VAL CO:R:C:V 545141 ILK
District Director
Los Angeles, California
RE: Application for Further Review of Protest No. 2704-92-
101570; appraisement of reimported merchandise under
402(f)
Dear Sir:
The subject protest and application for further review
concerns the appraisement of bicycle parts reimported by Europa
Bicycle (hereinafter referred to as the "protestant), a U.S.
company, from Colnago (hereinafter referred to as the
"exporter"), an Italian company. We regret the delay in
responding.
FACTS:
The protestant purchased the bicycle parts from the exporter
and imported them from 1985 through 1987. On the basis of
transaction value, the appraised value for the parts entered from
1985-1987 amounted to $48,550.00. The protestant was unable to
sell the merchandise in the U.S. and did not pay the exporter for
the parts. According to the protestant, subsequent to the
importation of the merchandise, Japanese technology for the
manufacture of bicycles became more prevalent, and the protestant
could not sell the merchandise. Litigation between the
protestant and exporter resulted in a settlement between the
parties pursuant to which the protestant returned the merchandise
to the exporter in Italy. However, the exporter refused the
merchandise and returned it to the protestant in the U.S. The
merchandise was entered in the U.S. on September 16, 1991, valued
at $48,550.00 and duty-free treatment was claimed under
Harmonized Tariff Schedule of the United States Item
9801.00.25003. The entry was denied duty-free treatment because
more than three years had passed since the merchandise was
originally imported. The reimported merchandise, was appraised
by Customs on the basis of the original invoice price of $48,550.
The commercial invoices accompanying the entry for the
reimported merchandise were prepared by the protestant, and the
unit prices for the merchandise were based upon the original
invoices for the merchandise when it was originally imported.
Upon reimportation of the merchandise, the protestant consigned
the merchandise to King's Bicycles on behalf of the exporter.
According to correspondence from King's Bicycles, it was
estimated that the merchandise could be sold for between $8,000
and $9,000.
According to the protestant there is no imported merchandise
identical or similar to the merchandise imported in September
1991 because the subject merchandise was outdated at that time.
The protestant claims that the computed value information for the
subject merchandise cannot be obtained from the exporter, and
that there is no deductive value for the imported merchandise as
it was delivered to King's Bicycles only after settlement of the
litigation between the parties. It is the protestant's position
that the merchandise should be appraised under 402(f) of the
Tariff Act of 1930, as amended by the Trade Agreements Act of
1979 (TAA, 19 U.S.C. 1401a(f)) based on the estimated $8,000 to
$9,000 resale value of the imported merchandise.
ISSUE:
Was the appraisement of the imported merchandise appropriate
under the circumstances presented.
LAW AND ANALYSIS:
Transaction value, the preferred basis of appraisement under
the TAA, is defined in 402(b) as "the price actually paid or
payable for the merchandise when sold for exportation to the
United States." In this case, as no sale transaction took place
in connection with the reimportation of the merchandise, it
cannot be considered to be "sold for exportation to the United
States" as required under 402(b) of the TAA. Therefore,
transaction value is eliminated as the basis of appraisement.
The second appraisement method in order of statutory
preference is transaction value of identical and similar
merchandise under 402(c) of the TAA. According to the
protestant, no identical or similar merchandise is imported into
the U.S. If the imported merchandise cannot be appraised under
this method the succeeding methods of appraisement are deductive
value under 402(d) or computed value under 402(e) of the TAA.
Upon importation the merchandise was placed for sale on
consignment. It appears from Kings' letter dated February 3,
1992 that as of that date the merchandise had not been sold.
Therefore as the merchandise was not sold within 90 days of
entry, the merchandise cannot be appraised under 402(d).
According to the protestant records are not available to
determine computed value. Therefore, based on the information
provided in the request, it appears that none of the appraisement
methods provided for in 402(b)-(e) can be used with respect to
the imported merchandise.
Section 402(f) of the TAA provides that if the value of
imported merchandise cannot be determined under subsections (b)
through (e):
...the merchandise shall be appraised for the purposes
of this Act on the basis of a value that is derived
from the methods set forth in such subsections, with
such methods being reasonably adjusted to the extent
necessary to arrive at a value.
The merchandise may properly be appraised based on a value
derived pursuant to section 402(f) by means of an independent
appraiser. In Headquarters Ruling Letter (~HRL~) 543265 dated
July 2, 1985, we found that the value, as determined by an
independent appraiser, of a used drilling rig imported into the
U.S., could be used to establish an alternate value under TAA
402(f). In HRL 543970 dated March 13, 1989, we determined that
appraisement on the basis of an independent appraisal would be
reasonable and appropriate.
Based on the foregoing, we find that the value, as
determined by an independent appraiser may be used to establish
an alternate value under TAA 402(f). In this case, the
appraisal received from King~s Bicycles can be used provided the
import specialist is satisfied that the appraiser is independent.
HOLDING:
The merchandise can properly be appraised under 402(f)
based on a value derived pursuant to section 402(f) as determined
by an independent appraiser.
Consistent with the decision set forth above, you are hereby
directed to grant the subject protest. In accordance with
Section 3A(11)(b) of Customs Directive 099 3550-065, dated August
4, 1993, Subject: Revised Protest Directive, this decision 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 of 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, Lexis, Freedom of Information Act and other
public access channels.
Sincerely,
John Durant, Director