us-cbp-cross-rulings-hq-544286•HQ 544286: Decision on Application for Further Review of Protest No. 3801-6-001161
HQ 544286: Decision on Application for Further Review of Protest No. 3801-6-001161
us-cbp-cross-rulings-hq-544286HQ 544286: Decision on Application for Further Review of Protest No. 3801-6-001161Guidance
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 544286
February 2, 1989
CLA-2 CO:R:CV:V 544286 VLB
CATEGORY: Valuation
District Director of Customs
Detroit, Michigan 48226-2568
RE: Decision on Application for Further Review of Protest
No. 3801-6-001161
Dear Sir:
This protest was filed against your decision in the
liquidation of various entries made by ---------------- on behalf
of ----------------------------------, a lumber distributor
(hereinafter referred to as the "distributor") The merchandise
was appraised pursuant to section 402(b) of the Tariff Act of
1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C.
1401a(b); TAA).
FACTS:
The merchandise in question is waferboard (particle board)
that is manufactured in Canadian mills. The valuation of
Canadian waferboard is the subject of hundreds of protests
arising out of the various importers' manner of doing business.
In correspondence dated March 28, 1988, forwarding the
protests, the National Import Specialist lists the following
three general methods used to sell the merchandise in question:
(1) A Canadian manufacturer sells to a distributor (a
Canadian or a U.S. company) for export to the United
States, e.g. F.O.B. mill. All documents, including a
through bill of lading, show that the merchandise is to be
shipped from point of manufacture or origin to the United
States port of importation or beyond.
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(2) A Canadian manufacturer sells F.O.B. mill to a
distributor (a Canadian or a U.S. company) for shipment to
a "storage-reload center" located near the border but on
the Canadian side. In turn, the distributor sells the
merchandise from the "storage-reload center" to U.S. buyers
for export to the United States (F.O.B. "storage-reload
center" or duty paid delivered).
(3) A Canadian manufacturer sells to a distributor (a
Canadian or a U.S. company) for export to the United
States, e.g. F.O.B. mill. All documents, including a
through bill of lading, show that the merchandise is to be
shipped from point of manufacture or origin to the United
States port of importation or beyond. However, the
shipment is routed trough a "storage-reload center" in
Canada. The only thing that happens at the reload center
is either a change in the transportation conveyance or a
stop over (sic) on the way to the United States. There is
no change in quantities or destination.
Each of the three methods described may have variations and
the details of each transaction may differ slightly. Therefore,
we will examine the documentation submitted by each protestant.
In this case, the distributor had submitted documentation
for several transactions. There are three relevant documents in
each transaction: (1) A Lumber Order Report by the mill
indicating the distributor placed an order for a specified amount
of lumber to be shipped to the distributor's U.S. customer; (2)
An Entry Summary Form showing that the mill is the ultimate
consignee and F.W. Myers (broker) is the importer of record; (3)
A Customs Invoice indicating that the mill is the seller, the
buyer is the distributor and the distributor's U.S. customer is
the consignee. The terms of sale were "F.O.B. reload center".
The protestant states that the U.S. customers make
arrangements to pick up the loads at the reload center. In
addition, when an order is shipped, the distributor remits
payment to the mill. At the same time, the distributor invoices
its U.S. customer.
You determined that the transaction value of the
merchandise was the price the U.S. customer paid the distributor
for the merchandise. The distributor argues that the transaction
value is the price that it paid to the Canadian manufacturer.
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ISSUE:
Whether the sale between the manufacturer and the
distributor, or the sale between the distributor and its
customer, is the price actually paid or payable for the
merchandise when it was sold for exportation to the United
States.
LAW AND ANALYSIS:
Transaction value, the preferred method of appraisement, is
defined in section 402(b) of the TAA as the "price actually paid
or payable for the merchandise when sold for exportation to the
United States. . ." (emphasis added). Section 101.1(k) of the
Customs Regulations (19 CFR 101.1(k)), defines "exportation" as a
severance of goods from the mass of things belonging to this
country with the intention of uniting them to the mass of things
belonging to some foreign country.
In C.S.D. 84-54 and Headquarters ruling 542928 cited as TAA
#57, we held:
. . . the transaction to which the phrase "when sold for
exportation to the United States" refers, when there are
two or more transactions which might give rise to a
transaction value, is the transaction which most directly
causes the merchandise to be exported to the United States.
Headquarters also issued ruling 543687 dated May 6, 1986,
in response to hypothetical questions posed by a lumber industry
trade journal. In that ruling we stated the following:
. . . if sales for exportation to the United States
actually occur from the border reload point (in Canada),
and these sales are the sales that directly cause the
merchandise to be exported from Canada, the transaction
value would be based upon those sales. (emphasis added)
Finally, on May 22, 1986, Headquarters issued ruling 543747
involving specific waferboard entries. In that case, a U.S.
company purchased and imported waferboard products from various
unrelated sources in Canada. The terms of sale were "F.O.B.
mill". Therefore, the company took title to the merchandise at
the mill.
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However, the product was shipped to reload centers in
Canada where it was stored and consolidated. The company
frequently obtained orders for resale of the product to unrelated
U.S. purchasers prior to the consolidation at the staging yards.
Relying on ruling 543687, we held that the sale from the
company (distributor) to its U.S. customer most directly caused
the merchandise to be exported to the U.S.
The facts of the present case appear to fall under Scenario
3 that was discussed previously. In this scenario the sale at
the mill between the distributor and the manufacturer is for
direct shipment to the U.S. However, the shipment is routed
though the reload center in Canada for the purpose of changing
transportation conveyance or for a stopover on the way to the
United States.
The National Import Specialist's comments state that in
these cases "appraisement should be under transaction value, Sec.
402(b), using the price between the mill and the distributor. We
agree with this conclusion.
The documents submitted by the distributor in this protest
support the finding that the distributor had an order from its
U.S. customer prior to placing an order with the mill. In
addition, the documentation shows that the quantity ordered by
the U.S. purchaser is the same amount of merchandise that left
the mill. It appears that the reload center was used for
changing transportation conveyance or as a stopover. There is no
evidence that the merchandise was sold from the reload center.
As a result we believe that the sale that severed the
merchandise from the mass of things belonging to Canada with the
intent of uniting them with the mass of goods belonging to the
U.S. was the sale between the manufacturer and the distributor.
This is the sale that directly caused the merchandise to be
exported from Canada to the U.S. and is the price actually paid
or payable under transaction value.
HOLDING:
The facts of this case fall under Scenario 3 that was
discussed previously. We hold that in that factual pattern the
sale between the manufacturer (mill) and the distributor is the
sale that directly caused the merchandise to be exported from
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Canada to the U.S. Therefore, the amount of that sale is the
price actually paid or payable for the goods under transaction
value.
Accordingly, you are directed to grant 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,
Commercial Rulings Division
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