HQ 547612 - Application for further review of Protest No. 4101-99-100270; Customs duties and other federal taxes; antidumping duties included in a DDP price; 19 U.S.C. § 1401a(b)(3); HRL 545304; HQ 542874 - United States International Trade Commision Rulings

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HQ 547612

December 27, 2001

RR:IT:VA 547612 CC

CATEGORY: VALUATION

Port Director
U.S. Customs Service
6747 Engle Road
Middleburg Heights, OH 44130

RE: Application for further review of Protest No. 4101-99-100270; Customs duties and other federal taxes; antidumping duties included in a DDP price; 19 U.S.C. § 1401a(b)(3); HRL 545304; HQ 542874

Dear Sir or Madam:

The above-referenced protest was forwarded to this office for further review. We have considered the facts and issues raised, and our decision follows. We regret the delay in responding.

FACTS:

The merchandise at issue consists of 27 entries of flat rolled, cold rolled carbon steel. The merchandise is manufactured by Hoogovens Ijmuiden (“Hoogovens”), a parent company of Hoogovens Steel USA, Inc. (“HSUSA”), which acts as a selling agent and the importer of record in sales between the manufacturer and its U.S. customers. The terms of sale for the merchandise at issue were delivered duty paid, (DDP), which included antidumping duties paid by HSUSA on behalf of the seller.

The dates of entry for the subject merchandise were between August 3, 1994, and July 24, 1995. The entries at issue were subject to antidumping duties (A-421-804). On August 19, 1993, the Department of Commerce published in the Federal Register a notice of its antidumping duty orders and amendments to final determinations of sales at less than fair value for cold-rolled carbon steel flat products from the Netherlands. 58 FR 44172. Pursuant to that notice, Customs was instructed to suspend liquidation and require a cash deposit for such merchandise manufactured by Hoogovens in the amount of 20.19 percent. This required deposit applied to the subject entries and was collected by Customs.

The Department of Commerce instructed Customs to liquidate the subject steel with antidumping duties, manufactured by Hoogovens and entered from August 1, 1994, through July 31, 1995, at the rate of $21.83 per metric ton. Consequently, on March 19, 1999, Customs liquidated the subject entries with antidumping duties at that rate.

On June 17, 1999, HSUSA filed this protest. It claims that the deposit rate (20.19%) rather than the rate at liquidation ($21.83 per metric ton) should be the rate used to calculate the amount of antidumping duties excluded from value pursuant to 19 U.S.C. § 1401a(b)(3). Also, HSUSA claims that the value should be adjusted to reflect post-importation adjustments.

ISSUES:

What is the rate of antidumping duties used in order to calculate the proper amount of antidumping duties to deduct from the price actually paid or payable pursuant to 19 U.S.C. § 1401a(b)(3).

Whether post-importation price adjustments should be considered in determining the transaction value of the imported merchandise.

LAW AND ANALYSIS:

Initially, we note that the protest was timely filed pursuant to 19 U.S.C. § 1514(c)(3).

Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA: 19 U.S.C. § 1401a). The preferred method of appraisement is transaction valuation, which is defined as the “price actually paid or payable for merchandise when sold for exportation to the United States,” plus five statutorily enumerated additions. 19 U.S.C. § 1401a(b)(1). For purposes of this protest, we have assumed that transaction value is the appropriate basis of appraisement.

Section 402(b)(3) of the TAA, 19 U.S.C. § 1401a(b)(3), provides that transaction value of imported merchandise does not include, if identified separately from the price actually paid or payable:

The customs duties and other Federal taxes currently payable on the imported merchandise by reason of its importation, and any Federal excise tax on, or measured by the value of, such merchandise for which vendors in the United States are ordinarily liable.

See also, 19 CFR § 152.103(i)(2).

