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HQ 544784

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August 10, 1992

VAL CO:R:C:V 544784 ML

CATEGORY: VALUATION

District Director
San Diego, California

RE: Proper Appraisement for Merchandise Under Deductive Value; Application For Further Review of Protest No. XXXX-XX-XXXXXX

Dear Sir:

The protest was filed against your decision in the liquidation of an entry made by Salico Farms, (hereinafter referred to as the ,,importer") of honeydew melons of various sizes. The merchandise was consigned to the importer and grown in Mexicali, Mexico. The merchandise was appraised using deductive value, based on the price of the greatest aggregate quantity.

FACTS:

The merchandise consisted of honeydew melons that were imported from Mexicali, Mexico, through Calexico on May 24, 1988. The merchandise was consigned to the importer and appraised using deductive value. The method of appraisement is not protested. The importer's position is that since the market in Mexicali is different than the market in Nogales, the merchandise should be appraised at values the importer sold the merchandise for in the United States, less allowable deductions, (i.e., the U.S. selling price, less deductions- The concerned import specialist is of the opinion that the merchandise was correctly appraised using the price of the greatest aggregate quantity.

ISSUE:

Whether an appraisement using deductive value includes the use of similar merchandise sold in the greatest aggregate quantity.

LAW AND ANALYSIS:

Deductive value, the method of appraisement used in connection with the imported merchandise, is defined in section 402(d)(2)(A)(i) and (ii) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(d)), as the price at which the merchandise concerned is sold in the condition as imported at or about the date of importation of the merchandise being appraised, sold in the greatest aggregate
quantity at or about such date, or before the close of the 90th day after the date of such importation. The unit price at which merchandise is sold in the greatest aggregate quantity is the unit price at which such merchandise is sold to unrelated persons, at the first commercial level after importation.

The importer stated that honeydews from Mexicali or the marketing of honeydews from Mexicali is different than the marketing of honeydews in Nogales. It is argued that this alleged discrepancy was said to cause substantial pricing and value differences. Therefore, the greatest aggregate quantity for the merchandise, as was found in Nogales and used in the ?402(d) appraisement was not appropriate.

Section 402(h)(4)(A) of the TAA states that similar merchandise is merchandise that--

"(iii) is commercially interchangeable with the merchandise being appraised;...."

We are of the opinion that if the merchandise was commercially interchangeable, (for example, the same USDA standard grade) then the merchandise found in Nogales was "similar" (as provided for in the statute) to the imported merchandise, and therefore, we must accept it. In our opinion, the growing region in Mexico has no relevance in the application of deductive value. Merchandise is either similar or it is not, as per the above definition. Since the concerned import specialist has found the honeydews to be similar, the import specialist's use of the greatest aggregate quantity of similar merchandise is in accord with the statute.

HOLDING:

Based on the foregoing, the deductive value of the imported merchandise was properly arrived at using the greatest aggregate quantity of similar merchandise as found in Nogales.

Accordingly, you are directed to deny the protest in full. A copy of this decision should be attached to the Customs Form 19 and mailed to the protestant as part of the notice of action on the protest.

Sincerely,

John Durant, Director
Commercial Rulings Division

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