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HQ 547633





June 9, 2000

RR:IT:VA 547663 EK

CATEGORY: VALUATION

S.K. Ross & Assoc., P.C.
5777 West Century Blvd., Suite 520
Los Angeles, California 90045-5659

RE: Prospective Ruling Request; Currency Conversion

Dear Ms. Ross:

This is in response to your letter of January 28, 2000, requesting a ruling on behalf of your client, Stanley Electric Sales of America (hereinafter referred to as Stanley). Stanley is an importer of opto components including light emitting diodes (LED’s) and LED assemblies, liquid crystal displays (LSDs), and cold fluorescent lamps. The merchandise is imported from Japan.

FACTS:

Stanley negotiates and purchases the merchandise at issue in Japanese yen. The goods are subsequently imported; however, by agreement of the parties, payment is not actually made until between 90 and 180 days after their entry. At the time of entry, the currency conversion rate in effect on the date of export is applied to calculate the value. As a result, if the exchange rate fluctuates post-entry, there is a difference in the amount of U.S. dollars that are remitted between the calculation which results based on the exchange rate in effect at the time of entry and the exchange rate in effect at the time of payment.

Your position is that the price actually paid or payable should be based upon the currency exchange rate in effect at the time of exportation, and that any post-entry currency fluctuation should be disregarded in the determination of transaction value.

For purposes of this ruling request, we are assuming that Stanley and the seller are not related parties within the meaning of section 402(g) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA).

ISSUE:

Whether this particular currency fluctuation that occurs between the time of export and the time of payment by the importer to the seller should be disregarded in the valuation of the imported merchandise.

LAW AND ANALYSIS:

The preferred method of appraising merchandise imported into the United States is transaction value pursuant to §402(b) of the TAA. Section 402(b)(1) of the TAA 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 certain numerated additions.

In previous Headquarters rulings involving currency conversion, Customs has held that where a purchaser has paid or intends to pay for imported merchandise in foreign currency, that amount, converted to U.S. dollars in accordance with sections 159.31-159.39 of the Customs Regulations (19 CFR 159.31 to 19 CFR 159.38), constitutes the price actually paid or payable for the merchandise.

HQ Ruling 544739 dated January 21, 1992, held that the price actually paid or payable for imported merchandise was the peseta price presented on the invoice at the time the imported merchandise was entered, converted to U.S. dollars in accordance with the appropriate currency conversion rate in effect on the date of exportation. In addition, HQ 545574 dated October 12, 1994, held that the transaction value of an imported yacht, in U.S. dollars, was based on the exchange rate applicable on the date of its exportation to the United States. Section 152.1(c), Customs Regulations, provides that the date of exportation or time of exportation referred to in section 402 of the TAA, means the actual date the merchandise leaves the country of export for the United States.

In addition, Customs Statement of Administrative Action provides that Customs will use the date of exportation for currency conversion purposes, in accordance with Section 522 of the Tariff Act of 1930, as amended (31 U.S.C. 5151, formerly 31 U.S.C. 372). Section 159.32 of the Customs Regulations, states that the date of exportation for currency conversion shall be fixed in accordance with 152.1(c), which provides: ‘Date of exportation,’ or ‘time of exportation’ referred to in section 402, Tariff Act of 1930, as amended (19 U.S.C. 1401a), means the actual date the merchandise finally leaves the country of exportation for the United States.

In accordance with the Customs Regulations and the Statement of Administrative Action, and absent an agreement between the parties to adjust the price by reason of currency conversion rate fluctuations, the appropriate rate of currency conversion is the rate in effect on the date of exportation.

Therefore, we agree with your position that the price actually paid or payable for Stanley’s importations from Japan should be the value determined based on the currency conversion rate applicable at the time of exportation. Any U.S. dollars remitted relying on a post-entry rate of exchange does not effect the price actually paid or payable for appraisement purposes.

HOLDING:

The price actually paid or payable for purposes of determining transaction value should be the value determined based upon the currency conversion rate that is applicable at the time of exportation to the United States.

Sincerely,

Thomas L. Lobred, Chief
Value Branch

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