VAL OT:RR:CTF:VS H229700 EE
Carolyn Malina
Lands’ End Inc.
5 Lands’ End Lane
Dodgeville, WI 53595
RE: Transaction value; charges incident to the international shipment of the
merchandise
Dear Ms. Malina:
This is in response to your letter dated July 30, 2012, and additional information you submitted on January 4, 2012, in which you request a ruling concerning whether certain charges for services provided by third party logistics providers should be included in the transaction value of the imported merchandise.
FACTS:
Lands’ End Inc. (“Lands’ End”) is a retailer based in Dodgeville, Wisconsin that imports primarily apparel and footwear, luggage and home furnishings from various sources throughout the world. Lands’ End utilizes the services of third party logistics providers to assist with a variety of origin related services to facilitate the handling of the cargo. You state that the fees for the services offered encompass the following as examples:
Container Freight Station (“CFS”) charge for receiving and packing cargo into containers at the loading port;
Port construction / maintenance fee;
Port security charge;
Terminal handling charge;
Documentation fee for issuing the Freight Cargo Receipt (“FCR”);
Advance Manifest Surcharge (“AMS”) charged by the carrier to electronically transmit cargo declaration information to CBP;
AMS amendment fee;
Document fee issued for validating and processing the shippers’ documents;
Container seal fee for the affixation of a special security seal on the container;
Container Yard (“CY”) monitoring fee for handling the cargo;
Export customs declaration fee;
Container booking fee for booking a container with the steamship line;
Fee charged by the carrier for equipment management;
Customs inspection fee for any origin customs inspections when required;
House bill correction fee;
Courier fee to cover the costs of using a courier to move documents from the shipper to the forwarder or carrier;
Late document charge;
Late come charge to cover the costs related to the late arrival of goods at the CY or CFS;
Booking cancellation fee for cancelling a booking with the carrier;
Change of vessel administration fee for requesting a vessel change;
Diversion administration fee if the seller requests a diversion to the shipment; and
Late AMS / late ISF fee.
You provided documentation from two sample transactions for illustrative purposes. The documentation consists of purchase orders from the importer to the sellers, commercial invoices and packing lists from the sellers to the importer for certain apparel. 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 or foreign country.”
You also submitted waybills issued by the carriers and forwarder certificates of receipt issued by the third party logistics providers to the sellers. These documents reference the information on the invoices, packing lists, and the purchase orders. You also submitted origin charge summary sheets issued by the third party logistics providers to the sellers referencing the waybills and list the various charges per bill of lading, which you claim are incident to the international shipment of the merchandise. Additionally, for the first transaction, you submitted a freight invoice from the third party logistics provider to the seller which also lists the origin charges that are on the origin charge summary sheet.
You claim that the dutiable value should be based upon the foreign sellers’ invoice value less the charges assessed by the third party logistics provider, 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. Additionally, CBP has held that the container seal fee is a charge incident to the international shipment of the merchandise. See HQ H219516, dated July 30, 2012.
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 origin charge summaries issued by the third party logistics providers’ to the sellers 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 forwarder’s cargo receipts issued by the third party logistics indicate the same FOB location as the commercial invoices 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 third party logistics providers, as referenced in the FACTS section of this ruling letter, the documents for sample transaction #1 only specify the following charges: terminal handling charge, CFS receiving charge, bill of lading charge, AMS fee, and AMS amendment fee. Therefore, inasmuch as these are the only actual charges substantiated by the documentary evidence in the first sample transaction, only these fees may be excluded from the price actually paid or payable in this case. The document for sample transaction #2 lists agent handling fees. The description of this charge is not specific enough for CBP to determine if it is a service incident to the international shipment of the merchandise. Therefore, agent handling fees cannot be deducted. You stated on December 21, 2012 that the late document charge, the late come charge, the late AMS/ISF fee, and the diversion/administration fees are not incorporated into the price of the goods. Since these charges are not included in the price actually paid or payable of the merchandise, they cannot be deducted. However, the rest of the charges may be deducted from the price actually paid or payable in line with our ruling HQ H092560, if included in the price actually paid or payable of the imported merchandise and supported by the necessary documentation.
HOLDING:
Based on the information presented, the following costs charged by the third party logistics provider may be excluded from the price actually paid or payable for the imported merchandise with respect to the first sample transaction: terminal handling charge, CFS receiving charge, bill of lading charge, AMS fee, and AMS amendment fee. However, late document charge, late come charge, late AMS/ISF fee, the diversion/administration fees, and agent handling fees may not be excluded from the price actually paid or payable for the imported merchandise.
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