VAL CO:R:C:V 544435 ML
Ellen XXXX, Esq.
XXXXX P.C.
XXXXX Street
New York, N.Y. 10004
RE: Dutiability of Quota Payments Paid for the Importation of
Wearing Apparel
Dear Mrs. Rosenberg:
This is in response to your letter dated December 21, 1989,
requesting a prospective ruling regarding the dutiability of
quota payments made by Amerex (USA) Inc. (hereinafter referred to
as the "importer") in connection with the importation of wearing
apparel. We regret the delay in responding to your inquiry.
FACTS:
The importer has entered into an agreement with Chinatex
Beijing whereby approximately 6,000 dozen units of quota will be
made available to him at $XX.00 per dozen. The importer has also
entered into an agreement with Shanghai Garments (hereinafter
referred to as the "vendor") to purchase wearing apparel.
Letters of credit will be opened directly to the vendor for the
purchase of the merchandise. Beijing will assign the quota
allocation to the importer's designated exporter and thereafter,
the importer will pay Chinatex for each dozen of quota utilized.
Chinatex will give the importer an invoice reflecting the quota
purchase.
ISSUE:
Whether the quota charges paid by the importer to an
unrelated third party vendor are part of the "price actually paid
or payable" for the imported merchandise?
LAW AND ANALYSIS:
For purposes of this response, we are assuming that
transaction value, the preferred method of appraising
merchandise, is applicable. Transaction value is defined in
section 402(b) of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(b)) as the "price
actually paid or payable" for merchandise when sold for
exportation to the United States, plus certain enumerated
additions not relevant here.
Customs has consistently held that in cases where quota
payments are paid to the seller, or a party related to the
seller, the amount of the payments is part of the total payment
to the seller; and thus, is included in the transaction value of
the merchandise. See, Headquarters Ruling Letter (HRL) No.
542169 (TAA #6), dated September 18, 1980; HRL 543150 (TAA #14),
dated January 6, 1981; and HRL 543931, dated February 22, 1988.
The U.S. Court of Appeals for the Federal Circuit recently
affirmed this position in Generra Sportswear Co. v. United
States, Slip Op. 89-1652, dated May 22, 1990. In the instant
case, however, the payments made by the buyer to an unrelated
third party or to a governmental agency would not be part of the
"price actually paid or payable" for the imported merchandise.
HOLDING:
To the extent that payments are made by the importer to an
unrelated third party or to a governmental agency to supply
quota, these payments would not be part of the "price actually
paid or payable" for the imported merchandise.
Sincerely,
John Durant, Director