HQ 546523 - Application for Further Review of Protest (2904-96-100205); Currency Exchange; 19 CFR 152.1(c); 19 CFR 159.32. - United States International Trade Commision Rulings

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HQ 546523

August 11, 1997

RR:IT:VA 546523 er
CATEGORY: VALUATION

Port Director
U.S. Customs
Portland, Oregon

RE: Application for Further Review of Protest (2904-96-100205); Currency Exchange; 19 CFR 152.1(c); 19 CFR 159.32.

Dear Sir:

This is in response to the above-referenced protest and application for further review dated August 28, 1996, which was filed by Interpipe, Inc. and was forwarded by you to this office for response. We regret the delay in responding.

FACTS:

The subject entry involves merchandise imported from Germany by Interpipe, Inc. (“Interpipe”). The merchandise at issue was exported from Germany on February 6, 1995 and was entered into the United States on March 20, 1995. The entry was liquidated on June 7, 1996. The invoiced presented at the time of entry reflects a CIF price in DM. The importer paid for the imported merchandise in DM which they had previously purchased in Switzerland on August 2, 1994 at a rate of exchange of 1.7703 DM to the U.S. dollar. The importer claims that the merchandise should be appraised based on the exchange rate in effect at the time they purchased the DM. Because the importer paid for the merchandise in DM, the appraising officer believes the rate of exchange at which the DM were purchased is irrelevant. The appraising officer, accordingly, appraised the merchandise using the rate of exchange in effect on the date of export, February 6, 1995, which was 0.643211.

ISSUE:

Whether the merchandise was properly appraised using the exchange rate in effect on the date the merchandise was exported?

LAW AND ANALYSIS:

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”). Section 402(b)(1) 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. The “price actually paid or payable” is defined in section 402(b)(4) of the TAA as the “total payment...made, or to be made, for imported merchandise by the buyer to, or for the benefit of the seller.”

The Statement of Administrative Action, specifically adopted by Congress contains the following language further explaining the term “price actually paid or payable.” The price actually paid or payable shall be considered without regard to its method of derivation. It may be the result of discounts or increases, or may be arrived at through some formula, or may be the result of negotiations. See, HRL 544725, dated April 24, 1992.

The issue here is whether the “price actually paid or payable” was determined by the use of a formula. Customs has consistently held that currency conversion rates that are agreed to by the parties prior to the exportation of the merchandise constitute valid formulas for purposes of transaction value. Otherwise, the rate of exchange to be used for currency conversion purposes is that in effect on the date of exportation of the imported merchandise. See, HRL 544725, supra; HRL 543437, dated May 17, 1988 and HRL 543089, dated June 20, 1984. Section 152.1(c), Customs Regulations (19 CFR 152.1(c)) provides that the date of exportation or time of exportation referred to in section 402 of the TAA, means the actual date the merchandise finally leaves the country of exportation for the United States.

In this case, while the importer had previously purchased the DM at a different exchange rate than that in effect at the date of exportation, there is no evidence that the parties had entered into a currency exchange rate contract for purposes of setting the exchange rate for the price of the imported merchandise. Under these circumstances, the exchange rate at which the DM were purchased cannot be used to determine the transaction value of the imported merchandise and instead the rate of exchange in effect at the date of exportation controls. See, HRL 545574, dated October 12, 1994.

Based on the information provided, the merchandise at issue was exported on February 6, 1995, from Germany. Accordingly, based on the above-referenced regulations, the correct currency conversion rate from DM to U.S. dollars, for purposes of appraising the imported merchandise, is the exchange rate applicable on February 6, 1995.

HOLDING:

Based on the evidence presented, the transaction value of the imported merchandise is properly based on the exchange rate applicable on the date of its exportation from Germany.

You are directed to deny this protest. 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 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 the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

Acting Director
International Trade

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