RR:IT:VA 547147 RC
Andrew E. Mishkin, Esq.
Beveridge & Diamond, P.C.
1350 I Street, N.W., Suite 700
Washington, D.C. 20005-3311
RE: Solid waste material; non hazardous waste; fallback method; all reasonable ways and means; 19 U.S.C. § 1500; HRL 545017 affirmed
Dear Mr. Mishkin:
This in response to your letter dated August 10, 1998, on behalf of Waste Management, Inc. (“WMI”), requesting a prospective ruling concerning the appraisement of solid waste to be imported into the United States. On September 24, 1998, you withdrew your request for confidential treatment of information set forth in your submission.
FACTS:
WMI, a United States corporation whose subsidiaries provide services, throughout North America, contracts with domestic and foreign customers, for the disposal of domestic and imported waste in the United States. According to WMI, a number of Customs port directors apply the decision in Headquarters Ruling Letter (HRL) 545017, issued August 19, 1994, which appraised imported waste oil based on the cost of domestic services purchased by the exporter. In HRL 545017, Customs stated:
Based on the facts presented, especially in light of the fact that the protestant has not provided any other documentation such as invoices, contracts, or record keeping to show otherwise, we find that the protestant has not proffered sufficient evidence to prove that Customs employed unreasonable ways and means to ascertain the value of the imported merchandise. The appraising officer, under authority of section 500 and by utilizing a method of appraisement in accordance with section 402(f), appropriately considered all the evidence made available by the protestant and used “all reasonable ways and means in his power” to appraise the merchandise. (Emphasis added.)
WMI disagrees with the decision in HRL 545017 and attempts to distinguish the instant facts from those in HRL 545017. WMI explains that, here, a pro forma Customs invoice has been submitted. The invoice states that the particular type of solid waste at issue has a value of one dollar per 19 tons. Therefore, WMI contends that the imported waste, in essence, has no
commercial value in its condition as imported. Moreover, WMI asserts that the fee it charges exporters is for services related to the disposal of the waste in the U.S. after importation, rather than a payment for the waste itself.
As such, WMI claims that to appraise the imported waste based on the price paid for its disposal is not a reasonable fallback method. Additionally, WMI agues that in HRL 545017, Customs failed to address the applicability of the preceding methods of valuation, as required by the statute and that, therefore, the appraised value was arbitrary and fictitious.
WMI argues that HRL 545017 is incorrect, that the method of appraisement applied contravenes statutory intent of the amended Tariff Act of 1930. WMI requests that Customs find, based on the evidence presented, that the solid waste imported into the United States for disposal by WMI is not subject to HRL 545017, or in the alternative, that Customs reassess the method of appraisement applied in HRL 545017, and modify the ruling accordingly.
No other relevant documentation such as, contracts or record keeping was submitted for our review.
ISSUE:
Whether, based on the evidence presented, it is appropriate to appraise the imported goods under section 402(f) of the TAA.
LAW AND ANALYSIS:
Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. § 1401a; TAA). The primary method of appraisement is transaction value, defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States” plus the value of certain statutorily enumerated additions thereto. 19 U.S.C. § 1401a(b)(1).
When imported merchandise cannot be appraised on the basis of transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in sequential order. The alternative bases of appraisement, in order of precedence, are: the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with section 402(f) of the TAA. 19 U.S.C. § 1401a(a)(1).
For Customs purposes, a “sale” generally is defined as a transfer of ownership in property from one party to another, for a consideration. J.L. Wood v. United States, 62 CCPA 25, 33; C.A.D. 1139 (1974). Although J.L. Wood was decided under the prior appraisement statute, Customs recognizes this definition under the TAA. Several factors may indicate whether a bona fide sale exists between potential seller and buyer. In determining whether property or ownership has been transferred, Customs considers whether the alleged buyer has assumed the risk of loss and acquired title to the imported merchandise. In addition, Customs may examine whether the alleged buyer paid for the goods, whether such payments are linked to specific importations of merchandise, and whether, in general, the roles of the parties and circumstances of the transaction indicate that the parties are functioning as buyer and seller. See, HRL 545542, dated December 9, 1994; HRL 546225, dated April 14, 1997.
Here, WMI would have us believe that the pro forma Customs invoice submitted evidences a bona fide sale for exportation. Notwithstanding the fact that it is the only evidence presented, we note that the invoice does not indicate the shipping terms agreed to by the parties. Consequently, there is no evidence provided to show when the parties agreed that title and risk of loss would pass to WMI. Additionally, there is no evidence that WMI paid consideration for the imported waste. Moreover, if the “Customs invoice” purporting to show a price paid or payable of one dollar, as consideration for the transfer of title and assumption of the risk for the solid waste, is evidence of a bona fide sale, then it begs the question as to why the exporter would be obligated or willing to pay for the disposal of the waste, after the alleged sale, that it no longer owns. Based on the information and documentation presented, we find that there is insufficient evidence of a bona fide sale.
