CLA-2 CO:R:CV:V 544177, 544178 EK
District Director of Customs
Pembina, North Dakota
RE: Decision on Application for Further Review of
Protest Nos. 3303-7-000024, 3303-7-000025
Dear Sir:
These protests were filed against your decision in the
liquidation of various entries made by (company name)
(hereinafter referred to as importer). The merchandise was
appraised pursuant to section 402(f) of the Tariff Act of 1930,
as amended by the Trade Agreements Act of 1979 (19 U.S.C.
1401a(f); TAA). This was determined by Customs to be equal to
the invoice price, plus an additional 18 percent.
FACTS:
The merchandise in question consists of rowing machines.
The importer states that it purchased the rowing machines from
H.C. Enterprises. This company subsequently changed its name to
Weslo International (hereinafter referred to as WI).
In a joint venture between WI and the importer, Pro-X was
established to monitor production and insure quality control.
The importer indicates that its purchases were invoiced by WI to
Pro-X and then re-invoiced by Pro-X to the importer.
The importer states that although Pro-X is related to WI,
Pro-X was neither the seller nor the manufacturer of the merchan-
dise. The importer alleges that in prior transactions, Pro-X had
received a commission for the services it rendered. However, the
importer states that the commissions were discontinued and that
the services of Pro-X were subsequently terminated.
- 2 -
It is the position of the importer that transaction value
pursuant to section 402(b) is applicable in appraising the
merchandise. The importer asserts that the "price actually paid
or payable" for the merchandise when sold for exportation to the
United States is the price paid by the importer to WI, through
Pro-X.
ISSUE:
Whether transaction value pursuant to section 402(b) of the
TAA is proper in appraising the imported merchandise.
LAW AND ANALYSIS:
Transaction value, the preferred method of appraisement, is
defined in section 402(b) of the TAA as the "price actually paid
or payable for the merchandise when sold for exportation to the
United States . . . plus amounts equal to any selling commission
incurred by the buyer with respect to the imported merchandise."
The addition to the "price actually paid or payable" for the
selling commission must be based upon sufficient information. If
sufficient information is not available, then transaction value
of the imported merchandise cannot be determined. See, section
402(b)(1).
In this case, it is our conclusion that Pro-X is a selling
agent for WI. The importer claims that Pro-X had received a
commission in connection with prior transactions; however, the
commission payments were discontinued. Although the importer
claims that the services of Pro-X were discontinued, the
documentation submitted clearly establishes that Pro-X was still
involved with the transactions in question.
Transaction value pursuant to section 402(b) was properly
eliminated as a means of appraisement because the amount of the
commission paid to Pro-X could not be determined.
However, prior to resorting to a section 402(f)
appraisement, it is necessary to proceed sequentially through the
remaining bases of appraisement. Please note that if it becomes
necessary to appraise pursuant to section 402(f) of the TAA,
resort should be made to a previously determined customs value,
if available. Values which are determined pursuant to section
402(f) will be based, to the greatest extent possible, on
previously determined values. See, Statement of Administrative
Action.
- 3 -
Under the circumstances, the method established by Customs
used to liquidate the subject entries was proper. The 18 percent
added to the invoice unit values is not an arbitrary figure as
alleged by the importer. The figure was based upon the
importer's records of the last quarter of 1984. The difference
reflects the amount paid to Pro-X by the importer and the amount
remitted by Pro-X to WI, the seller, i.e., the selling
commission.
HOLDING:
In view of the foregoing, it is our conclusion that
transaction value pursuant to section 402(b) of the TAA was
properly rejected as a means of appraisement. Moreover, if it
becomes necessary to appraise the merchandise pursuant to section
402(f), the method established by Customs in liquidating the
subject entries was proper under the circumstances presented. To
this date, a Request for Information dated January 1985, has yet
to be answered by the importer.
The protest should be denied. A copy of this decision
should be attached to the Form 19, Notice of Action, to be sent
to the protestant.
Sincerely,
John Durant, Director,
Commercial Rulings Division