HQ 543913: Decision of Application for Further Review of Protest No. 0401-4-000375

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 543913

                                        February 22, 1988

          CLA-2 CO:R:C:V  543913 EK

          CATEGORY:  Valuation

          District Director of Customs
          Boston, Massachusetts

          RE:  Decision of Application for Further Review of
               Protest No. 0401-4-000375

          Dear Sir:

                This protest was filed against your decision in the
          liquidation of Entry No. 83-308251 dated March 16, 1984.  The
          protesting party is disputing the dutiability of quota charges
          incurred by the importer.  The merchandise was appraised pursuant
          to transaction value, section 402(b) of the Tariff Act of 1930,
          as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
          1401a(b)).

          FACTS:

                 The goods were manufactured by (seller's name)
          (hereinafter referred to as seller) who is also a quota holder in
          Hong Kong.  When the importer purchases merchandise from the
          seller, a portion of the seller's quota is provided to the
          importer as part of the agreed upon purchase price.  On occasion,
          the importer purchases more garments than the seller is
          authorized to export under its quota allocation.  Therefore, the
          importer provides the seller with quota authorization acquired
          from unrelated third parties.  The importer states that the
          seller acts as its agent in receiving quota acquired from
          unrelated third parties.

                The importer argues that the manufacturer in receiving the
          quota from the unrelated third party merely acted as an
          intermediary and that the quota transaction is completely
          separate from the import transaction.

          ISSUE:

                Whether the amount assessed for quota is included in the
          price actually paid or payable.

                Whether the exchange rate in effect at the time of
          exportation is appropriate.














                                        - 2 -


          LAW AND ANALYSIS:

                 The best evidence available in this case as to the
          identity of the seller and quota holder is the export license
          issued by the Hong Kong government.  That document indicates the
          seller and quota holder as the same party.  Moreover, no transfer
          documentation or record of payment has been submitted indicating
          that the importer purchased the quota from a third party.

                It is our conclusion that the amount assessed for quota is
          clearly included in the "price actually paid or payable" for the
          imported merchandise and forms part of transaction value.  The
          transaction is governed by the well-settled proposition that if
          the payments are made to the seller, or a party related to the
          seller, then they are included in the transaction value of the
          merchandise.  See, TAA Ruling Nos. 6 and 14.

                The importer further alleges that if in fact the payment is
          deemed to be dutiable, then the exchange rate in effect at the
          time of exportation is appropriate, rather than at the time the
          quota was purchased.  We agree that the exchange rate which
          governs is that which exists at the time of exportation
          See, 31 U.S.C. 372.


          HOLDING:

                Accordingly, you should deny the protest with respect to
          the dutiability of the quota; however, the protest should be
          granted with respect to the exchange rate which should govern.  A
          copy of this decision should be attached to the Form 19, Notice
          of Action, to be sent to the protestant.

                                        Sincerely,




                                        John Durant
                                        Acting Director, Commercial
                                        Rulings Division