HQ 544238: Internal Advice Request Regarding the Dutiability of an Injection Mold

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 544238

                                  October 24, 1988


          CLA-2 CO:R:C:V 544238 EK

          CATEGORY:  Valuation

          Area Director of Customs
          New York Seaport Area
          New York, New York 10048

          RE:  Internal Advice Request Regarding the Dutiability of
               an Injection Mold

          Dear Sir:

                This is in reference to your memorandum of August 22, 1988,
          requesting our response to an internal advice initiated on behalf
          of (company name) (hereinafter referred to as importer).  The
          importer is inquiring as to the dutiability of a certain
          injection mold pursuant to 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 importer is a U.S. thermometer manufacturer who is
          involved with a Japanese compass manufacturer in producing a
          thermometer/compass.  The parties are not related within the
          meaning of section 402(g) of the TAA.  The importer and the
          Japanese manufacturer have jointly purchased an injection mold
          which will be used to produce a plastic component to be used to
          house the thermometer/compass.  The mold was purchased for
          $15,000, the importer paying its share of $7,500.

                You indicate that the injection mold is of Japanese origin
          and the manufacturer will use the same mold to produce plastic
          housings for sale in Japan.

                Although we are referring to this item as a mold, it
          appears from the description provided by the importer that
          the item is actually incorporated into the final imported
          product.  

















                                        - 2 -


          ISSUE:

                Whether the cost of the mold is part of the "price actually
          paid or payable" in determining the transaction value of the
          final imported product.


          LAW AND ANALYSIS:

                Transaction value, the preferred method of appraisement, is
          defined as the "price actually paid or payable" for imported
          merchandise when sold for exportation to the United States.  An
          addition to the "price actually paid or payable" will be made for
          the value of any assist.  Section 402(b)(1) of the TAA.

                The definition of an assist (in pertinent parts) is as
          follows:

                The term 'assist' means any of the following
                if supplied directly or indirectly, and free
                of charge or at a reduced cost, by the buyer
                of the imported merchandise for use in connec-
                tion with the production or the sale for export
                to the United States of the merchandise:

                   (i)  Materials, components, parts, and
                        similar items incorporated in the
                        imported merchandise.

          Section 402(h)(1)(A)(i) of the TAA.

                Although you have cited rulings which indicate that when
          the importer pays the manufacturer to provide tools necessary to
          produce the imported merchandise the payment constitutes an
          indirect payment rather than an assist, the circumstances here
          are slightly different.  In this case, the importer is not
          supplying the manufacturer money to pay for the mold but rather,
          the importer is providing the manufacturer with the actual mold,
          albeit half-ownership rights which the importer has acquired.

                With respect to the valuation of the assist, section
          152.103(d)(1) of the Customs Regulations, 19 CFR 152.103(d)(1),
          provides for the following:

                If the assist consists of materials . . . incorporated
                in the imported merchandise . . . acquired by the
                buyer from an unrelated seller, the value of the
                assist is the cost of its acquisition. . . . [T]he
                value of the assist would include transportation costs
                to the place of production.











                                        - 3 -


                In this case, the value of the assist should be $7,500, the
          cost of acquisition, plus the transportation costs incurred by
          the importer in transporting the assist to the place of
          production.

                With respect to the importer's inquiry regarding
          amortization, please note section 152.103(e)(1) of the Customs
          regulations regarding apportionment.  The method of apportionment
          is to be made in a reasonable manner and in accordance with
          generally accepted accounting principles.  If the anticipated
          production is only partially for exportation to the United
          States, then the method of apportionment will depend upon
          documentation submitted by the importer.

                Any questions regarding the applicability of this decision
          to previously entered merchandise should be directed to the
          district director responsible for the concerned port of entry.

                                  Sincerely,





                                  John Durant, Director,
                                  Commercial Rulings Division