VAL RR:IT:VA 546057 LPF
Port Director
U.S. Customs Service
9 North Grand Avenue
Nogales, AZ 85621
RE: A pplication for Further Review of Protest No. 2608-95-100001; Transaction Value of Identi cal and Similar Merchandise and Computed Value; 19 U.S.C. 1401a(c) and (e); Filing of Protest under 19 U.S.C. 1514(c)(3); Extension of Liquidation under 19 U.S.C. 1504(b); Obligation of Surety for Payment Against Bond; Proper Duty Rate for Asparagus under Subheading 0709.20.9000, HTSUS
Dear Director:
This is a decision on an application for further review of a
protest filed by the importer of record's surety on January 31, 1995,
against the decision of the former district director concerning the
entry, appraisement, and classification of asparagus. The entry at
issue was liquidated on July 29, 1994. Customs made formal demand on
the surety for payment on November 2, 1994.
FACTS:
Fresh asparagus produced in Mexico by Costa Del Sol (producer/
seller) was imported and entered through the Nogales District by Warren
Brock DBA Campo Costa Del Sol (importer/buyer). It is our understanding
that the buyer and seller are related pursuant to section 402(g) of the
Tariff Act of 1930, as amended by the Trade Agreements Act of 1979
(TAA), codified at 19 U.S.C. 1401a. You explain that you did not
appraise the merchandise based on transaction value (section 402(b)),
since the relationship between the parties was found to influence the
price actually paid or payable. You add that since no transaction value
of identical or similar merchandise (section 402(c)) applied to these
importations and since the importer exercised his option to utilize
computed value (section 402(e)) rather than deductive value (section
402(d)), you appraised the merchandise under computed value. The
protestant claims that the final appraised value was unreasonable,
unsupported, and contrary to the guidelines set forth in 19 U.S.C.
1401(a) and 19 U.S.C. 1500.
You explain that the importer's merchandise had been appraised
under computed value for several years prior to this protest. For the
entry at issue, the actual cost for the asparagus was filed on August
30, 1993. Additional information was requested via Customs Form (CF) 29
on November 11, 1993, to verify some of the figures submitted by the
importer and a follow up request was made via CF 29 on February 22,
1994. Part of the requested information was received March 23, 1994,
with a request from the importer for an explanation of part of the CF 29
request. The additional information was presented to your office at the
end of March, 1994. At this point, final liquidation could be
completed. The final CF 29, with the billing amount, was issued on July
12, 1994. You explain that the bill issued for the period in question
is less than the amount of the continuous bond for the importer and that
a portion of the bill has already been paid through a payment plan
approved by the Finance Center. The protestant submits that the
liquidation of the entries was untimely and extension of the time period
for liquidation was improper pursuant to 19 U.S.C. 1501 and 1504.
Further, the protestant provides that it is not obligated for the
default of the bond principal in any amounts in excess of the principal
amount of that bond.
You classified the asparagus under subheading 0709.20.9000,
Harmonized Tariff Schedule of the United States Annotated (HTSUSA) as
other vegetables, fresh or chilled, asparagus, other, at a general
column one rate of 25% ad valorem. The protestant submits that this
classification and assessment of duty at a general column one rate as
opposed to a free, special column one rate is improper.
ISSUES:
1. Whether the time period for liquidation was properly extended
pursuant to 19 U.S.C. 1501 and 1504 and whether the protestant is
obligated for the default of the bond principal in excess of the
principal amount of that bond.
2. Whether the merchandise was appropriately appraised under
computed value.
3. Whether the merchandise is classifiable within heading 0709 as
fresh asparagus and carries a general column one rate of duty.
LAW AND ANALYSIS:
1. Liquidation pursuant to 19 U.S.C. 1501 and 1504
Initially, we note that this protest was timely filed pursuant to
19 U.S.C. 1514(c)(2)(A). The entry was liquidated on July 29, 1994,
formal demand for payments was made on the surety on November 2, 1994,
and the surety filed its protest on January 31, 1995. See 19 U.S.C.
