HQ 544019: Decision on Application for Further Review of Protest No. 3801-7-000075

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 544019

                                  January 3, 1989

          CLA-2 CO:R:CV:V 544019 VLB

          CATEGORY: Value

          District Director of Customs
          477 Michigan Avenue
          Detroit, Michigan  48226-2568

          RE: Decision on Application for Further Review of Protest
              No. 3801-7-000075

          Dear Sir:

                This application for further review was filed against your
          decision in the liquidation of entries made by ------------
          (hereinafter referred to as the "importer").  The merchandise was
          appraised pursuant to section 402(b) of the Tariff Act of 1930,
          as amended by the Trade Agreements Act of 1979 (TAA).


          FACTS:

                The merchandise in question is a Tag Isolated Phase Bus and
          hardware for its assembly.  The purchase and assembly of the
          phase bus was a large project with many subcontractors, including
          ----------------------------- (hereinafter referred to as the
          "seller") and --------------- (hereinafter referred to as "Tr.").
          Entries were made through both Detroit and Buffalo.  This
          protest, as previously mentioned, involves the Detroit entries.

                The merchandise was appraised under transaction value.
          However, you and the importer disagree on the amounts that should
          be included in the transaction value.  We have prepared the
          following table that outlines your respective positions:


                                        Importer          Customs

          Contract Value                $1,052,143.00     $1,574,011.00

          Value of Detroit entries
             appraised in this protest  788,892.00        788,892.00

          Value of Buffalo entries
             on contract reconciliation 273,423.00        273,423.00















                                        - 2 -

                                        Importer          Customs

          Total FOB duty paid value     1,044,687.00      1,062,315.00

          On Site Services
             (Installation)             (119,504.30)      (34,371.00)

          Direct Shipments from
             Trench                     (221,825.00)      (221,825.00)

          U.S. Origin Materials         (100,725.00)      (0.00)

          Freight and Brokerage         (6% of dutiable   (6% of dutiable
                                           value)             value)


                You began the appraisement of the merchandise by taking the
          total contract price (1,574,011.00) less on-site services
          (34,371.00) and direct shipments from Trench (221,825.00) to
          arrive at 1,317,815.  You then calculated the difference between
          the dutiable value (1,317,815) and the total entered FOB duty
          paid price (1,062,135) to arrive at $255,500.00.  You state that
          this is the amount that was not covered by the entries in the
          importer's contract reconciliation.  You, therefore, divided
          255,500.00 by 788,892.00 (the Detroit entries) and arrived at
          32.388%.  This percentage represents the unappraised entries that
          were necessary to complete the contract.

                The importer on the other hand, alleges that 1,044,687.00
          is the proper appraised value.  The importer contends that the
          total invoice price of all of the entries is 1,052,143.00 which
          is 7,456.00 greater than the total adjusted contract price
          (1,044,687.00), including duty.  Therefore, the importer alleges
          that "all of the entries should be reliquidated at the invoice
          price, U.S. funds, less .71%, less duty included".  The .71% was
          calculated by dividing 1,052,143.00 by 1,044,687.00.



          ISSUE:

                Whether the merchandise was properly appraised.



















                                        - 3 -

          LAW AND ANALYSIS:

                The preferred method of appraisement is transaction value
          which is defined in section 402(b)(1) of the Tariff Act of 1930,
          as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
          section 1401a(b)) as the "price actually paid or payable for the
          merchandise when sold for exportation to the United States . . .
          ."  The merchandise at issue was appraised under transaction
          value.  From the information provided, it appears that
          transaction value was the proper basis of appraisement.

                You and the importer agree that under transaction value,
          the on-site services for the installation of the phase bus are
          deductible.  We agree that under section 402(b)(3)(A) of the TAA
          the cost of these services incurred after importation of the
          merchandise are not included in the transaction value.

                However, you and the importer disagree on the value of
          these services.  The importer alleges that the installation cost
          is $119,504.30 while you contend that the value is $34,371.00.
          The invoices submitted to us on this issue total $34,371.00.
          Therefore, we hold that your appraisal of the installation costs
          is correct.

                A second issue in the appraisement is the value of the
          direct shipments for Tr. to the importer.  You and the importer
          agree that these amounts should not be included in the
          transaction value of the merchandise.  Based on the information
          in the file, it appears that these payments do constitute part of
          the transaction value and were omitted properly from the dutiable
          value of the merchandise.

                A third issue involves the importer's allegation that
          certain U.S. origin materials should not be included in the
          dutiable value of the merchandise.  You contend that the importer
          has not complied with any of the statutory provisions that allow
          for U.S origin materials to be imported into the United States
          duty free.  We find that the importer has failed to supply any
          information that verifies its claim that the merchandise was
          comprised of U.S. origin materials.  Therefore, we hold that your
          appraisement on this issue is correct.

                The final issue involved in the appraisement of the
          merchandise is a deduction for freight and brokerage.  You and
          the importer agree that the deduction should be 6% of the
          dutiable value of the merchandise.  We find nothing in the file
          indicating that there is an error in this method of calculation.














                                        - 4 -

          HOLDING:

                In light of the foregoing, it is our conclusion that the
          importer has failed to submit any documentation that supports its
          claim that the dutiable value is less than your appraisement.
          Therefore, the protest should be denied.

                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