VAL CO:R:C:V 544746 DPS
District Director
U.S. Customs Service
P.O. Box 619050
1205 Royal Lane
Dallas/Ft. Worth, Texas 75261
RE: Application for Further Review of Protest No.
5501-4-000141; Appraisement of Heavy Machine Gun Parts;
402(f)
Dear Sir:
The subject protest and application for further review
concerns the appraisement of parts to a Russian DSHK 38 heavy
machine gun imported into the U.S. by John R. Black III ("Mr.
Black" or the "importer"), who states he is a gun collector.
Mr. Black protests Customs value advance in a notice dated
August 9, 1984, from $100.00 to $4500.00. We note that while
the entries and protest were filed in 1984, this Application
for Further Review was not received by Headquarters until
June, 1991.
FACTS:
On or about February 29, 1984, the importer caused to be
imported into the U.S., a complete group of parts and
accessories, less the receiver or frame, for a Russian DSHK
38 heavy machine gun. Submitted with the protest were the
following documents: (1) an executed permit from the Bureau
of Alcohol, Tobacco and Firearms, approving the importation
of the group of parts less the receiver or frame the
protestant imported; (2) a packing list of the parts
imported, indicating that the parts were packed in four
containers; and (3) a copy of an invoice from Fire-Power
International Limited, the seller, indicating that the
complete group of parts and accessories for the Russian DSHK
38 heavy machine gun (no receiver or frame) were priced at
$100.00.
One other piece of relevant documentation in the file
was a letter from the Mr. Black to the responsible import
specialist in Dallas/Ft. Worth at the time, explaining his
disagreement with Customs value advance action. The
information presented in that letter indicates that Mr. Black
paid $100.00 for the parts along with $1,250.00 to an
individual named Richard Wray, who is stated to have made all
of the necessary arrangements in obtaining the imported set
of gun parts.
Customs officials at the port of Dallas/Ft. Worth
questioned the extremely low invoice value of $100.00,
stating that the "invoice value appears subject to a
condition or consideration for which a value cannot be
determined" in accordance with the section 152.103(J)(1)(ii),
Customs Regulations (19 CFR 152.103(J)(1)(ii)).
In rejecting the $100.00 declared value, Dallas Customs
found price information in a gun publication about a similar,
but smaller gun, an M2 .50 caliber machine gun. The
published price for that gun in the U.S. was $3,550.00.
Because the subject DSHK 38 machine gun is somewhat similar
to the gun priced at $3,550.00, but larger, Dallas Customs
appraised the complete set of gun parts less the frame at
$4500.00, under 402(f) of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (19 U.S.C. 1401a(f);
TAA).
LAW & ANALYSIS:
Transaction value, the preferred method of appraisement
is defined in section 402(b)(1) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (19 U.S.C.
1401a(b); TAA) as the "price actually paid or payable for the
merchandise" plus five enumerated statutory additions. One
of the statutory additions, 402(b)(1)(B) of the TAA is: "any
selling commission incurred by the buyer with respect to the
imported merchandise."
Here, the information provided by the importer indicates
that he paid $100.00 for the gun parts, and $1250.00 for the
services rendered in obtaining the gun parts. While we
recognize that the declared value of the parts may have been
too low for merchandise of this kind, the information relied
upon by Dallas Customs does not meet the standards of
appraisement under 402(f) of the TAA. The chosen method of
appraisement by Dallas Customs is inconsistent with the
language set forth in 402(f)(2)(g). That provision
precludes Customs use of arbitrary and fictitious values.
Here, the merchandise imported is a complete set of gun parts
minus a frame. Thus, the imported merchandise is not a
complete gun. To appraise it as a gun, and determine its
value based on a comparison to an entirely different model
and caliber of gun with an unknown country of origin appears
to be exactly the type of situation prohibited by
402(f)(2)(g) of the TAA.
Under these circumstances, where it is impossible to
determine a true transaction value, we must proceed through
the methods of appraisement in the statute. Since sufficient
information about the value of similar or identical
merchandise has not been presented, we are unable to appraise
the merchandise under 402(c), which provides for the
transaction value of similar or identical merchandise.
Because we have no accurate cost and sales information about
the product imported, we are unable to appraise under the
deductive value method of appraisement, 402(d), or the
computed value method of appraisement, 402(e). Accordingly,
we must rely on 402(f), which provides, in part:
(1) If the value of imported merchandise cannot be
determined, or otherwise used for the purposes of
this Act, under subsections (b) through (e), the
merchandise shall be appraised for the purposes of
this Act on the basis of a value that is derived
from the methods set forth in such subsections,
with such methods being reasonably adjusted to the
extent necessary to arrive at a value.
Appraising the imported gun parts in accordance with
402(f), we take the stated price of $100.00 paid for the
parts, plus the $1250.00 paid as what we would consider
selling commissions, and reach a total appraised value for
the imported gun parts of $1350.00.
HOLDING:
Consistent with the decision set forth above, you are
directed to grant the protest and reliquidate the entry.
The subject merchandise should be appraised at $1350.00.
The protestant is entitled to a refund of duties paid on the
appraised value over and above $1350.00, plus interest
calculated at the statutory rate, from the date of payment of
duties. A copy of this decision should be attached to the
Customs Form 19, Notice of Action, sent to the protestant.
Sincerely,
John Durant, Director
Commercial Rulings Division