HQ 544157: Valuation of Exempted Component

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 544157

                                    June 22, 1988

          CLA-2 CO:R:C:V:TLL 544157

          CATEGORY:  Valuation

          David Newman, Esq.
          Siegel, Mandell & Davidson
          One Whitehall Street
          New York, New York 10004

          Re:   Valuation of Exempted Component

          Dear Mr. Newman:

               This is in reply to your letter dated December 1, 1987,
          regarding the value of fabricated components under section 10.17,
          Customs Regulations (19 CFR 10.17)

          ISSUE:

               Whether the Harbor Maintenance Tax which attaches pursuant
          to 26 U.S.C. 4461 et seq. is part of the value of fabricated
          components to be subtracted from the full value of an assembled
          article.

          LAW AND ANALYSIS:

               19 CFR 10.17, the applicable portion of the Customs
          Regulations provides:

                      10.17 Valuation of exempted components.

                            The value of fabricated components
                            to be subtracted from the full
                            value of the assembled article is
                            the cost of the components when
                            last purchased, f.o.b. United
                            States port of exportation or
                            point of border crossing as set
                            out in the invoice and entry
                            papers, or, if no purchase was
                            made, the value of the components
                            at the time of their shipment for
                            exportation, f.o.b. United States
                            port of exportation or point of
                            border crossing, as set out in
                            the invoice and entry papers.  














                                        - 2 -

                            However, if the appraising officer
                            concludes that the cost or value
                            of the fabricated components so
                            ascertained does not represent
                            a reasonable cost or value, then
                            the value of the components shall
                            be determined in accordance with
                            section 402 or section 402a,
                            Tariff Act of 1930, as amended
                            (19 U.S.C. 1401a, 1402).

               The applicable portion of 26 U.S.C. 4461 provides:

                      (a)  General Rule - there is hereby imposed a tax on
                      any port use.
                      (b)  Amount of Tax. - The amount of the tax imposed
                      by subsection (a) on any port use shall be an amount
                      equal to 0.04 percent of the value of the commercial
                      cargo involved.
                      (c)  Liability and Time of Imposition of Tax. -
                            (1) Liability. - The tax imposed by subsection
                      (a) shall be paid by-
                               (A) in the case of cargo entering the United
                            States, the importer,
                               (B) in the case of cargo to be exported
                            from the United States, the exporter, or
                               (C) in any other case, the shipper.
                            (2) Time of Imposition. - Except as provided
                            by regulations, the tax imposed by subsection
                            (a) shall be imposed-
                               (A) in the case of cargo to be exported
                            from the United States, at the time of
                            loading, and
                               (B) in any other case, at the time of
                            unloading.

               Under section 4462, the term "port use" is defined as:

                      (A) the loading of commercial cargo on, or

                      (B) the unloading of commercial cargo from, a
                      commercial vessel at a port.

               Insofar as the definition of F.O.B. is concerned, the
          Customs Service would consider an F.O.B. sale as one in which the
          seller's unit price includes all costs and risks of the goods
          until such time as they are delivered on board the exporting
          carrier.  Accordingly, since F.O.B. charges include all costs
          accruing on goods until such time as they are delivered on board
          the exporting carrier, and since the tax basis under 26 U.S.C.












                                        - 3 -

          4461 depends upon "port use", and port use is defined to include
          the loading of commercial cargo, the value of fabricated
          components under 19 CFR 10.17 would include the Harbor
          Maintenance Tax established under 26 U.S.C. 4461.

          HOLDING:

               The value of fabricated components set forth in 19 CFR 10.17
          would include the Harbor Maintenance Tax established under 26
          U.S.C. 4461.

                                        Sincerely,





                                        John Durant, Director,
                                        Commercial Rulings Division