VAL RR:IT:VA 547061 CRS
Area Port Director
U.S. Customs Service
9901 Pacific Highway
Blaine, WA 98230
RE: AFR of Protest No. 3004-98-100021; waste material; hazardous waste; fallback method; all reasonable ways and means; 19 U.S.C. § 1500
Dear Sir:
This is in reply to an application for further review of protest no. 3004-98-100021, dated February 5, 1998, filed by counsel Junker & Thompson on behalf of the protestant and importer of record, Philip Environmental, Inc., concerning the valuation of certain imported waste material. The AFR was forwarded to this office under cover of your memorandum PRO-2-NG:C KAL dated February 17, 1998. Information contained in brackets [] will be deleted from any published version of this decision. We regret the delay in responding.
FACTS:
Philip Environmental (“Philip”), a British Columbia corporation, located in Delta, B.C., is a wholly owned subsidiary of Philip Services Corporation (“PSC”), an Ontario corporation. Philip is a full service provider of industrial cleaning and waste disposal services and operates a network of transfer, treatment and disposal facilities in the United States and Canada. These facilities are authorized by the U.S. and Canadian Governments to accept, treat, store and dispose of hazardous waste in accordance with applicable regulations.
Philip accepts waste from entities that generate the waste. Typically the waste is transported through a transfer station to a Treatment, Storage and Disposal Facility (“TSDF”) where the material is treated prior to disposal by third parties. Philip’s Delta facility acts primarily as a transfer station, shipping waste to Philip’s TSDFs in the United States. The usual destination is one of three TSDFs in the Puget Sound area. Philip’s Delta, B.C., facility is charged a fee by the U.S. operators based on the required processing cost and any third party charges for final disposal.
The imported merchandise that is the subject of the instant protest consists of sixty-seven entries of hazardous and non-hazardous waste material such as cadmium, lead, oil sludge, toluene, phosphoric acid, wax emulsion, oily water and filter press solids. Pro forma invoices submitted at the time of entry, e.g., in respect of entry no. [****************], declared a value of $1.00 “FOR CUSTOMS PURPOSES ONLY.” Subsequently, however, pursuant to a request for information from your office, Philip provided an intercompany billing invoice which showed that Philip was to remit to Philip Environmental Services, Seattle, Washington, an amount of [$*****] for the shipment in question. The imported merchandise was appraised under the fallback method of valuation on the basis of the information contained in the pro forma invoices.
Philip contends that the imported waste has no commercial value in its condition as imported and, moreover, that valuing the waste on the basis of the disposal fee it paid to Philip Environmental Services is not a reasonable method of appraisement under the fallback method. Philip asserts that the fee is a charge for services related to the disposal of the waste in the U.S. after importation rather than a payment for the waste itself. Further, Philip notes an appraisement based on the disposal fee is not derived from one of the preceding methods of valuation as required by the statute. As such, Philip contends the value was arbitrary and fictitious.
ISSUE:
The issue presented is whether the information presented is sufficient to show that Customs did not use all reasonable ways and means in appraising the imported merchandise.
LAW AND ANALYSIS:
Initially, we note that the protest and application for further review was timely filed under the statutory and regulatory provisions for protests (19 U.S.C. § 1514; 19 C.F.R. pt. 174). We also note that the issues protested are protestable issues (19 U.S.C. § 1514).
Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. § 1401a; TAA). The primary method of appraisement is transaction value, defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States” plus the value of certain statutorily enumerated additions thereto. 19 U.S.C. § 1401a(b)(1).
When imported merchandise cannot be appraised on the basis of transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in sequential order. The alternative bases of appraisement, in order of precedence, are: the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with section 402(f) of the TAA. 19 U.S.C. § 1401a(a)(1).
In the instant case, the imported waste was not the subject of a sale and therefore cannot be appraised under the transaction value method set forth in section 402(b) of the TAA. Similarly, the methods of appraisement set forth in sections 402(c)-(e) of the TAA are inapplicable in the present circumstances. Accordingly, the imported merchandise must be appraised under the fallback method provided for under section 402(f) of the TAA.
Section 402(f) of the TAA provides that imported merchandise is to be appraised on the basis of a method derived from one of the methods set forth in sections 402(b)-(e), such methods reasonably adjusted to the extent necessary to arrive at a value. However, there are certain prohibited bases of appraisement under section 402(f), including the selling price of merchandise produced in the United States, minimum values and arbitrary or fictitious values. 19 U.S.C. § 1401a(f)(2).
Nevertheless, under section 500 of the Tariff Act of 1930, as amended, which sets forth Customs’ general appraisement authority, the appraising officer may:
fix the final appraisement of merchandise by ascertaining or estimating the value thereof, under section 1401a of this title, by all reasonable ways and means in his power, any statement of cost or costs of production in any invoice, affidavit, declaration, other document to the contrary notwithstanding....
19 U.S.C. § 1500(a) (emphasis added).
In this regard, the Statement of Administrative Action (SAA), which forms part of the legislative history of the TAA, provides in pertinent part:
Section 500 allows Customs to consider the best evidence available in appraising merchandise....[It] authorize (sic) the appraising officer to weigh the nature of the evidence before him in appraising the imported merchandise. This could be the invoice, the contract between the parties, or even the recordkeeping of either of the parties to the contract.
Statement of Administrative Action, H.R. Doc. No. 153, 96 Cong., 1st Sess., pt 2, reprinted in, Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 (October 1981), at 67. Accordingly, if the value of imported merchandise cannot be determined on the basis of a method derived from sections 402(b)-(e), it is our position that the value of the imported waste material that is the subject of the instant protest may be determined under the fallback method provided for in section 402(f) of the TAA, using all reasonable ways and means, so long as the method is not specifically precluded under section 402(f)(2)(D).
In the instant case the imported waste material was appraised under section 402(f) on the basis of the fee paid by Philip, the importer of record, to Philip Environmental Services, the U.S. TSDF which processed the waste. This same approach was followed in Headquarters Ruling Letter (HRL) 545017 dated August 19, 1994, in regard to the valuation of waste oil imported for purposes of disposal. There we stated:
Based on the facts presented, especially in light of the fact that the protestant has not provided any other documentation such as invoices, contracts, or recordkeeping to show otherwise, we find that the protestant has not proffered sufficient evidence to prove that Customs employed unreasonable ways and means to ascertain the value of the imported merchandise. The appraising officer, under authority of section 500 and by utilizing a method of appraisement in accordance with section 402(f), appropriately considered all the evidence made available by the protestant and used "all reasonable ways and means in his power" to appraise the merchandise.
HRL 545017 at 3. See also, HRL 543904 dated March 20, 1987.
Similarly, we find that there is insufficient evidence in the instant case that Customs used unreasonable ways and means in appraising the imported waste at issue. The appraised value for, e.g., entry no. [***********] was neither arbitrary nor fictitious. Indeed, the basis for determining that value, the disposal fee, is the only available information which can be quantitatively documented. The payment is an amount agreed upon by the two parties to the transaction and represents the consideration for which Philip Environmental Services is willing to accept and process the imported waste. Accordingly, we find that the cognizant import specialist used “all reasonable ways and means in his power” to determine the value of the imported goods under section 402(f) of the TAA.
HOLDING:
In conformity with the foregoing the protest should be denied in full. The information presented is insufficient to show that Customs failed to use all reasonable ways and means in appraising the imported merchandise.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, this decision and the Customs Form 19 are to be mailed to the protestant no later than sixty days from the date of this letter. Any reliquidation of the entry or entries 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 make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Thomas L. Lobred
Chief, Value Branch