Customs Ruling HQ H234029 - -labeled them in Tijuana to state falsely “Made in Mexico.” Coleman does not dispute that the hangers supplied by Velazquez to Coleman were of Chinese origin, not Mexican origin as entered. See Supplement to Protest (July 2, 2012).

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HQ H234029
Apr 22, 2013

Type : • HTSUS :

OT:RR:CTF:ER H234029 RDC

Port Director U.S. Customs and Border Protection 9777 Via De La Amistad San Diego, CA 92154 Att: Judith Vance

Dear Port Director:

This is in response to an application for further review of Protest Number 2506-12-100045 submitted by H. H. Coleman Company (hereinafter, Coleman or the protestant). Our decision follows.

FACTS:

On October 6, 2008, the Department of Commerce (DOC) published the notice of the Antidumping Duty Order: Steel Wire Garment Hangers from the People's Republic of China (73 Fed. Reg. 58,111). On July 29, 2009, Coleman made entry of wire hangers as originating in Mexico and claimed duty-free treatment under the North American Free Trade Agreement (NAFTA). Coleman bought the hangers from Arturo Huizar Velazquez (Velazquez) owner of Proveedoras de Limpiadurias de Tijuana. On February 17, 2011, Velazquez pled guilty to conspiracy, entry of goods into the United States by means of false statements, wire fraud and money laundering, all charges arising from this companies’ importation of Chinese-manufactured steel wire hangers claimed as originating in Mexico. Velazquez admitted that he purchased Chinese manufactured steel wire garment hangers, shipped them from China, through the United States to Mexico, and then re-labeled them in Tijuana to state falsely “Made in Mexico.” Coleman does not dispute that the hangers supplied by Velazquez to Coleman were of Chinese origin, not Mexican origin as entered. See Supplement to Protest (July 2, 2012).

The Protestant imported 750,000 units of wire hangers (1500 boxes with 500 units of wire hangers per box) and declared the value of $3,750.00 for the imported merchandise. The Port determined that the wire hangers were undervalued and recalculated the value to $33,213.75 (.044285 per hanger) pursuant to 19 U.S.C. § 1401a(f). Coleman does not dispute that the entered value should have been declared higher, because the declared value of $3,750.00 was the freight charge (no documentation was submitted to U.S. Customs and Border Protection (CBP) to indicate this was the actual or estimated freight charge). However, Protestant requests for CBP to reliquidate the entry at the customs value of $20,505.00. Coleman claims that its broker, Ferrer Brokers, Inc., made a mistake when filing the entry and asserts that the correct entered value for the subject entry should have been $20,505.00, based on the pro forma invoice issued by Mr. Velazquez. A copy of the pro forma invoice, in the amount of $20,505.00, was submitted for our review.

Protestant claims that the quantity and purchase price of the wire hangers frequently changed from the time the purchase order was made to the time of entry (no purchase orders were provided for our review). Protestant states that the original purchase order was issued for 750 boxes, at a purchase price of $19,725.00. However, on the pro forma invoice dated July 29, 2009, the quantity was increased to 1,336 boxes, with a purchase price of $21,340.20. However, upon receipt of the shipment, Protestant discovered that 36 boxes were not included in the shipment, and, as a result, Protestant paid $20,505.00 to its Mexican supplier. Protestant attached its wire transfer to this protest, which allegedly shows the payment made for the merchandise declared to CBP in the subject entry.

DOC message number 1152308, dated June 1, 2011, instructed CBP to liquidate entries of hangers subject to the order, entered between March 25, 2008 and September 30, 2009, and "exported from the PRC by the PRC-wide entity (A-570-918)" at the specified rate. On November 4, 2011, CBP liquidated the protested entry per DOC message number 1152308 and assessed antidumping duty at the revised value computed by CBP. On May 2, 2012, Coleman filed the instant protest. Initially, Coleman disputed that the hangers were of Chinese origin but submitted no evidence to support this contention. On July 2, 2012, Coleman filed additional arguments in support of its protest in which it disputes only the rate of AD applied to the entry and CBP's valuation of the hangers.

Coleman asserts that the entry should have been liquidated at the rate assigned to one of three Chinese suppliers that he asserts Velazquez used around the time of entry rather than the PRC-wide entity rate at which CBP liquidated the entry. The three suppliers named are Zhejiang Lucky Cloud Hanger (Zhejiang), Shaoxing Dingli Metal Clotheshorse (Shaoxing) or Yiwu Ao-Si Metal Products (Yiwu). Coleman concludes that the hangers imported under the protested entry should have been liquidated per DOC message 115303, dated June 2, 2011. In pertinent part this message instructs CBP to assess AD duties at a specified rate "for all shipments of steel wire garment hangers from the PRC exported by [the manufacturer / exporters] listed . . . ." Among the manufacturer / exporters listed are Yiwu and Zhejiang. Shaoxing is not listed.

