based upon the commercial accounts of the producer provided such accounts are consistent with the generally accepted accounting principles (GAAP) applied in the country where the goods are produced. See Statement of Administrative Action, H.R. Doc. No. 153, Pt. II, 96th Cong., 1st Sess. (1979), reprinted in Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 at 62 (1981). In this regard, the protestant has not submitted evidence calling into question your appraisement under computed value based on the CF 247 and the amounts provided therein concerning the producers' actual, as opposed to estimated, costs of production, profit, general expenses, and the like.

HOLDING:

Based on the evidence submitted, we hold as follows:

1. The entry at issue was liquidated in a timely manner and the time period for liquidation properly was extended in accordance with 19 U.S.C. 1504(a) and (b).

2. The merchandise was appropriately appraised under computed value.

The protest is denied in accordance with the foregoing. 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,

Acting Director,
International Trade Compliance

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