OT:RR:CTF:VS H312866 EE
Center Director
Apparel, Footwear and Textiles (C/O-ACD Buchanan)
Center of Excellence and Expertise
555 Battery Street, Room 433
San Francisco, CA 94111
RE: Application for Further Review of Protest No. 3401-19-100172; 1520(d) Claim Denial; Brokerage Fees
Dear Center Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 3401-19-100172, timely filed on August 21, 2019, on behalf of Actionwear Saskatoon Inc. (hereinafter, the “protestant”), concerning the denial of the protestant’s preferential tariff treatment claim under 19 U.S.C. § 1520(d) of the North American Free Trade Agreement (“NAFTA”) of certain men’s synthetic hooded sweatshirts and the dutiability of certain brokerage fees.
FACTS:
The merchandise subject to the protest at issue consists of men’s synthetic hooded sweatshirts style numbers 34LPA3, 34UPA3, 34UZA3, and 34LZ, produced in Canada by the protestant. The merchandise was entered on July 16, 2018 and liquidated on June 14, 2019. Your office denied the protestant’s request for reliquidation under 19 U.S.C. § 1520(d) on April 1, 2020, stating that the ultimate consignee on the entry summary and CF 7501 show a foreign importer of record, which is not acceptable; that with the ultimate consignee listed as a foreign entity, it appears that the goods are in Canada; that the terms of sale are not listed on the invoice; and that the deduction brokerage fees were not substantiated. Subsequently, the protestant filed the protest claiming that the ultimate consignee was reported correctly at the time of entry and that the deduction of brokerage fees was substantiated.
ISSUE:
Whether the protestant’s NAFTA preferential tariff treatment claim under 19 U.S.C. § 1520(d) should be granted.
Whether the brokerage fees are dutiable.
LAW AND ANALYSIS:
Section 520(d), Tariff Act of 1930, as amended (19 U.S.C. § 1520(d)), provides as follows:
Notwithstanding the fact that a valid protest was not filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess duties paid on a good qualifying under the [NAFTA] rules of origin ... for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes:
(1) a written declaration that the good qualified under those rules at the time of importation;
(2) copies of all applicable NAFTA Certificates of Origin ...; and,
(3) such other documentation relating to the importation of the goods as the Customs Service may require.
The U.S. Customs and Border Protection (“CBP”) Regulations implementing 19 U.S.C. § 1520(d) are found in sections 181.31 through section 181.33 (19 C.F.R. § 181.31 through § 181.33). Section 181.32(b) of the CBP Regulations (19 C.F.R. § 181.32(b)) provides that a post-importation duty refund claim must include:
(1) A written declaration stating that the good qualified as an originating good at the time of importation and setting forth the number and date of the entry covering the good;
(2) Subject to 19 C.F.R. § 181.22(d), a copy of each Certificate of Origin pertaining to the good;
(3) A written statement indicating whether or not the importer of the good provided a copy of the entry summary or equivalent documentation to any other person. An identification of the person if the information was so provided.
(4) A written statement indicating whether or not the importer of the good is aware of any claim for refund, waiver or reduction of duties under the NAFTA relating to the good and identification of same.
(5) A written statement indicating whether or not any person has filed a protest or a petition or request for reliquidation relating to the good under any provision of law, and if so, identification of same.
Furthermore, 19 C.F.R. § 181.33(d), enumerates the grounds for denial of a post-importation NAFTA claim as follows: failure to timely file; noncompliance with regulatory requirements; invalidity of the Certificate of Origin; or determination following initiation of a verification that the imported good does not qualify as originating.
In the instant case, the declaration and statements required by 19 C.F.R. § 181.32(b) with respect to the entry under the protest are not at issue. Since the claim under 19 C.F.R. § 181.31 was timely filed on August 23, 2018, the claim must be allowed provided a proper NAFTA Certificate of Origin pertaining to the goods has been submitted for the entry covered by the protest, and unless there is another basis in the record for denial (19 C.F.R. § 181.33(d)). As previously noted, your office denied the protestant’s § 1520(d) petition stating that the ultimate consignee on the entry summary and CF 7501 show a foreign importer of record, which is not acceptable. The NAFTA Certificate of Origin, which was submitted to your office, is dated July 8, 2018 and covers the blanket period January 1, 2018 to December 31, 2018. The men’s synthetic hooded sweatshirts style numbers 34LPA3, 34UPA3, 34UZA3, and 34LZ, classified under subheading 6110.30.10, HTSUS, are listed on the NAFTA Certificate of Origin. Since the protestant’s post-importation NAFTA claim was timely filed within one year from the date of importation of the merchandise and the NAFTA Certificate of Origin covering the merchandise at issue was submitted, we find that the protestant's post-importation NAFTA preference claim pursuant to 19 U.S.C. § 1520(d) should be granted. The ultimate consignee designation is not a basis for denial of the protestant’s 19 U.S.C. § 1520(d) claim. 19 C.F.R. § 181.33(d).
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 primary 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).
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.
The invoice from the protestant to Amaril Uniform Co., the purchaser in the United States, lists the broker as Fed Ex Trade Networks. Even though the invoice does not list the term of sale, it indicates “bill brokerage service charges to shipper”. However, the brokerage charges are not separately listed. Further, evidence of actual costs of brokerage charges were not provided. Accordingly, we find that brokerage charges may not be deducted from the price actually paid or payable for the imported merchandise.
HOLDING:
The protest should be GRANTED IN PART and DENIED IN PART. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the
Customs Rulings Online Search System (CROSS) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division