RR:IT:VA 546287 KCC
Director, South Texas CMC
U.S. Customs Service
P.O. Box 3130
Lincoln-Juarez Bridge
Laredo, Texas 78044-3130
RE: IA 1/96; transaction value; U.S. origin packing; packing
costs; 402(b)(1)(A) and (h); HRLs 546043, 544294, 544458
and 544667
Dear CMC Director:
This is in regard to a memorandum from Duty Assessment
Branch 2, Harlingen Texas, dated December 14, 1995, requesting
internal advice (IA 1/96) concerning the addition of United
States origin "packing costs" to the price actually paid or
payable for imported frozen vegetables in determining transaction
value pursuant to 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. A memorandum from the Acting Chief, Food and Chemicals
Branch, National Commodity Specialist Division, New York Seaport,
dated February 23, 1996, was taken into consideration in
rendering this decision.
FACTS:
The imported merchandise consists of frozen zucchini,
cauliflower, brussel sprouts and broccoli which were exported
from Mexico. All of the frozen vegetables were entered under the
appropriate heading for frozen vegetables, heading 0710,
Harmonized Tariff Schedule of the United State (HTSUS).
Additionally, the invoice listed separate items, quantities and
values for U.S. origin containers classified under subheading
9801.00.10, HTSUS. We note that the inquiry into this
transaction revealed a "double invoicing violation." The actual
cost paid for the frozen vegetables and the U.S. origin
containers was stated on a second invoice, containing the same
invoice number and date as the first invoice, which was not
presented with Customs entry documents.
ISSUE:
Is the value of the U.S. origin packing included in the
appraised value of the imported frozen vegetables?
LAW AND ANALYSIS:
The preferred method of appraising merchandise imported into
the United States is transaction value pursuant to 402(b) of the
TAA. 402(b) 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 certain enumerated additions, including
the packing costs incurred by the buyer with respect to the
imported merchandise. 19 U.S.C. 1401a(b)(1)(A).
Assuming transaction value is the appropriate basis of
appraisement, packing costs constitute an addition to the price
actually paid or payable. 19 U.S.C. 1401a(b)(1)(A). In this
regard, 402(h) of the TAA provides:
(3) The term "packing costs" means the cost of all
containers and coverings of whatever nature and of
packing, whether for labor or materials, used in
placing merchandise in condition, packed ready for
shipment to the United States.
19 U.S.C. 1401a(h)(3).
The cost of packing materials and containers incurred by the
buyer is included in the statutory definition of packing costs
and normally must be added to the price actually paid or payable.
However, HRL 544294 dated July 7, 1989, and HRL 544458 dated
February 23, 1990, held that, if packing material of U.S. origin
is classified under subheading 9801.00.10, HTSUS, there is no
legal authority to treat the packing as part of the appraised
value of the imported merchandise because items which are
separately classified must be separately appraised. This
position was affirmed in HRL 544667 dated July 30, 1991. There
we stated, in pertinent part, that:
With regard to determining appraised value, the principle
that imported merchandise be appraised in accordance with
its classification applies. Thus, where American packaging
is classified under subheading 9801.00.10, HTSUS, and the
merchandise packed in the American packaging is classified
in a subheading within the nomenclature between Chapters 1
and 97, no authority exists to combine the respective
appraised values. Because the packaging and merchandise are
treated as separately classifiable entities, their appraised
values are separate....
See also, HRL 546043 dated November 30, 1995, which modified HRL
545224 dated September 19, 1994, found that U.S. origin packing
materials/containers are classified under subheading 9801.00.10,
HTSUS, separately from the imported toys. Thus, the value of the
U.S. packing materials/containers was not included in the
appraised value of the imported toys.
Pursuant to HRL 544294, HRL 544458, HRL 544667 and HRL
546034, U.S. packing materials or packing containers are
separately classified from the imported merchandise contained
therein. In this case, the invoice describes the imported
merchandise, i.e., frozen vegetables - heading 0710, and U.S.
packing materials, i.e., plastic containers - subheading
9801.00.10. Since the items are separately classified, they are
separately appraised. Therefore, the value of the U.S. packing
materials or packing containers, i.e., the plastic containers, is
not included in the appraised value of the imported merchandise,
i.e., frozen vegetables.
HOLDING:
The value of the U.S. origin containers classified under
subheading 9801.00.10, HTSUS, is not part of the appraised value
of the imported merchandise.
The Office of Regulations and Rulings will take steps to
make this 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 60 days from the date of this decision.
Sincerely,
Acting Director
International Trade Compliance
Division