1514(c)(3) providing that a protest by a surety which has an
unsatisfied legal claim under its bond may be filed within 90 days from
the date of mailing of notice of demand for payment against its bond.
Liquidation has been defined as "the final computation by the
Customs Service of all duties (including any antidumping or
countervailing duties) accruing on that entry." American Permac, Inc.
v. United States, 10 CIT 535, 537 (1986). Generally, an entry of
merchandise not liquidated within one year from the date of entry of
such merchandise, "shall be deemed liquidated at the rate of duty,
value, quantity, and amount of duties asserted at the time of entry by
the importer of record." 19 U.S.C. 1504(a). However, pursuant to 19
U.S.C. 1504(b) Customs may extend this period if: 1) information needed
for the proper appraisement or classification of the merchandise is not
available to the appropriate customs officer; 2) liquidation is
suspended as required by statute or court order; or 3) the importer,
consignee, or his agent requests such extension and shows good cause
therefor.
In the present matter, Customs had the authority to extend the
initial one year time period for liquidation. From the Customs "ACS
entry archive" records for entry 264-XXXX925-2, liquidation was extended
one time and the notice of extension was given to the importer of
record. It appears, in this case, that the extension was done under
"EXT CDE 01" which meant that "information needed for the proper
appraisement or classification of the merchandise is not available to
the appropriate customs officer." See 19 U.S.C. 1504(b)(1); 19 CFR
159.12(a)(1)(I); St. Paul Fire & Marine Ins. Co. [Carreon] v. United
States, 799 F. Supp. 120 (CIT 1992), rev'd, 6 F3d 763 (Fed. Cir. 1993).
According to documents in the file, in particular the CF 29s, the
extensions of liquidation were proper because there was a question as to
the classification and valuation of the merchandise at issue.
As it is our understanding from the "ACS entry archive" that the
merchandise only was liquidated once on July 29, 1994, we find 19 U.S.C.
1501 irrelevant in the present matter.
Insofar as the protestant's obligation for the default of the bond
principal is concerned, we agree that the protestant is only bound for
the amount, each year, equal to the principal amount of that bond. In
this regard, we note that the language found on the Customs Bond, CF
301, provides that the principal and surety bind themselves in the
amounts as set forth on the bond. However, it is our understanding that
the bill submitted from Customs for the amount at issue is less than the
principal amount of the bond, rendering this a moot issue.
2. Appraisement under computed value
As you are aware, the preferred method of appraising merchandise
imported into the United States is transaction value pursuant to section
402(b) of the TAA. Section 402(b)(1) of the TAA provides, in pertinent
part, that the transaction value of imported merchandise is the "price
actually paid or payable for the merchandise when sold for exportation
to the United States" plus amounts for the enumerated statutory
additions. However, imported merchandise is appraised under transaction
value only if the buyer and seller are not related, or if related, the
transaction value is deemed to be acceptable.
In this case, it is our understanding that the parties are related
pursuant to section 402(g). Section 402(b)(2)(B) provides that a
transaction value between related parties will be deemed acceptable if
an examination of the circumstances of sale indicates that the
relationship between the parties did not influence the price actually
paid or payable or where the transaction value closely approximated
certain "test" values. Insofar as no evidence has been presented in this
regard which supports the acceptability of transaction value, we proceed
sequentially through the subsequent provisions of section 402 of the TAA
for an alternative method of appraisement.
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 U.S. at or about the time that
the merchandise currently being appraised was exported to the U.S.
In accordance with T.D. 91-15, 25 Cust. Bull. 31 (1991), it must
be demonstrated that the transaction value of the merchandise under
consideration is fully acceptable under section 402(b), in order to be
applied as the transaction value of identical or similar goods under
section 402(c). The determination concerning the acceptability of the
transaction value may be based on information provided by the importer
or already available to Customs.
