VAL CO:R:C:V 545579 ILK
District Director
Baltimore, Maryland
RE: Application for Further Review of Protest No. 1303-93-100249
and 1303-93-100331; estimated versus actual freight charges
Dear Sir:
The following is in response to the above-referenced
Applications for Further Review.
FACTS:
These protests concern footwear imported from Romania by H H
Brown (hereinafter referred to as "the protestant"), from Clujana
(hereinafter referred to as "the manufacturer"), a Romanian
company. According to the protests, the ocean freight deducted
at the time the entries were made was incorrect. Requests from
the District and from Headquarters for further information
regarding the documentation provided in support of the protests
were not responded to by the broker. The entries which are the
subject of Protest No. 1303-93-100249 are also the subject of
Protest No. 1303-93-100331, in addition to other entries.
The documentation submitted with one entry shown on protest
No. 1303-93-10331 indicates that the imported merchandise
consisted of pineapples from Thailand. The date of entry shown
on the respective entry summary is different from that indicated
in the protest. According to the entry, the importer of the
pineapples is not the same as the importer identified on the
protest. We have insufficient information to take any other
action but to deny the protest with respect to this particular
entry.
The invoices for the imported merchandise indicate that the
delivery terms are either C&F or CFR. C&F commonly means that
the charges and international freight are included in the price.
According to the concerned import specialist, CFR has the same
meaning as C&F. The invoices contain what appear to be amounts
for inland freight and international freight handwritten onto the
invoices. The international freight figure is shown as a
nondutiable charge on the entry summary.
The protestant has submitted invoices from the freight
consolidator. Each of these invoices corresponds to each one of
the entries which is the subject of Protest No. 1303-93-100249,
and those which are duplicated in Protest No. 1303-93-100331.
There are no freight consolidator invoices submitted that
correspond to the remaining entries which are the subject of
Protest No. 1303-93-100331. Each freight invoice shows a total
amount billed for freight from Cluj to Baltimore, a documentation
fee and a discount for payment upon arrival. The freight charge
on each of the freight consolidator invoices is for the same
amount regardless of the quantity of merchandise shipped. The
quantity of merchandise shipped ranged from 388 cartons to 601
cartons. The amount deducted for international freight on the
original entries varied with each entry.
According to a September 20, 1993 statement to the
protestant from the freight service, the merchandise is shipped
from the factory in Cluj, Romania to the German port of
Bremerhaven for shipment to New York. The freight service's
statement breaks down the various components of the freight
charges to 51% of the invoice representing "precarriage" from
Cluj to Bremerhaven, of which 5% accounts for transportation from
Cluj to the Romanian-Hungarian border and 46% accounts for
transportation from the Romanian-Hungarian border to Bremerhaven.
Transportation from Bremerhaven to New York accounts for 49% of
the freight charges (the statement refers to shipment to New
York, but the statement initially references its subject matter
as being "transportation costs from Cluj to Baltimore," and the
merchandise was entered into Baltimore).
The District has appraised the merchandise at the invoiced
unit values, less international freight charges claimed at the
time of entry. According to the District, the protestant has not
provided a copy of any bill to show actual freight charges paid
for the international freight. The protestant takes the position
that the international freight charges deducted from the entries
were incorrect amounts and that the merchandise should be
appraised at the invoiced unit values less 49% of the charges
billed by the freight consolidator. The 49%, according to the
statement from the freight service, accounts for the freight from
Bremerhaven to Baltimore.
ISSUE:
Whether the transaction value was properly determined in
this case.
LAW AND ANALYSIS:
Transaction value is defined by 402(b)(1) 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 the
merchandise when sold for exportation to the United States..."
plus certain additions specified in 402(b)(1)(A) through (E).
The term "price actually paid or payable" is defined in TAA
402(b)(4)(A) 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 from the
country of exportation to the place of importation in the
United States) made, or to be made, for imported merchandise
by the buyer to, or for the benefit of, the seller.
In this case, the importer has failed to provide Customs
with any documentation showing the actual shipping charges
incurred. The amount to be deducted for international freight
charges from the entered value of the imported merchandise is the
actual cost of such freight. See Headquarters Ruling Letter
(HRL) 542467 dated August 15, 1981. In this case the freight
costs submitted by the protestant based on 49% of the total
freight costs are estimates and do not reflect actual costs.
Further, the importer has submitted only the freight
consolidators invoices, and has failed to submit any
documentation regarding the actual costs charged by the shipper.
The importer has not provided Customs with any documentation
that supports the protest. The documentation that has been
submitted contains inconsistencies such as identifying the port
of entry as both New York and Baltimore, and identical freight
charges for shipments of varying sizes. The importer's broker
has been unresponsive to Customs' requests for clarification of
existing documents and additional information. In addition, some
of the entry documents are incomplete.
In this case, Customs has not been provided with any basis
for finding that the imported merchandise was appraised
incorrectly.
HOLDING:
Consistent with the decision set forth above, you are hereby
directed to deny the protests. In accordance with Section
3A(11)(b) of Customs Directive 099 3550-065, dated August 4,
1993, Subject: Revised Protest Directive, this decision should be
mailed by your office to the protestant no later than 60 days
from the date of this letter. Any reliquidation of the entry in
accordance with the decision must be accomplished prior to the
decision. Sixty days from the date of the decision the Office of
Regulations and Rulings will take steps to make the decision
available to customs personnel via the Customs Rulings Module in
ACS and the public via the Diskette Subscription Service, Freedom
of Information Act and other public access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division