In Headquarters Ruling Letter (HRL) 545304, dated January 4, 1994, we found that antidumping duties constitute “customs and other Federal taxes” such that they would not be included in transaction value pursuant to section 402(b)(3), provided the amount of such duties is identified separately from the price actually paid or payable for the imported merchandise. For the merchandise at issue, the terms of sale are DDP. The price included antidumping duties paid by the seller, and the antidumping duties are identified separately from the price on the invoices presented. Indeed, you do not dispute that antidumping duties should be excluded from transaction value. Consequently, there is no issue whether antidumping duties should be included in transaction value in this case.

The issue here is what rate of antidumping duties should be used to determine the amount of the antidumping duties excluded from transaction value. Concerning the issue of the amount of duties that can be deducted, we have found that only actual U.S. duties may be deducted from the price actually paid or payable under the authority of 19 U.S.C. § 1401a(b)(3)(B). See, HRL 542524, dated July 15, 1981 (TAA No. 34); and HRL 546111, dated March 1, 1996.

You believe that the rate of antidumping duties to be deducted from the price paid is the $21.83 per metric ton rate, which is the rate specified by the Department of Commerce in its liquidation instructions and thus the rate applied at liquidation. The protestant believes the correct rate of antidumping duties to be deducted from the price paid is the 20.19 percent rate, which was used to calculate the amount of antidumping duties deposited at entry.

Specifically, counsel for the protestant argues that the plain meaning of the statutory language “currently payable” of section 402(b)(3) of the TAA is that customs duties payable at the time of importation should be excluded because those are the duties that are currently payable. Counsel states, “A final antidumping duty assessment rate cannot be ‘currently payable’ at the time of importation because that rate is not known until months and even years after importation. Thus, in order to give meaning to all of the words in the statute, Customs must look to those duties that are owed at the time of importation, rather than on the date of liquidation.” In addition, counsel relies heavily on HQ 542874, dated August 27, 1982, which clarified HQ 542467, dated August 13, 1981.

HQ 542467 concerned the interpretation of section 402(b)(3) of the TAA. The inquirer had asked, in pertinent part, whether the manufacturer’s amounts on the relevant invoice, which listed estimated duties, should be the duties currently payable, rather than the actual duties paid. The inquirer also asked that if the actual duties are deducted, “when is the actual rate used, at [the] time of importation, or liquidation?” We responded that, “[i]n determining the duties, the actual rate at the time of liquidation must be used.”

In HQ 542874, the inquirer asked that we reconsider this decision, arguing that the actual rate of duty used should be based upon the rate in effect at the time of entry. We stated, “Our response to the specific question posed [in HQ 542467] was merely intended to convey that the actual rate, based upon the rates in effect at the time of entry, must be applied at the time of liquidation. We agree that our response may have created an ambiguity of meaning not so intended. We trust that our explanation will clarify any misunderstanding.”

It appears that we did not fully succeed in HQ 542874 of clarifying any misunderstanding, for counsel claims that the rate in effect at the time of entry means the rate deposited at entry, and thus for antidumping duties the deposit rate. We disagree with counsel’s contention.

As stated above, we have ruled that only actual duties may be excluded from the price actually paid or payable pursuant to section 402(b)(3). HQ 542874 is consistent with this position and meant the following. Actual duties are the amount at which goods are liquidated and not estimated duties, which are an amount at which a deposit is made at the time of entry. The amount of actual duties paid is based on a rate of duty determined at liquidation, which may be different than the determination as to what rate applied when estimated duties were deposited at the time of entry. Although the determination of the rate of duty is made at liquidation, the rate applied is that in effect at the time of entry. Oftentimes, the reason for a change in the actual amount of duties owed is that a different classification for the merchandise is used to pay actual duties at liquidation than the classification used to deposit duties at entry. When a different classification is used at liquidation, however, the rate applied would be the rate applicable to that classification at the time of entry.

The following illustration may clarify this matter. Goods are imported DDP, thus the seller is responsible for paying the duties, which are separately identified from the price actually paid or payable. At the time of entry, the goods are classified under subheading X, HTSUS, which takes a duty rate of 5 percent. At the time of liquidation, subheading X takes a duty rate of 4 percent. At the time of liquidation, Customs determined that the subject merchandise should be classified under subheading Y, which took a 10 percent ad valorem duty rate at the time of entry and 9 percent ad valorem duty rate at the time of liquidation. What HQ 542874 states is that the actual rate is the rate determined at the time of liquidation, which is in effect at the time of entry. Thus for this example, since subheading Y is the applicable classification determined at the time of liquidation, the applicable rate of duty at the time of entry for that classification, 10 percent ad valorem, applies.

