RR:IT:VA 546029 KCC
Port Director
U.S. Customs Service
6747 Engle Road, Room #350
Middleburg Heights, Ohio 44130
RE: Application for Further Review of Protest 4101-95-1000204; transaction value; the price actually paid or payable; 402(b)(4)(A); freight charge; unloading charge; invoice; HRLs 544538, 543827, 542467; articles not imported; insufficient evidence; antidumping duty; 9802.00.80; 19 CFR 159.41; 19 CFR Part 353; 19 U.S.C. §1673, 1677(1), 1514; ABC International Traders
Dear Port Director:
This is in regards to Application for Further Review of Protest 4101-95-1000204 concerning the proper method of determining transaction value for a mechanical transfer press system imported by Komatsu America Industries Corp. (the importer). The mechanical transfer press system was appraised pursuant to transaction value, §402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. §1401a(b)).
FACTS:
The merchandise at issue is a mechanical transfer press system. The merchandise was entered on May 22, 1990, and the entry of the merchandise was liquidated on April 17, 1995. The merchandise was appraised pursuant to transaction value, §402(b) of the TAA, based on the sale for export between Komatsu Ltd. Japan (the manufacturer) and the Ford Motor Walton Hill Stamping Plant (the buyer). You state that the terms of the contract between the manufacturer and the buyer are CIF Cleveland, Ohio with the total contract price of $8,125,554. Even though the terms of the contract were CIF Cleveland, Ohio, the total contract price included the following non-dutiable charges:
Freight $360,836 Installation $278,000
Insurance $ 14,874 Start-up $105,750
Unloading $ 12,600 Training $ 38,250
Duty/Fee $271,472
After deducting the above non-dutiable charges, you contend that the total dutiable value is $7,023,772. Additionally, you determined that the importer failed to pay antidumping duties, pursuant to A-588-810, against the full value of the mechanical transfer press system classified under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS).
In a protest timely filed on May 16, 1995, Counsel for the importer contends that the appraised value of the merchandise is incorrect. Counsel does not dispute the application of transaction value based on the sale for export between the manufacturer and the buyer. Specifically, Counsel states that the amounts used for the non-dutiable charges of freight and unloading are incorrect. Counsel contends that the freight cost is actually $457,108 and the unloading cost is actually $34,525. As evidence of the actual amount paid for freight, the importer provided the applicable contract between Komatsu Transport Systems Corp. (a subsidiary of the manufacturer), and Mammoet Shipping, the invoice from Mammoet, and the notice issued by the Bank of Tokyo confirming that it had transferred funds by wire from the account of Komatsu Transport to the account of Mammoet for the exact amount found on the Mammoet invoice. As evidence of the amount paid for unloading the merchandise in the U.S. after importation, the importer supplied the invoice issued by the Cleveland Stevedore Company to Nippon Express (the importer's broker).
Counsel maintains that the liquidation failed to make a deduction for the value of the air tanks and spiral stairs, which were part of the contract price, but were not imported into the U.S. Counsel states that these articles were delivered to the buyer after the mechanical transfer press system was imported. Counsel submitted the invoice from the Marubeni America Corp. (the manufacturer's U.S. supplier) indicating the air tanks and spiral stairs, valued at $82,818, were shipped to the buyer. Additionally, Counsel contends that it is incorrect for Customs to apply antidumping duties against the full value of the mechanical transfer press system classified under subheading 9802.00.80, HTSUS.
ISSUE:
1. Should a deduction be made for the actual cost of freight and unloading charges?
2. Should a deduction be made for the value of the air tanks and spiral stairs which were not imported into the U.S. with the mechanical transfer press system?
3. Should antidumping duties be assessed against the value of the mechanical transfer press system classified under subheading 9802.00.80, HTSUS?
LAW AND ANALYSIS:
The preferred method of appraisement is transaction value which is defined by §402(b)(1) of the 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 §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 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.
1. Freight and Unloading Costs
Freight costs pertaining to the international movement of merchandise from the country of exportation and unloading costs in the U.S. after importation are, to the extent included in the price actually paid or payable, to be excluded from the total payment made for imported merchandise appraised under transaction value. The costs associated with freight and unloading are not the estimated cost, but the actual cost paid to the freight forwarder, transport company, etc.
In Headquarters Ruling Letter (HRL) 544538, issued December 17, 1992, Customs acknowledged that pursuant to §402(b)(4)(A) the cost of international transportation is to be excluded from the price actually paid or payable for imported merchandise. However, Customs explained that in determining the cost of the international transportation or freight, it always looked to documentation from the freight company, as opposed to the documentation between the buyer and the seller which often contains estimated freight costs or charges. In essence, Customs requires documentation from the freight company because the actual cost, and not the estimated charges, for the freight is the amount that Customs excludes from the price actually paid or payable. See also HRL 543827, issued March 9, 1987, in which Customs determined that the proper deduction from the price actually paid or payable for marine insurance was the amount actually paid to the insurance company by the seller, as opposed to the amount paid by the related importer/buyer; and HRL 542467 dated August 13, 1981.
