us-cbp-cross-rulings-hq-544284•HQ 544284: Decision on Application for Further Review of Protest No. 3801-6-001163
HQ 544284: Decision on Application for Further Review of Protest No. 3801-6-001163
us-cbp-cross-rulings-hq-544284HQ 544284: Decision on Application for Further Review of Protest No. 3801-6-001163Guidance
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 544284
January 26, 1989
CLA-2 CO:R:CV:V 544284 VLB
CATEGORY: Valuation
District Director of Customs
Detroit, Michigan 48226-2568
RE: Decision on Application for Further Review of Protest
No. 3801-6-001163
Dear Sir:
This protest was filed against your decision in the
liquidation of various entries made by --------------------------
---------------, a lumber distributor (hereinafter referred to as
the "distributor"). The merchandise was appraised pursuant to
section 402(f) 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.
(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
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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 through 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 has submitted documentation
for two transactions. There are two documents in each
transaction: (1) An Entry Summary Form indicating that the
distributor is the ultimate consignee and F.W. Myers & Co.
(Broker) is the importer of record; (2) An F.W. Myers Invoice
stating that Nu Way Distributors (Reload Center) is the exporter
and that the consignee is the distributor's U.S. customer. The
distributor failed to provide any invoices that indicated the
amount that it charged its U.S. customer for the merchandise.
Documents 1 and 2, presented to Customs at the time of
entry, appear to contain the price that the distributor paid to
the Canadian manufacturer.
You appraised the entries under section 402(f) of the TAA
using the price paid by other U.S. customers to U.S. distributors
for identical or similar merchandise as the starting point for
the appraisement. The distributor argues that the merchandise
should be appraised pursuant to section 402(b) of the TAA, and
that the transaction value is the price it paid to the Canadian
manufacturer.
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ISSUE:
Whether transaction value is the proper method for the
appraisement of the merchandise.
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 543746
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.
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.
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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 documents submitted by the distributor in this protest
do not contain enough information to determine when the
distributor received an order from its U.S. purchaser or when the
distributor ordered the merchandise from the manufacturer.
Therefore, it is impossible to determine which sale severed the
goods from the mass of things belonging to Canada with the intent
of uniting them with the mass of goods belonging to the U.S. for
purposes of transaction value.
If information containing the price that the distributor
charged its U.S. customer for the lumber is unavailable, it is
necessary to proceed sequentially through the remaining bases of
appraisement prior to resorting to a section 402(f) appraisement.
In this case, the distributor has failed to provide any evidence
that supports its contention that it the merchandise was
improperly appraised under section 402(f) of the TAA.
HOLDING:
The importer has failed to submit any documentation or
explanation supporting its claim that the merchandise was
improperly appraised under section 402(f) of the TAA. Therefore,
you are directed to deny the 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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