RR:IT:VA 546110 EK
Port Director
Detroit, Michigan 48226
RE: Application for Further Review of Protest No. 3801-94-107007; Sale for Exportation to the United States; Selling Commissions; Antidumping Duties
Dear Sir:
This is in response to the application for further review of the protest referenced above. This protest was filed on behalf of Algoma Steel Corporation (hereinafter referred to as ASC; petitioner) and Algoma Tube Corporation (hereinafter referred to as ATC) against your decision in the liquidation of entries of seamless linepipe. ASC is protesting the addition of a 3% selling commission to the invoice value of the merchandise.
In addition, the product was not declared as being covered by the antidumping order at the time of entry (6-15-88), and no dumping duties were deposited. However, at the time of liquidation (9-9-94), Customs assessed dumping duties in accordance with Department of Commerce instructions. The TSUS numbers for line pipe are not included in the list of TSUS numbers in the scope section of the antidumping order on Oil Country Tubular Goods (OCTG) from Canada. In their protest, petitioner claims the product is not covered by the order. The port of Detroit denied the protest.
FACTS:
The valuation issue in this case was initially addressed in Headquarter’s Ruling No. 544382 dated October 9, 1990. This was an Application for Further Review of Protest No. 3126-88-000009 filed in Anchorage, Alaska. The decision held that insufficient evidence was available to support the existence of bona fide sales between ASC and ATC. The decision further held that sales for exportation to the United States occurred between ASC and ARCO Alaska, the ultimate U.S. purchaser, with ATC acting as selling agent on behalf of ASC. ASC and ATC are related parties within the meaning of section 402(g) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(g)).
By internal memorandum from the Director, International Trade Compliance Division, dated January 28, 1992, (File No. 657655), this office was asked to examine additional information submitted on behalf of petitioners in the context of a penalty case and to reconsider whether there was in fact a sale between ATC and ASC. By internal memorandum dated August 19, 1992, (File No. 544929), the Director, Commercial Rulings Division, responded that the additional information submitted
was sufficient to conclude that within the context of the penalty case, bona fide sales did in fact exist between ASC and ATC. However, that ruling did not address whether those sales were in fact “sales for exportation” to the United States within the meaning of section 402 of the TAA.
In this protest, ASC states that Customs has already concluded that the transactions between ASC and ATC were considered to be sales (HQ 544929). Therefore, this presumes that ATC is a “buyer” and not a selling agent. ASC indicates that Customs’ appraisement using the invoice value plus a 3% selling commission is not correct since ATC has been determined to be the buyer.
ISSUES:
1. Whether the addition to the price actually paid or payable for a selling commission was proper in the appraisement of the merchandise.
2. Whether the article in question, seamless line pipe of iron or steel, is covered by the scope of the antidumping order on Oil Country Tubular Goods (OCTG) from Canada (A-122-506).
LAW AND ANALYSIS:
ISSUE NO. 1:
Transaction value, the preferred method of appraisement, is defined in section 402(b) of the TAA as “the price actually paid or payable for the merchandise when sold for exportation to the United States plus amounts equal to . . . any selling commission incurred by the buyer with respect to the imported merchandise “. The price actually paid or payable is defined as “the total payment (whether director 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 the imported merchandise by the buyer to, or for the benefit of, the seller.” 19 U.S.C. 1401a(b)(4)(A).
In our memorandum dated August 19, 1992, we concluded that based on the evidence submitted and in the context of the penalty case, that a sale occurred between the related parties. Although protestant indicates that Customs has already concluded in HQ 544929 that a bona fide sale occurred between ATC and ASC, based on the information provided, we cannot determine whether the facts here are the same as those in the penalty case. Although both cases involved transactions between ATC and ASC, different ultimate purchasers are involved. This may have affected the way ATC and ASC transacted business. Also, the determination in HQ 544929 regarding bona fide sale was limited to the context of the penalty case. Therefore, the decision in HQ 544929 is not binding here. Nonetheless, Customs appraised the merchandise using the invoice price between ASC and ATC. This presumes that Customs was satisfied that there was a bona fide sale between ATC and ASC and that the relationship did not influence the price actually paid or payable. Since Customs had determined that the invoice price between ATC and ASC was an appropriate transaction value, then ATC cannot be a selling agent, but rather, ATC must be the buyer of the merchandise. Under the TAA, any selling commissions incurred by the buyer with respect to the imported merchandise is included in the transaction value of the imported merchandise. Based on Customs’ determination that ATC was the buyer, the addition of the 3% “commissions” was improper.
ISSUE NO. 2:
Line pipe is generally not considered to be in the category of pipe and tube described as OCTG. OCTG refers to drill pipe, casing, and tubing which is used in the vertical drilling and retrieval of oil and gas. Line pipe refers to pipe and tube used for the horizontal transport of oil and gas. The performance properties required for these two different applications are, for the most part, mutually exclusive.
There are, however, some exceptions. High-strength seamless line pipe, in certain diameters and wall thicknesses, can be used in low pressure OCTG applications. To account for these overlap products, Commerce and Customs jointly issued specific instructions on 5-24-88, via CIE A-122-506N-214/854 Suppl. 4. Those instructions directed Customs field offices to not require a cash deposit of dumping duties on line importations, but did require that importers submit end use certification directly to Commerce within 6 months of importation. After review of the end use certification evidence, Commerce would notify Customs which entries could be liquidated without regard to antidumping duties.
In the package of documents submitted for review, there is neither an end use certificate, nor a Commerce instruction to Customs to liquidate without regard to antidumping duties. In the absence of any such information, the port liquidated the entries in accordance with the Commerce liquidation instructions for articles covered by the order. Regarding the list of TSUS numbers in the order, those numbers are listed for reference only and are not dispositive. Commerce decides which products are covered by the scope of their orders based on the written description in the case. The issue for review is whether or not the port correctly followed the Commerce instructions in this case, The field did correctly follow the Commerce instructions; therefore, the claim must be rejected.
HOLDING:
You are directed to ALLOW the protest regarding the valuation issue. With respect to the antidumping duty issue, the protest is DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing of this decision.
Sixty days from the date of this decision, the Office of Regulations and Rulings will make the decision available to Customs, and to the public on the Customs home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other method of public distribution.
Sincerely,
Thomas L. Lobred, Chief,
Valuation Branch