Coleman relies on the District Court record and Opening Appellant Brief to supports its assertion that only one of the three suppliers could have supplied the hangers. A copy of part of the Velazquez's (Appellant's) Opening Brief filed in its appeal from the Unites States District Court for the Southern District of California to the United States Court of Appeals for the Ninth Circuit, is supplied including Exhibit 14. Exhibit 14 is a table. This table is said to reflect actual value and applicable AD duty by supplier for all hangers imported from the PRC by Velazquez. No portion of the District Court record is supplied and our efforts to obtain this record were unsuccessful.

ISSUES:

1. Whether the PRC-wide entity AD rate applies to the protested entry.

2. Whether based on the evidence presented the imported wire hangers were properly appraised.

LAW AND ANALYSIS:

The instant protest was timely filed per 19 U.S.C. § 1514(c)(3)(A) on May 2, 2012, i.e., within 180 days of liquidation of the entry at issue on November 4, 2011. Generally, antidumping duty (AD) rates correctly applied by CBP are not protestable, (Fujitsu Ten Corp. v. United States, 957 F. Supp. 245; Ct. Intl. Trade 1997)) because "Customs has a merely ministerial role in liquidating antidumping duties . . . ." See Mitsubishi Electronics America, Inc. v. United States, 44 F.3d 973, 977 (Fed. Cir. 1994). CBP "may not independently modify, directly or indirectly the determinations, [the Department of Commerce's] underlying facts, or their enforcement." Royal Business Machines Inc. v. United States, 507 F. Supp. 1007, 1014 n.18 (Ct. Int'l Trade 1980), aff'd, 69 C.C.P.A. 61, 669 F.2d 692 (CCPA 1982). However, whether CBP applied the correct rate from among the rates calculated by the DOC, as Coleman argues, is a proper subject for protest per 19 U.S.C. § 1514(a)(5). Further, inasmuch as Coleman protests the liquidation, i.e., disputes the application by CBP of Commerce's liquidation instructions, this matter is protestable. See Xerox Corp. v. United States, 289 F.3d 792 (Fed. Cir. 2002) (holding that correcting a ministerial, factual error of CBP protestable). The entered value of the goods is also protestable per 19 U.S.C. § 1514(a)(1). Per 19 C.F.R. § 174.24(b), further review of the protest is proper because it involves issues of fact not previously addressed.

The DOC liquidation instructions applicable to the protested entry instruct CBP to liquidate the protested entry at the PRC-wide rate. Message number 1152308 was properly applied to the entry. Coleman argues that the AD duty rate assessed on the hangers should have been that rate assigned to one of three Chinese manufacturers and/or exporters (all of whom were assigned a separate, identical rate). Coleman cannot identify the specific hanger supplier for this entry but contends that it must be one of the three suppliers used by Velazquez during the time Coleman purchased the subject hangers. Coleman submits no evidence of which entity supplied the hangers covered by the entry at issue nor of the suppliers used by Velazquez. Accordingly, there is no basis to conclude that a specific rate rather than the PRC-wide rate applies. Further, the Port was correct when it identified previously accepted values of merchandise, identical or similar to the imported wire hangers, which was exported to the U.S. at or about the time the wire hangers being appraised were exported to the U.S. These wire hangers for which the value was previously accepted were imported from the same Mexican supplier and sold at the same commercial level and in substantially the same commercial quantities as the wire hangers being appraised. The protest is denied in full.

According to Coleman, during the time Velazquez supplied Coleman with the hangers covered by the entry the hangers could only have been supplied by one of three Chinese companies all of whom were subject to a company specific rate. The Protestant thus concludes that CBP should have assessed AD on the entry at the company specific rate rather than the PRC-wide rate that was applied. Coleman states:

Our review of the court documents underlying the United states District Court in San Diego [decision] and Mr. Velazquez's appeal to the United states Court of Appeals for the Ninth Circuit indicate that Mr. Velazquez utilized three (3) Chinese suppliers during the time period of the subject entry which were ultimately assigned and antidumping duty rate of a company specific rate by the Department of Commerce.