In Headquarters Ruling Letter (HRL) 545755, issued May 18, 1995,
involving the appraisement of asparagus, our office determined that
several acceptable transaction values under section 402(b) apparently
existed at or about the time of exportation of the merchandise at issue.
Accordingly, the subject merchandise was to be appraised, pursuant to
section 402(c), based on the lowest of these values. Customs emphasized
that the previously appraised merchandise must be examined to determine
if it could serve as the basis of appraisement for the merchandise at
issue.
However, in the event the transaction value of identical or
similar merchandise is not available for appraisement in this case, you
may proceed to the next alternative method of appraisement, computed
value (section 402(e)), as requested by the importer.
Specifically, section 402(e) provides that the computed value of
imported merchandise is the sum of:
(A) the cost or value of the materials and
the fabrication and other processing of any
kind employed in the production of the
imported merchandise;
(B) an amount for profit and general expenses
equal to that usually reflected in sales of
merchandise of the same class or kind as the
imported merchandise that are made by the
producers in the country of exportation for
export to the United States;
(C) any assist, if its value is not included
under subparagraph (A) or (B); and
(D) the packing costs.
The Statement of Administrative Action (SAA), adopted by Congress
with the passage of the TAA, further explains that the cost or value of
the materials and the fabrication and other processing employed in the
production of the imported merchandise as well as the amount for profit
and general expenses will be determined on the basis of information
supplied by, or on behalf of, the producer and will be based upon the
commercial accounts of the producer provided such accounts are
consistent with the generally accepted accounting principles (GAAP)
applied in the country where the goods are produced. See Statement of
Administrative Action, H.R. Doc. No. 153, Pt. II, 96th Cong., 1st Sess.
(1979), reprinted in Department of the Treasury, Customs Valuation under
the Trade Agreements Act of 1979 at 62 (1981).
Insofar as computed value is utilized for appraisement, the
protestant has not submitted evidence demonstrating that the computed
value established by your office in accordance with the above, based on
the costs of production, profit, and general expenses provided by the
producer, was "unreasonable, unsupported, and contrary to the guidelines
set forth in 19 U.S.C. 1401(a) and 19 U.S.C. 1500."
3. Classification under the HTSUS
The General Rules of Interpretation (GRIs) taken in their
appropriate order provide a framework for classification of merchandise
under the HTSUS. Most imported goods are classified by application of
GRI 1, that is, according to the terms of the headings of the tariff
schedule and any relative section or chapter notes.
It is our understanding that the parties agree that the
merchandise is classifiable, according to GRI 1, within heading 0709,
HTSUS, as other vegetables, fresh or chilled. Because the merchandise
was entered in January, 1993, the appropriate subheading is 0709.20.90,
HTSUS, providing for other vegetables, fresh or chilled, asparagus,
entered other than during the period from September 15 to November 15.
Merchandise imported from Mexico and classifiable in subheading
0709.20.90, HTSUS, which was entered during 1993, carried a general
column one rate of duty of 25% ad valorem and was not eligible for
special column one tariff treatment.
HOLDING:
Based on the information provided, we hold as follows:
1. The time period for liquidation was properly extended pursuant
to 19 U.S.C. 1504. However, with regard to the protestant's obligation
for the default of the bond principal, although apparently a moot issue,
we would agree that the protestant only is bound for the amount, each
year, equal to the principal amount of the bond.
2. Insofar as it is determined, as provided above, that the
merchandise cannot be appraised under transaction value of identical or
similar merchandise, the merchandise was appropriately appraised under
computed value.
3. The merchandise is classifiable in subheading 0709.20.9000,
HTSUS, as other vegetables, fresh or chilled, asparagus, entered other
than during the period from September 15 to November 15, at a general
column one rate of duty of 25% ad valorem.
The protest is denied in accordance with the foregoing. A copy of
this decision with the Form 19 should be sent to the protestant.
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 to the
public via the Diskette Subscription Service, the Freedom of Information
Act and other public access channels.
Sincerely,
Acting Director
International Trade Compliance Division