VAL OT:RR:CTF:VS H219516 EE
Brenda Bodnar
The Jones Group, Inc.
180 Rittenhouse Circle
Bristol, PA 19007
RE: Transaction value; charges incident to the international shipment of the
merchandise
Dear Ms. Bodnar:
This is in response to your letter, dated May 24, 2012, in which you request a ruling concerning whether certain charges for services provided by your freight forwarders should be included in the transaction value of the imported merchandise.
FACTS:
The Jones Group, Inc. is the parent company for Jones Apparel Group USA, Inc.; JAG Footwear, Accessories and Retail Corporation; Jones Jeanswear Group, Inc.; and Jones Jewelry Group, Inc. You state that these companies import merchandise from various suppliers around the world and utilize the services of freight forwarders to assist with origin coordination, supplier/vendor communication, cargo handling and a variety of other origin related services. You state that the fees for the services offered encompass the following as examples:
Administration/documentation fees for the preparation of documentation such as Freight Cargo Receipts (“FCR”) and House Bills of Lading (“HBL”);
Bill of lading charge by the carrier for issuing the bill of lading;
Bill of lading amendment fee charged for changes needed to the bill of lading after it is issued if requested by the shipper;
Terminal handling charge;
Container Yard (“CY”) monitoring fee for handling the cargo;
Customs export declaration fee;
Container seal fee for the affixation of a special security seal on the container;
Handling charges for handling cargo and processing the shipment;
Log-net fee to transmit Importer Security Filing (“ISF”) to CBP;
Late gate charges for when the factory needs to deliver the goods to the pier after normal operation hours;
Customs export amendment fee for the correction of any customs clearance documentation as requested by the shipper.
You provided documentation from three sample transactions for illustrative purposes. The documentation consists of purchase orders from the importer to the sellers/manufacturers, commercial invoices, and packing lists from the sellers to the importer for certain apparel and footwear. Each commercial invoice lists the merchandise, the quantity, the unit price, and the total price. You claim that the charges for the services above are included in the invoice as part of the price of the merchandise. The term of sale listed on each invoice is “FOB port of export.”
You also submitted waybills issued by freight forwarders and freight invoices from the freight forwarders to the sellers/manufacturers listing the various charges you claim are incident to the international shipment of the merchandise. The freight invoices reference the waybills and list the breakdown of services and fees charged by the freight forwarders per bill of lading. Additionally, for the first transaction, you submitted a deposit statement from the seller to the freight forwarder for the charges. For the second transaction, you submitted forwarder certificates of receipt issued by the freight forwarder as well as an arrival notice issued by the carrier. For the third transaction, you submitted the freight forwarder’s cargo receipt as well as the freight forwarder’s official receipt to the manufacturer for the payment of services claimed to be incident to the international shipment of the merchandise. All of these documents reference the information on the invoices, packing lists, and the purchase orders.
You claim that the dutiable value should be based upon the foreign sellers/manufacturers’ invoice value less the charges assessed by the freight forwarders, on the basis that those charges are incident to the international shipment of the merchandise.
ISSUE:
Whether certain charges that are included in the invoice price for the imported merchandise may be properly excluded from transaction value as costs incident to the international shipment of the merchandise.
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 (TAA; 19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States,” plus amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. 19 U.S.C. § 1401a(b)(1). If, for any reason, sufficient information is not available with respect to the additions to the price actually paid or payable, the transaction value of the imported merchandise is treated as one that cannot be determined. 19 U.S.C. § 1401a(b)(1).
The term “price actually paid or payable” is defined as:
[T]he total payment (whether direct 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 imported merchandise by the buyer to, or for the benefit of, the seller.
19 U.S.C. § 1401a(b)(4)(A).
CBP has previously determined that 10+2 management fee, carrier agent booking fee, carrier bill of lading, CFS receiving, customs clearance, CY monitoring, documentation fee, equipment management fee, FCR/HBL issuance, LCL handling, port construction charge, port security charge, supply chain security fee, terminal handling charge, and wharfage fees are charges incident to the international shipment of the merchandise. See Headquarters Ruling Letter (“HQ”) H092560, dated April 7, 2010; see also HQ H119858, dated September 9, 2010; and HQ H119857, dated September 9, 2010. CBP has also held that Automated Manifest System (“AMS”) fee is a charge incident to the international shipment of the merchandise. See HQ H148715, dated November 16, 2011.
In Treasury Decision (“T.D.”) 00-20, CBP reiterated its longstanding position that with regard to freight, insurance and other costs incident to international shipment, including foreign inland freight, the importer of record must deduct the actual costs for these charges from the price actually paid or payable in determining transaction value, if these costs are included in the price actually paid or payable. The notice advised that CBP considers actual costs to constitute those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freight/insurance costs, a freight/insurance bill, a through bill of lading or proof of payment of the freight/insurance charges (i.e., letters of credit, checks, bank statements) are examples of some documents which typically serve as proof of such actual costs. Other types of evidence may be acceptable.
As stated in T.D. 00-20, deductions for transportation, insurance, and related services incident to the international shipment of the merchandise is appropriate only to the extent they are included in the price actually paid or payable. In the instant case, the freight forwarders’ invoices to the sellers/manufacturers of the merchandise itemize the various charges. Although the sellers’ invoices to the importer do not provide a similar itemization, the use of the “FOB” term of sale on the invoices indicates that the price for the apparel and footwear includes all costs relating to the goods until they are on board the vessel at the named port of shipment. See Incoterms 2010, 90 (2010). Further, we note that the freight forwarders’ invoices to the sellers/manufacturers for the services provided indicate the same FOB location as the commercial invoice from the sellers to the importer and reference the same port of loading listed on the waybills.
Nevertheless, we note that even though this ruling request deals with a variety of fees that might be charged by the freight forwarders, as referenced in the FACTS section of this ruling letter, the documents for sample transaction #1 only specify the following charges: administration fee, bill of lading amendment fee, terminal handling charge, CY monitoring, and FCR issuance fee. The documents for sample transaction #2 list the following charges: terminal handling charge, document fee, customs export declaration fee, container seal fee, handling charge, log-net fee, and late gate charge. Similarly, the documents for sample transaction #3 specify the following charges: seal fee, terminal handling charge, handling charge, and bill of lading charge. Therefore, inasmuch as these are the only actual charges substantiated by the documentary evidence in all three sample transactions, only these fees may be excluded from the price actually paid or payable in this case. However, the rest of the charges may also be deducted from the price actually paid or payable in line with our ruling HQ H092560, if supported by the necessary documentation.
HOLDING:
Based on the information presented, the following costs charged by the freight forwarders may be excluded from the price actually paid or payable for the imported merchandise with respect to the sample transactions: (1) administration fee, bill of lading amendment fee, terminal handling charge, CY monitoring, and FCR issuance fee, as specified in sample transaction #1; (2) terminal handling charge, document fee, customs export declaration fee, container seal fee, handling charge, log-net fee, and late gate charge, as specified in sample transaction #2; and (3) seal fee, terminal handling charge, handling charge, and bill of lading charge, as specified in sample transaction #3.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch