CLA-2 CO:R:C:V 544256 EK
Mark R. Kopp
Sr. Customs/Freight Admin.
233 Broadway
New York, New York 10279-0099
RE: Ruling Request Regarding Depreciation of Assists
Dear Sir:
This is in response to your letter of October 19, 1988,
requesting a ruling as to the proper valuation of certain assists
which your company (importer) is providing to the seller of
imported merchandise.
FACTS:
The importer is considering importing leather shoe uppers
from the People's Republic of China. The imported uppers will be
lasted and soled by one of six domestic companies. The importer
will be providing to the Chinese factory, free of charge,
manufacturing machinery. The machinery is 12-15 years old and
has been fully depreciated by the importer in accordance with
generally accepted accounting principles.
ISSUE:
What is the proper valuation of the machinery sent abroad,
free of charge, to the seller?
LAW AND ANALYSIS:
As you correctly indicate, the machinery is con-
sidered an assist pursuant to section 402(h) of the Tariff
Act of 1930, as amended by the Trade Agreements Act of 1979
(TAA; 19 U.S.C. 1401a(h)). Regarding the value of the
assist, section 152.103(d)(1) and (2), Customs Regulations
(19 CFR 152.103(d)(1) and (2)), states that, depending upon
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the type of assist, the value is either the cost of its
acquisition or the cost of its production. In either case, the
value of the assist includes transportation costs to the place of
production.
It is possible to depreciate an assist to a zero value. In
Headquarters Ruling No. 543233 dated August 9, 1984, the books
and records of the importer reflected a zero value for a mold in
accordance with generally accepted accounting principles. In
that case, we held that the value of the assist was limited to
the costs and expenses incurred in transporting the assist to the
place of production.
In this case, if in accordance with generally accepted
accounting principles, the value of the assist has been fully
depreciated according to the importer's records, then the value
of the assist will be equal to the cost of transporting the
assist to the place of production.
Sincerely,
John Durant, Director,
Commercial Rulings Division