VAL R:C:V 545755 LPF
District Director
U.S. Customs Service
P.O. Box 3130
Laredo, TX 78044-3130
RE: Application for Further Review of Protest No. 2304-94- 100111;
Appraisement of Fresh Asparagus; Transaction Value of Identical Merchandise and Similar
Merchandise; 19 U.S.C. 1401a(c)
Dear Director:
This is a decision on an application for further review (AFR) of a protest filed May 26,
1994, and received in this office on August 24, 1994, against your decision concerning the
valuation of fresh asparagus. The entry was liquidated on February 25, 1994. We met with
counsel several times, including October 14, 1994, concerning the matter and received numerous
submissions, the most recent dated March 10, 1995, from counsel.
FACTS:
For the years prior to 1992, fresh asparagus imported on consignment by the protestant,
known as Hidalgo summer season asparagus, had been appraised based on the transaction value
of identical or similar merchandise, pursuant to Section 402(c) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA), codified at 19 U.S.C. 1401a. However,
none of the importers whose merchandise previously had served as the basis for the appraisement
of the protestant's imports established such a transaction value in 1992.
Although in 1992 the Laredo District appraised Pillsbury Company's Green Giant brand
asparagus based on transaction value, it was not utilized for appraisement of the subject
merchandise. Rather, the merchandise was appraised based on the deductive value of Nogales
winter season asparagus, pursuant to section 402(d) of the TAA. We have received Pillsbury's
Purchase and Sale Agreement and Quality Assurance Agreement for the asparagus imported in
1992.
Through numerous submissions including those dated December 12 and 13, 1994, counsel
contends that, in any event, the Green Giant asparagus cannot be considered "similar" to the
subject importations in accordance with section 402(c) of the TAA, unless appropriate adjustment
is possible. Counsel submits that the Green Giant "super pack" importations are comprised of
asparagus which is specially selected and trimmed, all of equal length, which has been selected
from the top 17% of all asparagus grown by just one of the many growers of Mexican summer
asparagus. In addition, counsel advises that the asparagus is resold to a few elite buyers in the
U.S. who, in turn, sell it for premiums of 100% or more to the consumer, in contrast to Mexican
summer asparagus, in general. Finally, counsel explains that the Green Giant asparagus also is
$3.00 to $4.00 per twelve pound crate more expensive than Mexican summer asparagus, in
general, in terms of packing processes and packing materials (e.g., costly wood crates as opposed
to cardboard or plastic).
Counsel submitted several affidavits from produce brokers and distributors concerning the
above and stating that in their opinion: 1) because of its superior, more costly selection, the "super
pack" almost never incurs losses during shipment to the U.S. retail grocer and 2) the "super
pack", as opposed to the regular asparagus, usually is sold to an upscale grocer or restaurant
specializing in deluxe quality produce.
At the request of this office, the appropriate Customs NIS conducted a search to identify,
among other things, the importers of fresh asparagus from Mexico during May to September
1992. From memoranda dated February 16, 1995 and April 25, 1995 we learned that a number of
these importations were appraised based on transaction value. Not including the Laredo District,
the pool of importers examined consisted of: Maurice A. Auerbach and Pandol Brothers (Port
#4701); Pinos Produce, Inc. (Port #2504); Wilderness Foods and Hillcrest Sales (Port #5206);
Promesa, Inc. (Port #1704 and #2801); Jackpot Harvesting (Port #2801); Incline Trading (Port
#2309); and W. Fay Produce and Tavilla Sales Co. (Port #2720).
Through various submissions and meetings, counsel proposed that the protestant's
merchandise should be appraised based on a fallback method of valuation, pursuant to section
402(f) of the TAA. In particular, one basis of appraisement offered by counsel is USDA monthly
asparagus market prices. Counsel has stated that to the extent the values of the Green Giant
asparagus exceed the USDA price calculations, the Green Giant and subject importations are
dissimilar.
ISSUE:
Whether the asparagus is appropriately appraised based on deductive value.
LAW AND ANALYSIS:
As you are aware, the preferred method of appraisement is transaction value pursuant to
section 402(b) of the TAA. Section 402(b)(1) of the TAA provides, in pertinent part, 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 amounts for the enumerated
statutory additions. In this case, because the imported merchandise is consigned to the importer,
a sale has not occurred at the time of importation. Accordingly, we agree with the concerned
parties that the merchandise cannot be appraised based on transaction value.
Because there is not a transaction value, we proceed sequentially through the subsequent
provisions of section 402 of the TAA. Accordingly, the first alternative basis of appraisement is
the transaction value of identical or similar merchandise. Section 402(c) of the TAA provides that
the transaction value of identical or similar merchandise is the transaction value, accepted as the
appraised value under section 402(b), of merchandise identical or similar to the merchandise
currently being appraised which was exported to the U.S. at or about the time that the
merchandise currently being appraised was exported to the U.S. Furthermore, section 402(c)
provides that such transaction values are based on sales of identical or similar merchandise at the
same commercial level and in substantially the same quantity as the sales of the merchandise being
appraised. However, if no such sale is found, the merchandise shall be appraised based on sales of
identical or similar merchandise at either a different commercial level or in different quantities,
adjusted to take account of any such difference.
In accordance with T.D. 91-15, 25 Cust. Bull. 31 (1991), it must be demonstrated that the
transaction value is fully acceptable under section 402(b) at the time of appraisement of the
merchandise under consideration in order to be applied as the transaction value of identical or
similar goods under section 402(c). In T.D. 91-15 it was explained that the information necessary
for the determination of the transaction value of identical or similar merchandise under section
402(c) could be
made on the basis of information provided by the importer or already available to Customs.
