HQ 544284: Decision on Application for Further Review of Protest No. 3801-6-001163

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                      HQ 544284


                                  January 26, 1989


          CLA-2  CO:R:CV:V   544284 VLB


          CATEGORY: Valuation


          District Director of Customs
          Detroit, Michigan  48226-2568


          RE: Decision on Application for Further Review of Protest
              No. 3801-6-001163


          Dear Sir:

                This protest was filed against your decision in the
          liquidation of various entries made by --------------------------
          ---------------, a lumber distributor (hereinafter referred to as
          the "distributor").  The merchandise was appraised pursuant to
          section 402(f) of the Tariff Act of 1930, as amended by the Trade
          Agreements Act of 1979 (19 U.S.C. 1401a(b); TAA).


          FACTS:

                The merchandise in question is waferboard (particle board)
          that is manufactured in Canadian mills.  The valuation of
          Canadian waferboard is the subject of hundreds of protests
          arising out of the various importers' manner of doing business.

                In correspondence dated March 28, 1988, forwarding the
          protests, the National Import Specialist lists the following
          three general methods used to sell the merchandise in question:

                (1)  A Canadian manufacturer sells to a distributor (a
                Canadian or a U.S. company) for export to the United
                States, e.g. F.O.B. mill.  All documents, including a
                through bill of lading, show that the merchandise is to be
                shipped from point of manufacture or origin to the United
                States port of importation or beyond.

                (2)  A Canadian manufacturer sells F.O.B. mill to a
                distributor (a Canadian or a U.S. company) for shipment to
                a "storage-reload center" located near the border but on













                                        - 2 -

                the Canadian side.  In turn, the distributor sells the
                merchandise from the "storage-reload center" to U.S. buyers
                for export to the United States (F.O.B. "storage-reload
                center" or duty paid delivered).

                (3)  A Canadian manufacturer sells to a distributor (a
                Canadian or a U.S. company) for export to the United
                States, e.g. F.O.B. mill.  All documents, including a
                through bill of lading, show that the merchandise is to be
                shipped from point of manufacture or origin to the United
                States port of importation or beyond.  However, the
                shipment is routed through a "storage-reload center" in
                Canada.  The only thing that happens at the reload center
                is either a change in the transportation conveyance or a
                stop over (sic) on the way to the United States.  There is
                no change in quantities or destination.

                Each of the three methods described may have variations and
          the details of each transaction may differ slightly.  Therefore,
          we will examine the documentation submitted by each protestant.

                In this case, the distributor has submitted documentation
          for two transactions.  There are two documents in each
          transaction: (1) An Entry Summary Form indicating that the
          distributor is the ultimate consignee and F.W. Myers & Co.
          (Broker) is the importer of record;  (2) An F.W. Myers Invoice
          stating that Nu Way Distributors (Reload Center) is the exporter
          and that the consignee is the distributor's U.S. customer.  The
          distributor failed to provide any invoices that indicated the
          amount that it charged its U.S. customer for the merchandise.

                Documents 1 and 2, presented to Customs at the time of
          entry, appear to contain the price that the distributor paid to
          the Canadian manufacturer.

                You appraised the entries under section 402(f) of the TAA
          using the price paid by other U.S. customers to U.S. distributors
          for identical or similar merchandise as the starting point for
          the appraisement.  The distributor argues that the merchandise
          should be appraised pursuant to section 402(b) of the TAA, and
          that the transaction value is the price it paid to the Canadian
          manufacturer.



















                                        - 3 -

          ISSUE:

                Whether transaction value is the proper method for the
          appraisement of the merchandise.


          LAW AND ANALYSIS:

                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. . ." (emphasis added).  Section 101.1(k) of the
          Customs Regulations (19 CFR 101.1(k)), defines "exportation" as a
          severance of goods from the mass of things belonging to this
          country with the intention of uniting them to the mass of things
          belonging to some foreign country.

                In C.S.D. 84-54 and Headquarters ruling 542928 cited as TAA
          #57, we held:

                . . . the transaction to which the phrase "when sold for
                exportation to the United States" refers, when there are
                two or more transactions which might give rise to a
                transaction value, is the transaction which most directly
                causes the merchandise to be exported to the United States.

                Headquarters also issued ruling 543687 dated May 6, 1986,
          in response to hypothetical questions posed by a lumber industry
          trade journal.  In that ruling we stated the following:

                . . . if sales for exportation to the United States
                actually occur from the border reload point (in Canada),
                and these sales are the sales that directly cause the
                merchandise to be exported from Canada, the transaction
                value would be based upon those sales.  (emphasis added)

                Finally, on May 22, 1986, Headquarters issued ruling 543746
          involving specific waferboard entries.  In that case, a U.S.
          company purchased and imported waferboard products from various
          unrelated sources in Canada.  The terms of sale were "F.O.B.
          mill".  Therefore, the company took title to the merchandise at
          the mill.

                However, the product was shipped to reload centers in
          Canada where it was stored and consolidated.  The company
          frequently obtained orders for resale of the product to unrelated
          U.S. purchasers prior to the consolidation at the staging yards.















                                        - 4 -

                Relying on ruling 543687, we held that the sale from the
          company (distributor) to its U.S. customer most directly caused
          the merchandise to be exported to the U.S.

                The documents submitted by the distributor in this protest
          do not contain enough information to determine when the
          distributor received an order from its U.S. purchaser or when the
          distributor ordered the merchandise from the manufacturer.
          Therefore, it is impossible to determine which sale severed the
          goods from the mass of things belonging to Canada with the intent
          of uniting them with the mass of goods belonging to the U.S. for
          purposes of transaction value.

                If information containing the price that the distributor
          charged its U.S. customer for the lumber is unavailable, it is
          necessary to proceed sequentially through the remaining bases of
          appraisement prior to resorting to a section 402(f) appraisement.
          In this case, the distributor has failed to provide any evidence
          that supports its contention that it the merchandise was
          improperly appraised under section 402(f) of the TAA.


          HOLDING:

                 The importer has failed to submit any documentation or
          explanation supporting its claim that the merchandise was
          improperly appraised under section 402(f) of the TAA.  Therefore,
          you are directed to deny the protest.  A copy of this decision
          should be attached to Form 19, Notice of Action, to be sent to
          the protestant.




                                     Sincerely,



                                     John Durant, Director,
                                     Commercial Rulings Division