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HQ 958331




November 14, 1995

CLA-2 R:C:M 958331 LTO

CATEGORY: CLASSIFICATION VALUATION

TARIFF NO.: 8543.80.90

Port Director
U.S. Customs Service
9901 Pacific Highway
Blaine, Washington 98230

RE: Protest 3004-95-100095; Solid State Logic 4000G Series Master Studio System; integrated music mixing console; HQs 542141, 544610, 957852; information insufficient to establish existence of bona fide buying agency; commissions are part of price actually paid or payable

Dear Port Director:

The following is our decision regarding Protest 3004-95-100095, which concerns the valuation and classification of the Solid State Logic 4000 G Series Master Studio System under the Harmonized Tariff Schedule of the United States (HTSUS). The subject merchandise was entered on July 22, 1994, and the entry was liquidated on February 10, 1995. The protest was timely filed on May 10, 1995.

FACTS:

The article in question is referred to as the Solid State Logic 4000 G Series Master Studio System ("SL 4000"), which is an integrated music mixing console. The SL 4000 combines numerous channels of sound input into one unamplified stereo output. It is used to take multiple audio inputs, mix them together into the sound desired by the engineer, and prepare the sound for amplification or recording onto either a compact disc or audio tape. The SL 4000 is used primarily by recording studios which specialize in creating masters for compact discs and soundtracks.

The SL 4000 was entered under subheading 8543.80.90 (now, 8543.80.98), HTSUS, which provides for other electrical machines and apparatus, having individual - 2 -
functions, not specified or included elsewhere in this chapter. The console was classified upon liquidation under subheading 8537.10.90, HTSUS, which provides for boards and panels for electric control or the distribution of electricity, for a voltage not exceeding 1,000 V.

ISSUE:

1. Whether the SL 4000 is classifiable as a board or panel for electric control or the distribution of electricity, for a voltage not exceeding 1,000 V, under subheading 8537.10.90, HTSUS, or as an electrical machine, having an individual function, not specified or included elsewhere in chapter 85, under subheading 8543.80.90, HTSUS.

2. Whether the commissions in question constitute part of the price actually paid or payable pursuant to 19 U.S.C. 1401a(b).

LAW AND ANALYSIS:

With regard to the classification issue, this office has already considered the appropriate classification for the SL 4000. In HQ 957852, dated May 16, 1995 (copy enclosed), the SL 4000 was classified under subheading 8543.80.90 (then, 8543.80.95), HTSUS, which provides for other electrical machines and apparatus, having individual functions, not specified or included elsewhere in chapter 85. This remains our position on the classification of this merchandise.

With regard to the valuation issue, merchandise imported into the United States is appraised in accordance with the provisions of Section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 1401a; TAA). The principal method of appraisement is transaction value, defined as "the price actually paid or payable for merchandise when sold for exportation to the United States," plus certain statutorily enumerated additions. 19 U.S.C. 1401a(b)(1).

The "price actually paid or payable" is defined as "the total payment (whether direct or indirect . . .) made, or to be made, for imported merchandise by the buyer to or for the benefit of the seller." 19 U.S.C. 402(b)(4). As a general matter, bona fide buying commissions are not added to the price actually paid or payable. Pier 1 Imports, Inc. v. United States, 708 F. Supp. 351, 13 CIT 161, 164 (1989); Rosenthal-Netter, Inc. v. United States, 679 F. Supp. 21, 23, 12 CIT 77, 78 (1988); Jay-Arr Slimwear, Inc. v. United States, 681 F. Supp. 875, 878, 12 CIT 133, 136 (1988).

The existence of a bona fide buying commission depends upon the relevant factors of the individual case. J.C. Penney Purchasing Corp. v. United States, 451 F. Supp. 973 (Cust. Ct. 1978). In this regard the importer has the burden of proving the - 3 -
existence of a bona fide agency relationship and that payments to the agent constitute bona fide buying commissions. Rosenthal-Netter, 679 F. Supp. 21, 23; New Trends, Inc. v. United States, 645 F. Supp. 957, 960, 10 CIT 637 (1986); B.W. Wholesale Co., Inc. v. United States, 462 F. Supp. 1399, 1403, 58 CCPA 92, C.A.D. 1010, (1971).

In determining whether an agency relationship exists, the primary consideration is the right of the principal to control the agent's conduct with respect to those matters entrusted to the agent. Jay-Arr Slimwear, 681 F. Supp. 875, 879. The degree of discretion granted the agent is a further consideration. New Trends, 645 F. Supp. 957. The existence of a buying agency agreement, moreover, has been viewed as supporting the existence of a buying agency relationship. Dorco Imports v. United States, 67 Cust. Ct. 503 (1971). In addition, the courts have examined such factors as whether the purported agent's actions were primarily for the benefit of the principal; whether the agent was responsible for the shipping and handling and the costs thereof; whether the language used in the commercial invoices was consistent with a principal-agent relationship; whether the agent bore the risk of loss for damaged, lost or defective merchandise; and whether the agent was financially detached from the manufacturer of the merchandise. New Trends, 645 F. Supp. 957.

Evidence submitted to Customs must clearly establish the fact of a bona fide buying agency. See HQ 544610 dated December 23, 1991. Moreover, "an invoice or other documentation from the actual foreign seller to the agent [is] required to establish that the agent is not a seller and to determine the price actually paid or payable to the seller." See HQ 542141 dated September 29, 1980.

The information submitted in connection with the instant protest is insufficient to support the existence of a bona fide agency relationship. As such, the commissions are part of the price actually paid or payable and are dutiable.

HOLDING:

The Solid State Logic 4000 G Series Master Studio System is classifiable under subheading 8543.80.90, HTSUS.

The commissions in question constitute part of the price actually paid or payable pursuant to 19 U.S.C. 1401a(b).

The protest should be GRANTED with regard to the classification issue, but DENIED with regard to the valuation issue. In accordance with section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, should be mailed by your office to the protestant no later than 60 days from the - 4 -
date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to the 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, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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