HQ 544230: Prospective Ruling Request

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 544230

                                  December 22, 1988

          CLA-2 CO:R:C:V   544230 EK

          CATEGORY:  Valuation

          Ronald W. Gerdes, Esquire
          Sandler & Travis, P.A.
          1120 Nineteenth Street, N.W.
          Washington, D.C.  20036

          RE:  Prospective Ruling Request

          Dear Mr. Gerdes:

                This is in response to your letters of August 11, 1988, and
          November 4, 1988, requesting a ruling as to the proper valuation
          of merchandise imported by your client (hereinafter referred to
          as importer).


          FACTS:

                You state that the importer currently imports brassieres
          assembled from American components in El Salvador by a related
          company.  The merchandise is entered under item 807.00, Tariff
          Schedules of the United States, and is appraised pursuant to
          transaction value, 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)).

                In the near future, you indicate that the importer will
          file a Transportation and Exportation Entry for the merchandise
          upon its arrival in New Orleans.  The goods will then be shipped
          through McAllen, Texas, to a related party in Mexico.  There the
          merchandise will be packaged for retail sale.  You have submitted
          samples of the type of packing which will occur in Mexico.

                You state that the merchandise is assembled specifically
          for the United States market and that the importer only sells the






















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          merchandise in the United States.  All parties intend the
          merchandise to be shipped to the United States and diversion of
          the merchandise is not even a reasonable possibility.

                The cost of the packing will be paid separately to the
          Mexican related party and not the seller of the merchandise.  The
          amount reflects approximately 2 - 5% of the current transaction
          value.


          ISSUE:

                Whether the sale for exportation to the United States for
          purposes of determining transaction value is between the importer
          and the El Salvadoran related party assembler and whether the
          cost of the packing is added to the price actually paid or
          payable.


          LAW AND ANALYSIS:

                The preferred method of appraisement, transaction value, is
          defined as the "price actually paid or payable" for merchandise
          when sold for exportation to the United States, plus certain
          additions including packing costs incurred by the buyer.

                For purposes of this response, we are assuming that
          transaction value is applicable in appraising the merchandise and
          that the relationship between the parties does not influence the
          price actually paid or payable.  The concerned appraising officer
          has the responsibility of making the determination as to whether
          the price has been influenced by the relationship.

                With respect to the instant situation, the sale for
          exportation to the United States for purposes of determining
          transaction value occurs between the El Salvadoran related party
          seller and the importer.  The packing operation in Mexico does
          not alter that conclusion.  The "sale" for exportation to the
          United States occurs at the time the merchandise is sold from El
          Salvador.

                Please note that in Headquarters Ruling No. 555088 dated
          October 17, 1988, this office ruled that the entry and
          exportation of the assembled merchandise pursuant to a
          transportation and exportation bond does not preclude the
          application of item 807.00, TSUS, to the merchandise upon a
          subsequent importation.  














                                        - 3 -


                Section 402(b)(1)(A) of the TAA requires that an addition
          to the price actually paid or payable be made for "the packing
          costs incurred by the buyer with respect to the imported
          merchandise.  Section 402(h)(3) of the TAA defines packing costs
          as "the cost of all containers and coverings of whatever nature
          and of packing, whether for labor or materials, used in placing
          merchandise in condition, packed ready for shipment to the United
          States."

                Under the facts presented, the retail packing operation in
          Mexico in included in the statutory definition of packing costs
          and must be added to the price actually paid or payable.  The
          imported merchandise in this case is not packed ready for
          shipment to the United States until the merchandise has been
          packed in Mexico.


          HOLDING:

                In view of the foregoing, it is our conclusion that
          transaction value pursuant to section 402(b) of the TAA is
          represented by the "price actually paid or payable" by the
          importer to the El Salvadoran seller.  The packing costs incurred
          by the importer and paid to the Mexican related party are to be
          added to the "price actually paid or payable."


                                  Sincerely,




                                  John Durant, Director,
                                  Commercial Rulings Division