Thus, according to HQ 542874, actual duty amounts may be excluded pursuant to section 402(b)(3), and not estimated amounts deposited at entry. A determination as to the rate used to calculate the actual amounts at liquidation may be different than the determination made at the time of entry. However, the rates applicable at the time of entry are used to calculate actual duties owed. Simply stated, 1999 duty rates are not applied to 1994 entries.

Since duties referenced in section 402(b)(3) include antidumping duties for value purposes, the findings of HQ 542874 are applicable here. Consequently, since the deposit rate paid at entry is not considered the actual antidumping duties paid or payable, it would not be the rate used to calculate the amount of antidumping duties excluded when calculating the value. Instead, the rate determined at liquidation applicable to the subject entries, made in 1994 and 1995, which was $21.83 per metric ton, is the correct rate to apply.

Also, we cannot agree with counsel that currently payable refers only to duties payable at the time of importation. For example, if Customs determines that the final amount of duty payable at liquidation will be a different amount than that deposited at entry, Customs will send a notice of proposed action to liquidate the entries at that amount, which would be an amount currently payable, and the amount owed or to be refunded based on what was deposited by the importer at entry. In addition, since we have consistently ruled that only actual duties may be deducted from the price actually paid or payable pursuant to section 403(b)(3) and that the amount currently payable is the customs duties actually payable, the term currently payable encompasses actual duty amounts determined at the time of liquidation.

Based on the foregoing, the rate of antidumping duties deductible from the price actually paid or payable is $21.83 per metric ton.

The protestant’s second claim is that the value should be adjusted to reflect post-importation adjustments. Counsel states that HSUSA made certain post importation price adjustments in the form of lump sum debits and credits to its customers. Although HSUSA is not able to link debit and credit notes to particular invoices or entries, counsel claims that the price adjustments are specific to particular customers. “Using these pieces of information,” a chart was submitted, which “shows each entry affected by a post-importation price adjustments [sic] through the port of Cleveland during 1994 and 1995 on a customer-specific basis,” according to counsel. Also, this chart contains the total credits and debits granted to each customer. In addition, submitted were credit and debit notes.

19 U.S.C. § 1401a(b)(4)(B) provides that any rebate of, or other decrease in, the price actually paid or payable that is made or otherwise effected between the buyer and seller after the date of importation of the merchandise into the United States shall be disregarded in determining transaction value. The Statement of Administrative Action (“SSA”), as adopted by Congress and relating to the TAA, at p. 46, states, “Changes in a price actually paid or payable which are arrived at subsequent to the time of importation shall not be taken into account in determining a transaction value.” Statement of Administrative Action, H.R. Doc. No. 153, Pt II, 96th Congress, 1st Sess. (1979). We have consistently ruled that retroactive price adjustments made after the merchandise was imported do not affect the transaction value of imported merchandise. See, e.g., HRL 547027, dated September 17, 1999; HRL 547273, dated April 22, 1999; and HRL 542797, dated May 19, 1982 (TAA #48;CSD 82-126. The protestant characterizes the price adjustments as made post-importation. The documentation does not show that price adjustments were arrived at prior to importation. Therefore, based on the applicable law and administrative precedent, the protestant’s claim for post-importation price adjustments is denied.

HOLDING:

The antidumping duties to be deducted from the price actually paid or payable pursuant to 19 U.S.C. § 1401a(b)(3) are the actual antidumping duties, which are determined at the time of liquidation based on the rate in effect for the subject entries. Therefore, the rate of antidumping duties deductible from the price actually paid or payable is $21.83 per metric ton.

Post-importation price adjustments do not affect the transaction value of the imported merchandise. Accordingly, the protest should be DENIED in full.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.

Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Virginia L. Brown

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