CLA-2 CO:R:C:V 544008 DHS
Area Director of Customs
Detroit, Michigan
RE: Decision of Application for Further Review of
Protest No. 3801-6-001587
Dear Sir:
The above-referenced protest and application for further
review concerns whether a bona-fide buying agency exists and
whether commissions paid to the foreign corporation are non-
dutiable buying commissions.
FACTS:
The importer has submitted a buying agency agreement as
well as documentation from the foreign corporation denying the
request of the importer to present a copy of the invoice from the
manufacturer or seller. There has not been any evidence
submitted which describes the relationships of the parties
involved or the duties and responsibilities of each.
ISSUE:
Is the submission of a buying agency agreement without the
existence of other evidence sufficient to find a buying agency
relationship?
LAW AND ANALYSIS:
Transaction value is defined in section 402, Tariff Act of
1930, as amended by the Trade Agreements Act of 1979 (TAA; 19
U.S.C. 1401a), as the price actually paid or payable for the
merchandise when sold for exportation to the United States, plus
amounts for the items specifically enumerated in section
402(b)(1) of the TAA. Although selling commissions are one of
the items listed therein, buying commissions are not included as
an item to be added to the price actually paid or payable. While
buying commissions cannot be added to the price actually paid or
payable, neither may they be deducted if the price actually paid
or payable includes a buying commission. The term "price
actually paid or payable" is defined in section 402(b)(4)(A) as:
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...the total payment (whether direct or indirect,
and exclusive of any costs, charges, or expenses
incurred for transportation, insurance, and
related services incident to the international
shipment of the merchandise from the country of
exportation to the place of importation in the
United States) made, or to be made, for imported
merchandise by the buyer to, or for the benefit
of, the seller.
It is clear from the statutory language that in order to
establish transaction value one must know the identity of the
seller and the amount actually paid or payable to him. Whether
or not the purported agent is the seller is to be determined by
the documents presented. Furthermore, the totality of the
evidence must demonstrate that the purported agent is in fact a
bona fide buying agent and not a selling agent or an independent
seller. See TAA No. 7, dated September 29, 1980 (542141).
The burden is placed upon the importer to prove the
existence of a bona fide agency relationship and that the charges
paid were, in fact, bona fide buying commissions. B & W
Wholesale Co. v. United States, 58 CCPA 92, C.A.D. 1010, 436 F.2d
1399 (1971); New Trends, Inc. v. United States, 10 CIT_, 645 F.
Supp. 957 (1986); J.C. Penney Purchasing Corporation et al v.
United States, 80 Cust. Ct..84, C.D. 4741 (1978), 451 F. Supp.
Ct. 1008, A.R.D. 251 (1969). If plaintiff does not clearly
establish that such a relationship existed, then the relationship
is not that of an agency. Globemaster Midwest, Inc. v. United
States, 67 Cust. Ct. 539, R.D. 11758, 337 F. Supp. 465 (1971).
The failure to produce documentary evidence of a transaction
which is normally reduced to writing, and that would be
indicative of agency status weakens the probative value. A & A
Trading Corp. v. United States, 65 Cust. Ct. 785, A.R.D. 276
(1970).
The importer relies upon the submission of the buying
agency agreement to support his contention that an
agent/principal relationship exists. No further evidence has
been offered to support this contention.
It is well settled that a bona fide agency agreement is not
dispositive of the determination that a bona fide buying agency
exists. New Trends, Inc. v. United States, supra. The buying
agency agreement is only evidence that the parties intended to
create an agency relationship. The agreement must be supported
by sufficient evidence. Rosenthal-Netter, Inc v. United States,
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12 CIT ____, Slip. Op. 88-9 (1988). In Hub Floral Mfg. v.
United States, 60 Cust. Ct 905, R.D. 11544 (1968), the court
noted that "Acts may support, or they may cast doubt upon, the
words which parties speak or reduce to writing." Accordingly, in
the absence of evidence demonstrating that the party did, in
fact, operate as a buying agent, we see no basis for providing
relief.
HOLDING:
In view of the foregoing, we are unable to find that a
buying agency exists. The importer has the burden of proving the
existence of a principal-agent relationship and he has failed to
provide sufficient evidence to meet this burden. Therefore, we
hold the commissions in question to be dutiable. Accordingly,
you are directed to deny the protest in accordance with the terms
of this decision. A copy of this decision should be attached to
the Customs From 19 to be sent to the protestant.
Sincerely,
John Durant, Director
Commercial Rulings Division