VAL OT:RR:CTF:VS H148715 EE
Port Director
U.S. Customs and Border Protection
Building 77, JFK International Airport
Jamaica, New York 11430
RE: Internal advice; charges incident to the international shipment of the merchandise; Automated Manifest Processing fee
Dear Sir:
This is in reply to your memorandum dated January 31, 2011, forwarding a request for internal advice submitted by Cerny Associates, P.C., on behalf of Hitachi America Ltd. (“HAL”), concerning whether the Automated Manifest Processing (“AMP”) fee charged by Hitachi Transport System, Ltd. (“HTSL”) should be included in the transaction value of the merchandise imported by HAL. The request for internal advice arose in connection with a focused assessment audit conducted by the New York office of the Regulatory Audit Division in 2008.
FACTS:
The transaction at issue concerns a shipment of ink jet printers sold by Hitachi Industrial Equipment Systems (“HIES”) to HAL. HTSL, a non-vessel operating common carrier (“NVOCC”) licensed with the Federal Maritime Commission, provides international transportation and other related services to HAL. For the purpose of this internal advice request, the only fee under consideration for the services offered by HTSL is the AMP fee, also known as the Automated Manifest System (“AMS”) fee.
Counsel for HAL submitted a copy of U.S. Customs and Border Protection (“CBP”) Form 7501, a commercial invoice for the printers from HIES to HAL, a bill of lading issued by HTSL, and an invoice from HTSL to HIES which references the bill of lading. The commercial invoice from HIES to HAL lists the quantity, unit price, and the total price for the imported merchandise less the amount for the freight (including the AMP fee). The term of sale listed on the invoice is “CIF
New York.” The invoice from HTSL to HIES lists the services and fees charged by HTSL including the AMP fee. The bill of lading issued by HTSL identifies the port of loading as Yokohama and the place of delivery as New York. The bottom section of the bill of lading references various charges by HTSL, including the AMP fee.
Counsel states that the AMP fee is charged by the carrier for filing manifest information with CBP. Counsel claims that the AMP fee constitutes a cost incident to the international shipment of the merchandise and, as such, should not be included in the transaction value of the merchandise imported by HAL.
ISSUE:
Whether the AMS fee that is included in the invoice price for the imported merchandise may be properly excluded from transaction value as a cost incident to the international shipment of the merchandise.
LAW AND ANALYSIS:
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 (TAA; 19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. 19 U.S.C. § 1401a(b)(1). If, for any reason, sufficient information is not available with respect to the additions to the price actually paid or payable, the transaction value of the imported merchandise is treated as one that cannot be determined. 19 U.S.C. § 1401a(b)(1).
The term “price actually paid or payable” is defined as:
[T]he 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.
19 U.S.C. § 1401a(b)(4)(A).
In Treasury Decision (“T.D.”) 00-20, CBP reiterated its longstanding position that with regard to freight, insurance and other costs incident to international shipment, including foreign inland freight, the importer of record must deduct the actual costs for these charges from the price actually paid or payable in determining transaction value, if these costs are included in the price actually paid or payable. The notice advised that CBP considers actual costs to constitute those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freight/insurance costs, a freight/insurance bill, a through bill of lading or proof of payment of the freight/insurance charges (i.e., letters of credit, checks, bank statements) are examples of some documents which typically serve as proof of such actual costs. Other types of evidence may be acceptable.
As previously noted, the term of sale listed on the invoice from HIES to HAL is “CIF New York.” Under the Incoterm “CIF”, the seller is obligated to pay the costs and freight necessary to bring the goods to the named port of destination in the U.S. See Incoterms 2000, 65 (1999). Thus, the “CIF New York” term of sale indicates that freight, as well as the AMP charge, is included in the price for the merchandise.
CBP has previously determined that 10+2 management fee, carrier agent booking fee, carrier bill of lading, CFS receiving, customs clearance, CY monitoring, documentation fee, equipment management fee, FCR/HBL issuance, LCL handling, port construction charge, port security charge, supply chain security fee, terminal handling charge, and wharfage fees are charges incident to the international shipment of the merchandise. See Headquarters Ruling Letter (“HQ”) H092560, dated April 7, 2010; see also HQ H119858, dated September 9, 2010; and HQ H119857, dated September 9, 2010. In HQ 547074, dated September 17, 1999, CBP noted that the types of fees ordinarily paid to freight forwarders are appropriately excluded from the price actually paid or payable. See also HQ H004683, dated April 12, 2007. The AMP fee at issue is charged by the carrier to electronically transmit cargo declaration information to CBP. In line with our ruling in HQ H092560, we find that the AMP fee is incident to the international shipment of the imported merchandise.
Counsel states that HTSL and HAL are related. CBP does not prohibit freight deductions, as appropriately evidenced by the actual costs for such amounts, in cases where the seller/shipper and freight or other service provider are related. See HQ 547074, dated September 17, 1999. Counsel submitted two bills of lading issued to unrelated customers which reflect the same amount for the AMP fee that was charged to HIES. We find that these documents are satisfactory evidence that the AMP fee charged is the actual cost. Therefore, as the AMP charge was itemized on the invoice from HIES and HAL and substantiated by the invoice from HTSL to HIES and the bill of lading issued by HTSL, it may be excluded from the price actually paid or payable for the imported merchandise.
HOLDING:
Based upon the information submitted, we find that the AMP fee charged by HTSL may be excluded from the price actually paid or payable for the imported merchandise.
This decision should be mailed to the internal advice applicant no later than sixty days from the date of this letter. On that date, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel and to the public via the CBP Home Page on the World Wide Web at www.cbp.gov, through the Freedom of Information Act, and by other methods of public distribution.
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch