HQ 544048: Valuation and admissibility of shirts

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 544048

                                        February 22, 1988

          CLA-2 CO:R:CV:V  544048 EK

          CATEGORY:  Valuation

          Robert L. Eisen, Esquire
          Coudert Brothers
          200 Park Avenue
          New York, New York  10166

          RE: Valuation and admissibility of shirts

          Dear Mr. Eisen:

                This is in response to your inquiry of September 30, 1987,
          regarding the valuation and admissibility of merchandise imported
          by your client.

          FACTS:

                You state that your client (importer) intends to purchase
          shirts, which are manufactured in the Philippines, from an
          unrelated Hong Kong company (seller).  The purchase price for the
          shirts will be $46.50 per dozen, FOB the Philippines.  The Hong
          Kong seller has purchased the shirts from the Philippine
          manufacturer, and has obtained a visaed invoice indicating that
          sales price to the Hong Kong seller as $80.00 per dozen.  The
          seller and the importer are not related within the meaning of
          section 402(g) of the Tariff Act of 1930, as amended by the Trade
          Agreements Acts of 1979 (TAA; 19 U.S.C. 1401a(g)).  You indicate
          that in some cases, the Hong Kong seller and the Philippine
          manufacturer are related.

          ISSUE:

                Whether the entry documentation is either erroneous or
          inconsistent so as to warrant their rejection pursuant to T.D.
          86-56.

          LAW AND ANALYSIS:

                The pertinent T.D. precludes the acceptance, by Customs, of
          entry documents in connection with the importation of merchandise
          which contain inconsistencies or erroneous information.  In such

















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          circumstances, the entry documentation is not accepted and is
          returned to the importer for correction.  Subsequent to the
          issuance of this T.D., instructions implementing the T.D. were
          issued by this office (Headquarters Ruling No. 543731 dated
          May 1, 1986).  The instructions indicated that if an importer
          provides an acceptable explanation for differences in the price
          or valuation information contained in visaes and invoices, then
          the entry may be accepted by Customs.  Several examples were
          listed which set forth acceptable scenarios in light of T.D.
          86-56.  As one example, Customs stated as follows:

                U.S. importer I contracts with exporter E located
                in country A to buy widgets at $10 each.  E subcontracts
                with manufacturer M in country B to actually produce
                the widgets, and to sell them to E for $8 each.  A visa
                is obtained by M from the government of the country of
                origin quoting a price of $8 per widget.  However, both
                the commercial invoice from E to I and the consumption
                entry filed by I cite a price of $10 per widget.

                The above-cited example pre-supposes that the sale between
          the manufacturer and the seller is a bona fide one, and that the
          subsequent resale from the seller to the U.S. importer is a bona
          fide sale.  The pricing between the parties is logical and
          completely consistent with commercial realities.  The seller and
          the importer are not related within the meaning of section 402(g)
          of the TAA.

                With respect to the instant case, there are two sales
          involved in the transaction.  The visaed invoice obtained from
          the Philippine government allegedly covers the sale from the
          Philippine manufacturer to the Hong Kong seller.  The commercial
          invoice submitted to Customs by the importer represents the
          transaction as between the Hong Kong seller and the importer.

                The pricing between the Philippine manufacturer and the
          Hong Kong seller is obviously, on its face, questionable.  This
          is a prospective ruling request; therefore, the possibility that
          the Hong Kong seller made an unprofitable deal and is selling the
          goods at a loss in order to relieve himself of the goods is not
          likely.

                The information which the importer intends to submit at the
          time of entry is, on its face, inconsistent.  The explanation
          that the Hong Kong seller is purchasing the goods at a higher
          price than that which it sells to the importer is not reasonable
          and is not in accordance with commercial reality.   














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                The importer has the burden of establishing that the entry
          documentation is accurate in all respects and that it is in
          compliance with the entry laws.  If there are inconsistencies or
          differences in the information submitted, the importer must
          adequately explain such inconsistencies.

                In submitting the two invoices which are patently
          inconsistent with no reasonable explanation in accordance with
          the instructions regarding T.D. 86-56, the importer has not
          complied with 19 U.S.C. 1481(a)(5) which states:

                All invoices of merchandise to be imported into the
                United States shall set forth . . . [t]he purchase
                price of each item . . .  .

                As indicated above, absent a reasonable explanation, the
          documentation with respect to the entries must be rejected.

          HOLDING:

                In view of the foregoing, the entry documentation with
          respect to the shipment will be rejected as being inconsistent or
          erroneous within the meaning of T.D. 86-56.

                                        Sincerely,




                                        John Durant
                                        Acting Director, Commercial
                                        Rulings Division