HQ 544493: Application for Further Review of Protest No. XX; Regarding Assists Provided in the Manufacturing of Wiring Devices

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 544493

                                   June 3, 1991

VAL CO:R:C:V  544493 ML

CATEGORY:  Valuation

District Director
Laredo, Tx  78044

RE:  Application for Further Review of Protest No. XX; Regarding
     Assists Provided in the Manufacturing of Wiring Devices

Dear Sir:

     This application for further review of the subject protest
was filed against your decision in the liquidation of various
entries made by General Electric Company.  The merchandise was
manufactured in Mexico by their wholly-owned subsidiary,
Apparatus Electricos de Acuna.  The imported merchandise was
appraised pursuant to section 402(e) of the Tariff Act of 1930,
as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
1401(a)).

FACTS:

     The General Electric Company (hereinafter referred to as the
"importer"), imported various wiring devices, such as, small
switches, fuses, dimmers, connectors, cordsets, lampholders, etc. 
The merchandise was manufactured in Mexico by their wholly-owned
subsidiary, Apparatus Electricos de Acuna (hereinafter referred
to as the "manufacturer").  The importer furnished the
manufacturer with component parts and materials, free of charge,
for incorporation into the imported merchandise.  Some of the
imported merchandise qualified for duty free treatment under
former item 807.00, Tariff Schedules of the United States (TSUS),
while some did not.

     Much of the imported merchandise was appraised at the end of
accounting periods on the basis of cost submissions furnished to
the import specialist.  The cost submission detailed the costs of
all assists provided by the importer to the manufacturer. 
Customs later determined the amount of additional duty or duty
refund on a per entry basis.  Counsel for the importer states
that Customs has, at times along the Mexican border, allocated
the entire increase or decrease, as a lump sum or sums against
one or a few entries, and not pro-rata against each entry.  This
procedure, states counsel, was invoked where the majority of the
entries covered by the cost submissions had already been
liquidated.

     In 1982, cost submissions were submitted to Customs and the
records of both the importer and the manufacturer were audited. 
Customs determined a dutiable value for the Calendar Year 1982
importations which would result in a duty refund to the importer
of $XXXXX.  The importer alleges that a quantity of material
provided by the importer to the manufacturer was "scrap", and as
such, should not be included in the dutiable value of the assist.

ISSUE:

     (1)  Whether evidence has been furnished by the importer
which establishes that materials provided to the manufacturer are
not assists because they have not been incorporated in the
imported merchandise.

     (2)  Whether proper duty refunds were made in connection
with the appraisement and liquidation of various entries made in
1982.

LAW AND ANALYSIS:

     Computed value is defined in section 402(e) of the TAA as
the sum of:

          (A)  the cost or value of the materials and the
          fabrication and other processing of any kind employed
          in the production of the imported merchandise;

          (B)  an amount for profit and general expenses equal to
          that usually reflected in sales of merchandise of the
          same class or kind as the imported merchandise that are
          made by the producers in the country of exportation for
          export to the United States;

          (C)  any assist, if its value is not included under
          subparagraph (A) or (B); and

          (D)  the packing costs.

The definition of an assist (in pertinent parts) is as follows:
(section 402(h)(1)(A))

          The term "assist" means any of the following if
          supplied directly or indirectly, and free of charge or
          at reduced cost, by the buyer of the imported
          merchandise for use in connection 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....

          (iii)  Merchandise consumed in the production of the
          imported merchandise....

     The protestant argues that the appraisement for the Calendar
Year 1982 importations treated as dutiable a quantity of "scrap"
from material provided by it, free of charge and which was not
incorporated in the imported merchandise.  The protestant notes
that Headquarters Ruling Letter (HRL) No. 543093 dated April 30,
1984, stated the following:

          ...components which are destroyed, scrapped, or lost,
          and which are not physically incorporated into the
          imported article are not assists under the TAA.

     The importer argues, therefore, that the import specialist
erred in treating the "scrap" as a dutiable cost.  If this were
the issue presented, we might be able to agree that discarded
component parts and materials that have some commercial value
(i.e., scrap) do not constitute an assist if they are not
incorporated into the final imported merchandise.  This material
would, therefore, be nondutiable.  However, in the instant case,
no evidence has been submitted suggesting that the additional
components supplied by the importer to the manufacturer were not
incorporated in the imported merchandise.  As the importer has
not supplied any evidence to negate the import specialist's
having made the appropriate adjustments to appraised value, we
find that the components incorporated in the imported merchandise
were dutiable assists.  As Customs stated in Headquarters Ruling
Letter No. 543995, if no evidence is submitted in support of a
protestant's argument, then we have no basis for holding that an
appraisement was in error.  (See HRL 543995, dated February 17,
1988)

     The second issue involves the appraisement and liquidation
of various Calendar Year 1982 entries.  These entries were
appraised and liquidated per information provided by the
importers cost report.  The protestant contends that section
504(b)(1) of the Tariff Act of 1930, as amended (19 U.S.C.
1504(b)(1)), requires the import specialist to suspend
liquidation since Customs had determined to audit the entries
concerned.  He states that Customs knew that further information
was needed for the proper appraisement and was not available,
therefore, the Customs officer involved should have invoked the
procedures in section 504.

     Section 504(a) states (in pertinent part):

          "the entry of merchandise not liquidated within one
          year...shall be deemed liquidated at the rate of duty,
          value, quantity, and amount of duties asserted at the
          time of entry by the importer, his consignee, or agent. 
          Notwithstanding section 500(e) of this title, notice of
          liquidation need not be given of an entry deemed
          liquidated."

As cited by the protestant, section 504(b) states that the
"Secretary may extend the period in which to liquidate an entry
by giving notice ...if-

          (1) information needed for the proper appraisement or
          classification of the merchandise is not available to
          the appropriate Customs officer;" (emphasis added)    
     
As no relief was requested by the importer at the time his cost
information was presented for these entries, they were
automatically liquidated.  Customs was under no obligation to
notify the importer, and so their decision to liquidate the
entries was not inconsistent with statutory requirements. 

HOLDING:

     In view of the foregoing, we have no basis for holding that
the appraisement was in error.  As Customs is not obligated to
notify the importer of their decision to liquidate entries that
have been held open for a period of time greater than one year,
Customs did not violate the procedures in section 504 as they
apply to the liquidation of entered merchandise.

     Accordingly, you are directed to deny this 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