In this case, proper documentation establishing the actual freight and unloading costs to be excluded was submitted to Customs. As evidence of the actual amount paid for transportation of the merchandise, the importer provided the applicable contract between Komatsu Transport Systems Corp. and Mammoet Shipping, the invoice from Mammoet, and the notice issued by the Bank of Tokyo confirming that it had transferred funds by wire from the account of Komatsu Transport to the account of Mammoet for the exact amount found on the Mammoet invoice. As evidence of the amount paid for the unloading charge, the importer supplied the invoice issued by the Cleveland Stevedore Company to the importer's broker. For both the freight and unloading costs, the importer submitted the invoice from the freight forwarders and unloading company showing the actual costs of the services rendered. Therefore, the actual cost for freight and unloading are deducted in determining transaction value.
2. Air Tanks and Spiral Stairs
Counsel maintains that payments made for merchandise that was not imported are not part of the "price actually paid or payable." Therefore, the cost of the air tanks and spiral stairs should be deducted in determining transaction value. Counsel states that these articles were delivered to the buyer after the mechanical transfer press system was imported. Counsel submitted the invoice from the manufacturer's U.S. supplier indicating that the air tanks and spiral stairs, valued at $82,818, were shipped to the buyer. However, no evidence was submitted that the air tanks and spiral stairs were part of the contract price between the manufacturer and buyer. The contract price as evidenced by the purchase order dated July 1, 1988 and amendment dated August 24, 1988, describes the merchandise ordered as:
Design, build and deliver two TSBL-1600/1400 1500 (4500 ton) - 248" x 248" x 120" dual slide, top, link drive transfer presses with mechanical tri-axis transfer feed and four front to back electric driven bolsters per press.
We do not find any evidence showing that the value of the air tanks and spiral stairs are part of the contract price. Therefore, based on the evidence provided, a deduction for the value of the air tanks and spiral stairs is improper.
3. Antidumping Duties
The mechanical transfer press system is subject to antidumping duties as determined by the Department of Commerce in A-588-810.
§159.41, Customs Regulations (19 CFR §159.41) states that:
Antidumping duties shall be assessed in accordance with part 353, chapter III of this title.
Part 353, International Trade Administration, Commerce Regulations (19 CFR Part 353), concerns antidumping duties. Pursuant to 19 CFR Part 353, it is the responsibility of the Secretary of Commerce or his designee to publish "Antidumping Duty Order[s]." Pursuant to 19 CFR §353.21, the Secretary of Commerce instructed the Customs Service to assess antidumping duties on mechanical transfer press systems. Customs does not control this assessment, but follows the instructions given to it by the Secretary of Commerce or his designee. Additionally, the Department of Commerce also informed Customs that antidumping duties were to be assessed against the full value of the merchandise classified under subheading 9802.00.80, HTSUS. This instruction was transmitted throughout Customs on November 24, 1992, via e:mail message 3329113.
As we understand the issue, the protestant is asserting that it was improper to assess antidumping duties on the value of the American parts that were used in the assembly of the mechanical transfer press system. It appears that the protestant is asserting that the Department of Commerce has misinterpreted the relevant language of 19 U.S.C. 1673 which provides that the Department of Commerce, as the administering authority, is limited to assessing the antidumping duty on a class or kind of foreign merchandise imported into the United States. Apparently, the protestant is arguing that because the duties assessed pursuant to General Rules of Interpretation (GRIs) 1 and 3, HTSUS, are subject to a partial duty exemption provided by subheading 9802.00.80, HTSUS, the duties imposed under 19 U.S.C. 1673 are entitled to a similar exemption.
It is clear that, if our understanding of the protestant's argument is accurate, a determination would necessarily be based on an interpretation of 19 U.S.C. 1673 as to the scope of "foreign merchandise" used in that statute. Such interpretations were delegated to the Secretary of Commerce by 19 U.S.C. 1677(1). Moreover clarification on the scope of an antidumping duty order is a function of the Department of Commerce rather than that of the Customs Service. See, ABC International Traders v. U.S., CIT Slip Op. 95-97 (May 23, 1995). Consequently, the thrust of the protestant's compliant on this issue appears to be against a matter within the jurisdiction of the Department of Commerce.
HOLDING:
Based on the facts presented, the actual cost for international freight and for unloading reflected by the amount paid to the freight company and unloading company are deducted in determining transaction value. However, based on the evidence submitted, a deduction for the value of the air tanks and spiral stairs is improper. Pursuant to 19 CFR Part 353, Customs is directed by the Secretary of Commerce or his designee to assess antidumping duties pursuant to an "Antidumping Duty Order." As instructed by the Department of Commerce and pursuant to 19 U.S.C. §1503, antidumping duties are properly assessed against the full value of mechanical transfer press system classified under subheading 9802.00.80, HTSUS.
The protest should be GRANTED in part and DENIED in part as instructed above. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 4, 1993, Subject: Revised Protest Directive, this decision, together with the Customs Form 19, 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 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,
Acting Director
International Trade Compliance Division