With regard to the application of the transaction value of the Green Giant importations as
the basis of the transaction value of the merchandise at issue, it is our position that the information
previously available to Customs demonstrates that the transaction value of the Green Giant
importations was fully acceptable under section 402(b) of the TAA at the time of the
appraisement of the subject merchandise. In particular, an agreement for the purchase and sale of
the asparagus between the Pillsbury Co. and the seller, invoices, and the Customs Form 7501
were available for the appraising officer's consideration. These documents were reviewed by our
office.
Furthermore, it is our position that although the Green Giant asparagus may not be
identical, it is, at the very least, similar to the subject merchandise. Section 402(h)(4) states that
"similar merchandise" means merchandise that: 1) was produced in the same country and by the
same person as the merchandise being appraised (although if such merchandise cannot be found,
merchandise not produced by the same person may be considered similar); 2) is like the
merchandise being appraised in characteristics and component material; and 3) is commercially
interchangeable with the merchandise being appraised.
Even if we accept counsel's statement that the Green Giant asparagus is specially trimmed
and selected from the top 17% of all asparagus grown by just one grower, we do not have
evidence substantiating that, on the contrary, the subject importations may not, at times, include
"top" asparagus as well. In fact, counsel explained in a prior submission that the harvesting of the
Hidalgo asparagus during the hot, wet periods of the summer months increase the incidence of
post-harvest fungal pathogen and bacterial problems of which the infected asparagus spears
remain symptomless until several days after packing. Further, counsel added that the
transportation distance for the Hidalgo asparagus from southern Mexico asparagus production
areas reduces shelf-life and further compounds quality problems. In particular,
insofar as the prolonged transportation/storage time reduces stored carbohydrate levels in the
spears, an increased metabolism occurs which, because of sugar reduction, causes the utilization
of proteins and hence the generation of ammonia yielding asparagus with a bitter taste. It
therefore is our understanding that regardless of whether the importations consist of the "top" or
"super packed" asparagus or not, all such asparagus is subject to: a) the same fungal pathogen and
bacterial problems which, we stress, are usually discernable only after the time of packing and b)
the same reduction in nutritional value and consumer appeal due to the generation of ammonia as
a result of the prolonged transportation/storage time, categorically, of Hidalgo summer season
asparagus.
Moreover, no documentation, such as contracts, purchase orders, proof of payment, and
the like, has been submitted indicating that the Green Giant asparagus and the subject asparagus
primarily are sold to, and accepted by, a particular type, or level, of consumers wishing to
purchase asparagus. The affidavits indicating that the asparagus may be resold to a few elite
buyers in the U.S. do not establish, on their own, that the products are dissimilar. Further, it is
our position that the cost differential of the packing process and packing materials of the
asparagus does not demonstrate that the merchandise itself is dissimilar. In any event, it should be
noted that Customs does not consider a difference in price for the goods, in and of itself, as proof
that merchandise is dissimilar.
Furthermore, after conducting an inquiry into Green Giant's selection and packaging
procedures, no information or documentation made available verifies that their imports are "super
packed" and selected from the top 17% of all asparagus grown by just one grower or are packed
with costly materials generally not utilized by other producers in the region. We note that the
statements made in this regard by counsel and by the asparagus brokers also have not been
substantiated by documentary or other concrete evidence which would enable us to find the
merchandise dissimilar.
Finally, the fact that Green Giant's importations may exceed the USDA price calculations
does not serve as any indication that the Green Giant and subject merchandise is dissimilar. With
regard to similarity of merchandise, our legal analysis only concerns a comparison of the
merchandise at issue (e.g., the Green Giant and subject asparagus). The USDA price calculations
do not have relevance in this regard. In fact, based on our research, it is our understanding that,
in part, these figures represent the price for asparagus grown in, and not imported to, the U.S.
Accordingly, pursuant to section 402(c), the transaction value of the Green Giant
importations, adjusted if necessary to account for different commercial levels or quantities
pursuant to section 402(c)(2), could serve as the basis of the transaction value for the subject
importations. However, there is no legal authority pursuant to section 402(c)(2) to make
adjustments for any differences that may exist in the amounts of the statutorily
enumerated additions to the price actually paid or payable, even if identified separately. On the
other hand, it should be noted that to the extent the Green Giant values include items such as
packing costs, it would be appropriate to make adjustments as necessary to account for different
commercial levels.
However, we do recognize and emphasize that in accordance with section 402(c)(2), if
two or more transaction values are determined for the similar merchandise, the subject
merchandise would be appraised based on the lowest of these values. Specifically, we draw your
attention to the fresh asparagus importations made outside of the Laredo District during the
summer of 1992. It is our understanding that, in at least some of these cases, the imports were
appraised based on transaction value, the merchandise was not shipped on consignment, and the
buyers and sellers were not related parties. These importations must be reexamined to determine
if, consistent with that stated above, they can serve as the basis of the transaction value for the
subject importations. If found to represent a viable transaction value, we reiterate that the
subject merchandise would be appraised based on the lowest of the potential values.
HOLDING:
Based on the information provided, the subject asparagus is appropriately appraised based
on the transaction value of identical or similar merchandise pursuant to section 402(c) of the
TAA. Further, if two or more transaction values exist for the similar merchandise, the subject
merchandise would be appraised based on the lowest of these values. You are directed to grant
the protest in accordance with the foregoing. A copy of this decision with the Form 19 should be
sent to the protestant.
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 mailing of 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 to the
public via the Diskette Subscription Service, the Freedom of Information Act and other public
access channels.
Sincerely,
John Durant, Director
Commercial Rulings Division