VAL CO:R:C:V 545490 LPF
Kenneth J. Nunnekamp, Esq.
Finnegan, Henderson, Farabow, Garrett & Dunner
1300 I Street, NW
Washington, D.C. 20005-3315
RE: Inclusion of "finishing" costs within price actually paid or payable for merchandise; 19 U.S.C. 1401a(b)
Dear Mr. Nunnekamp:
This is in response to your letter of December 6, 1993, on
behalf of Lavanderia Candida, S.r.L. and Golden Trade, S.r.L., in
which you request a ruling concerning the valuation of jeans and
other denim products imported from Italy. We regret the delay in
responding.
FACTS:
Golden Trade, S.r.L. ("Golden Trade") and its subsidiary,
Lavanderia Candida, S.r.L. ("Candida"), intend to sell jeans and
other denim products to Sun Apparel, Inc. ("Sun Apparel") of El
Paso, TX. Candida performs what are described as "finishing"
services on the goods, including one or more of the following:
labeling, pressing, acid wash treatment, stone wash treatment,
bleaching, softening, quality control, and delivery.
Golden Trade wishes to invoice Sun Apparel separately for the
imported denim goods and the "finishing" services performed by
Candida. It is Golden Trade's position that such "finishing"
services may not be subject to duties and may be invoiced
separately.
ISSUE:
Whether "finishing" services performed by a subsidiary are
part of the price actually paid or payable for the imported
merchandise.
LAW AND ANALYSIS:
The preferred method of appraisement is transaction value
pursuant to section 402(b) of the Tariff Act of 1930, as amended
by the Trade Agreements Act of 1979 (TAA), codified at 19 U.S.C.
1401a. Section 402(b)(1) of the TAA provides, in pertinent part,
-2-
that the transaction value of imported merchandise is the "price
actually paid or payable for the merchandise when sold for
exportation to the United States" plus enumerated statutory
additions.
The "price actually paid or payable" is defined in section
402(b)(4)(A) of the TAA as 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...)
made, or to be made, for the imported merchandise by the buyer
to, or for the benefit of, the seller."
It has been Customs position that all monies paid to the
seller, or a party related to the seller, are part of the price
actually paid or payable for the merchandise under transaction
value. See Generra Sportswear Co. v. United States, 8 CAFC 132,
905 F.2d 377 (1990) and Headquarters Ruling Letter 557331, issued
September 9, 1993. As no information has been presented
indicating that such fees have been paid to a party other than
the seller or a party related to the seller, the payments made
for the enumerated "finishing" operations are part of the price
actually paid or payable. Customs has no legal authority to
exclude these payments from the price paid or payable for the
merchandise.
Furthermore, because we do not have information regarding the
"delivery" of the merchandise, we are unable, at this time, to
determine whether the concerned "delivery" costs may be excluded
from the price paid or payable for the merchandise.
HOLDING:
Based on the information provided, the enumerated "finishing"
services performed by the subsidiary are part of the price
actually paid or payable for the imported merchandise.
Sincerely,
John Durant, Director
Commercial Rulings Division