Since the imported waste does not appear to be the subject of a sale, it, therefore, cannot be appraised under the transaction value method set forth in section 402(b) of the TAA. The transaction value of identical or similar merchandise is based on sales, at the same commercial level and in substantially the same quantity, of merchandise exported to the United States at or about the same time as that being appraised. 19 U.S.C. 1401a(c). We would assume that there is no merchandise similar or identical to the imported waste. Accordingly, the waste cannot be appraised on the basis of the transaction value of similar or identical merchandise.
Under the deductive value method, merchandise is appraised on the basis of the price at which it is sold in the U.S. in its condition as imported and in the greatest aggregate quantity either at or about the time of importation . . . . 19 U.S.C. 1401(d)(2)(A)(i) (ii). This price is also subject to certain enumerated deductions. 19 U.S.C. 1401a(d)(3). In the instant situation, the waste is not sold in its condition as imported. Merchandise that is not sold in its condition as imported can still be appraised under deductive value, however, provided the importer so elects. 19 U.S.C. 1401a(d)(2)(A)(iii). In this case the importer has not to our knowledge elected this method. Furthermore, the method is not normally applicable when as the result of further processing, imported merchandise loses its identity unless the value added by the processing can be determined accurately without unreasonable burden on the importer or Customs. Section 152.105(i)(2), Customs Regulations (19 C.F.R. 152.105(i)(2)). As a result, the imported waste cannot be appraised on the basis of deductive value method.
Under the computed value method, merchandise is appraised on the basis of the material and processing costs incurred in the production of imported merchandise, plus an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind, and the value of any assists and packing costs. 19 U.S.C. 1401a(e)(1). Since there is no information on which to base computed value, this method of appraisement is also inapplicable.
Section 402(f) of the TAA provides that imported merchandise is to be appraised on the basis of a method derived from one of the methods set forth in sections 402(b) (e), with such methods reasonably adjusted to the extent necessary to arrive at a value. However, there are
certain prohibited bases of appraisement under section 402(f), including the selling price of merchandise produced in the United States, minimum values and arbitrary or fictitious values. 19 U.S.C. § 1401a(f)(2).
Nevertheless, under section 500 of the Tariff Act of 1930, as amended, which sets forth Customs’ general appraisement authority, the appraising officer may:
fix the final appraisement of merchandise by ascertaining or estimating the value thereof, under section 1401a of this title, by all reasonable ways and means in his power, any statement of cost or costs of production in any invoice, affidavit, declaration, other document to the contrary notwithstanding . . .
19 U.S.C. § 1500(a) (emphasis added).
In this regard, the Statement of Administrative Action (SAA), which forms part of the legislative history of the TAA, provides in pertinent part:
Section 500 allows Customs to consider the best evidence available in appraising merchandise . . . [It] authorize [sic] the appraising officer to weigh the nature of the evidence before him in appraising the imported merchandise. This could be the invoice, the contract between the parties, or even the record keeping of either of the parties to the contract.
Statement of Administrative Action, H.R. Doc. No. 153, 96 Cong., 1st Sess., at 2, reprinted in, Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 (October 1981), at 67. Accordingly, if the value of imported merchandise cannot be determined on the basis of a method derived from sections 402(b) (e), it is our position that the value of the imported waste material that is the subject of the instant protest may be determined under the fallback method provided for in section 402(f) of the TAA, using all reasonable ways and means, so long as the method is not specifically precluded under section 402(f)(2)(D).
In HRL 545017, regarding the valuation of waste oil imported for purposes of disposal, we stated:
Based on the facts presented, especially in light of the fact that the protestant has not provided any other documentation such as invoices, contracts, or record keeping to show otherwise, we find that the protestant has not proffered sufficient evidence to prove that Customs employed unreasonable ways and means to ascertain the value of the imported merchandise. The appraising officer, under authority of section 500 and by utilizing a method of appraisement in accordance with section 402(f), appropriately considered all the evidence made available by the protestant and used “all reasonable ways and means in his power” to appraise the merchandise.
HRL 545017, at 3. See also, HRL 543904, dated March 20, 1987.
Similarly, we find that by applying the fallback method, Customs would be using reasonable ways and means in appraising the imported waste at issue. Based on the information provided in both HRL 545017 and the instant case, we find that the fallback method of appraisement as applied is neither arbitrary nor fictitious. Indeed, the basis for determining that value, the disposal fee, is the only available information which can be quantitatively documented. The payment is an amount agreed upon by the two parties to the transaction and represents the consideration for which WMI is willing to accept and process the imported waste.
HOLDING:
Based on the evidence presented, it is appropriate to apply section 402(f) of the TAA and appraise the imported waste based on the disposal fee. Accordingly, HRL 545017, dated
August 19, 1994, is affirmed.
Sincerely,
Thomas L. Lobred
Chief, Value Branch