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HQ 547738

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November 13, 2001

RR:IT:VA 547738 EK

CATEGORY: VALUATION

Port Director
Miami Service Port
Miami, Florida

RE: Application for Further Review of Protest No. 5201-00-100211; Pacific Isles Corp.; Transaction Value of Identical or Similar Merchandise, Computed Value

Dear Port Director:

This is in regard to the Application for Further Review noted above dated May 19, 2000, concerning the appraisement of various wearing apparel imported by Pacific Isles Corporation (importer). We regret the delay in responding.

FACTS:

The imported merchandise consists of children’s and men’s jeans and shorts. The importer purchased the materials for these items, including the fabric, from suppliers and delivered the items to manufacturers in the Dominican Republic. The wearing apparel was cut, sewn and embroidered in the Dominican Republic, and packed in boxes purchased and provided by the importer.

The merchandise was appraised pursuant to transaction value of identical or similar merchandise pursuant to section 402(c) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA). The merchandise was imported on various dates starting in March of 1999 through April, 1999. In a Notice of Action, CF 29, dated July 29, 1999, the importer was notified of a proposed action to increase the value of the imported merchandise due to the discovery of fabric and various items (buttons, hangtags, rivets, thread, etc.) supplied by the importer to the manufacturer and not declared to Customs. The importer was notified that there was insufficient information available to make the required adjustments for these items, and was given 20 days to respond. The importer did not respond, and on October 13, 1999, another Notice of Action, CF 29, was sent to the importer indicating that the merchandise would be appraised pursuant to transaction value of identical or similar merchandise, since information was not available to make the required adjustments to transaction value.

According to counsel, the importer erroneously believed that since the fabric had been purchased in the United States, it was only required to pay duty on the fabrication costs. The actual values of the assists (the fabric and another items) and freight costs were not provided and had not been substantiated by the importer. Therefore, a transaction value could not be determined. Counsel then argues that computed value should have been used to appraise the merchandise.

ISSUE:

Whether U.S. Customs properly appraised the imported merchandise pursuant to its transaction value of identical or similar merchandise pursuant to section 402(c) of the TAA.

LAW AND ANALYSIS:

The preferred method of appraising merchandise imported into the United States is transaction value pursuant to section 402(b), which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States”, plus amounts for certain enumerated additions described in section 402(b)(1)(A) – (E). Included in these additions is the value, apportioned as appropriate, of any assist. Assists are defined in section 402(h)(1)(A), as any “materials components, parts, and similar items incorporated in the imported merchandise” that are supplied either directly or indirectly, and free of charge or at a reduced cost, by the buyer of the imported merchandise. In this case, the fabric and other component parts provided by the importer to the manufacturers in the Dominican Republic are assists.

Section 402(b) provides for the following:

The price actually paid or payable for imported merchandise shall be increased by the amounts attributable to the items (and no others) described in subparagraphs (A) through (E) [including the value of any assists] only to the extent that each such amount . . . is based on sufficient information. If sufficient information is not available, for any reason, with respect to any amount referred to in the preceding sentence, the transaction value of the imported merchandise concerned shall be treated, for purposes of this section, as one that cannot be determined.

In this case, there was insufficient information to base an appraisement on transaction value since the value of the assists were not available. Therefore, the appraisement was based on transaction value of identical or similar merchandise pursuant to information available to Customs.

If an appraisement pursuant to transaction value of identical or similar merchandise is available to Customs, there is no authority to reject that method and continue sequentially through the remaining methods of appraisement. The methods of valuation set forth in section 402 of the TAA are set out in a sequential order of application. The importer cannot request the use of a computed value appraisement if in fact transaction value of identical or similar merchandise is available.

The importer has not provided any argument or documentation indicating that transaction value of identical or similar merchandise was not available or appropriate at the time of appraisement. As such, it is our conclusion that transaction value of identical or similar merchandise pursuant to section 402(c) of the TAA is proper.

HOLDING:

Customs properly appraised the merchandise according to the transaction value of identical or similar merchandise.

The protest should be DENIED. In accordance with Section 3A11(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with 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,
Chief Value Branch

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