VAL CO:R:C:V 545487 ILK
District Director
Laredo, Texas
RE: Application for Further Review of Protest No. 2304-93-100290;
determination of price actually paid or payable
Dear Sir:
The subject protest and application for further review ("AFR")
concerns the amounts to be included in the transaction value of
merchandise imported by Seaveg, Ltd. and Inn Foods, Inc.
(hereinafter collectively referred to as the "protestant" ) from
Mexico. According to the concerned import specialist, Seaveg and
Inn Foods are related companies. We regret the delay in
responding.
FACTS:
Protest is made against the liquidation of entries of frozen
broccoli, cauliflower and strawberries at the entered value plus
additional amounts determined as a result of a Regulatory Audit
report. According to Audit Report #631-91-FRO-001 the protestant's
payments to its Mexican growers, reflected on the protestants books
were higher than the entered values of the merchandise. The
protest specifically concerns merchandise imported from three
growers, Empacadora Chapala, Empacadora Del Celio and Industrias
Horticolas (hereinafter collectively referred to as the "growers"),
between December 6, 1988 through June 30, 1989. The merchandise
was entered on the basis of an initial invoice price and the audit
revealed that additional payments were made by the protestant to
the growers. The Assistant District Director of Commercial
Operations, the cognizant import specialist and the case agents
agree with the conclusions and recommendations of the Audit Report.
On the basis of the conclusions of the Audit Report, the imported
merchandise was appraised on the basis of the entered value plus
the additional amounts paid by the protestant to the growers.
According to the protestant, the entered value of the imported
merchandise was based on "Divisa" invoices, which it claims are
routinely prepared for the Mexican government, and are "in no way
related to the prices actually paid or payable for the goods." The
protestant takes the position that the imported merchandise can be
appraised on the basis of transaction value.
The Protest was timely filed on July 8, 1993, and an amendment
to the protest was received by Customs on September 7, 1993. As
this "amendment" contains additional information on a claim raised
when the protest was filed originally filed, it is timely
submitted. The protestant also takes the position that numerous
entries were deemed liquidated pursuant to Customs regulations, 19
C.F.R. 159.12(f), prior to the date the entries were liquidated by
Customs. With respect to the entries claimed to have been deemed
liquidated at their entered value, there is no dispute, that the
imported merchandise which was entered on or prior to April 9,
1989, was deemed liquidated on April 8, 1993, and is not subject to
appraisement determinations made in this decision.
ISSUE:
Whether the transaction value was properly determined in this
case.
LAW AND ANALYSIS:
The preferred method of appraisement is transaction value
which is defined by 402(b)(1) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C.
1401a(b)) as "the price actually paid or payable for the
merchandise when sold for exportation to the United States..." plus
certain additions specified in 402(b)(1) (A) through (E). The
term "price actually paid or payable" is defined in TAA
402(b)(4)(A) as:
...the total payment (whether direct or indirect...) made, or
to be made, for imported merchandise by the buyer to, or for
the benefit of, the seller.
In this case, the imported frozen vegetables were appraised
under transaction value on the basis of the total payment made by
the protestant to the growers. This amount was determined on the
basis of the actual payments recorded in the importer's accounting
records. Consequently, we conclude that this merchandise was
correctly appraised.
The protestant argues that the growers incurred inland freight
costs on behalf of the protestant. The protestant states that the
terms of sale indicated on the divisa invoices are FOB the growers
plant (i.e. ex-factory), and therefore, the freight costs incurred
by the growers should be deducted from the price actually paid or
payable for the imported merchandise. The documentation submitted
on behalf of the protestant does not support a finding that freight
costs were a part of the initially agreed upon price, therefore
Customs has no authority to allow any deductions for freight costs
from the price actually paid or payable.
HOLDING:
Consistent with the decision set forth above, you are hereby
directed to deny the 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
Commercial Rulings Division