Coleman supplies no court documents. Coleman further contends that, "[a]ccording to the District Court record and the Opening Appellant Brief," between March 25, 2008, and November 30, 2009, Velazquez used only three Chinese entities to supply wire hangers. Coleman purchased the hangers during this time, on July 28, 2009, so Coleman reasons that the supplier must be one of three entities.

Coleman offers no evidence of which Chines manufacturer or exporter supplied the imported hangers nor evidence that Velazquez received hangers from only the three named suppliers during the time he provided the entered hangers to Coleman. Coleman supplies a portion of Velazquez's "appellant's opening brief" filed by the counsel in Velazquez's appeal from the District Court. This brief refers to an Exhibit 14 which, among other things breaks down the shipments "by company during the respective time periods so that the companies subjected to the PRC-wide rate . . . are distinguished from those" assigned a lesser company-specific rate. However, Coleman has not identified which company was the manufacturer and exporter of these hangers. Commerce's instructions only permit CBP to apply a company-specific rate if that company was, in fact, the exporter or manufacturer. See, e.g., DOC Message Number 1153303 (June 2, 2011). Because Coleman has not identified who the Chinese manufacturer or exporter was for this merchandise, the PRC-wide rate must be assessed.

With regard to the value of the entered hangers, merchandise imported into the United States is appraised for customs purposes 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 primary 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. See 19 U.S.C. §1401a(b)(l).

In this case, we find that the Port properly rejected transaction value as the basis of appraisement. Protestant states that there was a purchase order indicating the quantity and types of wire hangers purchased from the Mexican supplier. Protestant further states that the quantity of the imported wire hangers increased from the quantity stated in the original purchase order. Nevertheless, Protestant failed to submit the original purchase order for the wire hangers or any other subsequent purchase orders, contracts, or other supporting information, reflecting the changes in the quantity of the wire hangers ordered. Instead, a copy of an unsigned pro forma invoice was provided for our review. However, the quantity of the wire hangers indicated on this pro forma invoice does not match the entered quantity of the merchandise for the subject entry.

Furthermore, the two wire transfers submitted as proof of payment for the imported wire hangers, while matching the amount on the pro forma invoice, do not refer to the pro forma invoice (or purchase orders, if there are any) and have no receiver information, such as an account number and financial institution. Therefore, due to the discrepancy between the quantity of the merchandise stated on the pro forma invoice and the quantity of wire hangers actually imported, consistently discrepant values, as well as the lack of information on the wire transfer and the impossibility of connecting these payments to the entry in question, CBP cannot determine the price actually paid or payable for the imported merchandise and appraise the wire hangers on the basis of the transaction value method of appraisement.

When transaction value is eliminated as the appropriate method of appraisement, imported merchandise must then be appraised in accordance with the remaining methods of valuation, applied in sequential order. 19 U.S.C. §1401a(a). The alternative bases of appraisement, in order of precedence, are: the transaction value of identical or similar merchandise (19 U.S.C. §1401a(c)); deductive value (19 U.S.C. §1401a(d)); computed value (19 U.S.C. §140la(e)); and, the "fallback" method (19 U.S.C. §1401a(f)).

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 United States at or about the time that the merchandise currently being appraised was exported to the United States. 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. It is possible that two or more transaction values for identical merchandise (or similar merchandise) will be determined. In such a case, the lowest value will be used as the appraised value of the imported merchandise.

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 CBP.

In this case and upon further review, the Port successfully identified previously accepted values of merchandise, identical or similar to the imported wire hangers, which were exported to the United States at or about the time the wire hangers being appraised were exported to the United States These wire hangers for which the value was previously accepted were imported from the same Mexican supplier and sold at the same commercial level and in substantially the same commercial quantities as the wire hangers being appraised. The lowest value identified by this office and confirmed by the Port was determined to be $0.0444995 per wire hanger. When applied to the 750,000 units imported under the subject entry, the total customs value actually equals $33,374.62. We find that based on the evidence presented to our office by the Port, the imported wire hangers should be appraised based on the transaction value of identical or similar merchandise, with a customs value of $33,374.62. Insofar as it is appropriate to appraise the subject wire hangers based on the acceptable values of the identical or similar wire hangers, we need not resort to any of the subsequent methods of valuation.

HOLDINGS:

1. The PRC-wide entity rate applies to the protested entry.

2. The imported wire hangers should be appraised based on the transaction value of identical or similar merchandise, with a customs value of $33,374.62.

You are instructed to DENY the protest in full.

No later than 60 days from the date of this letter, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and by other means of public distribution.

Sincerely,

Myles Harmon, Director Commercial and Trade Facilitation Division