HQ 544098: Salary Costs of Employees for Services Rendered Outside the United States

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 544098

                                  June 10, 1988


          CLA-2 CO:R:C:V  544098 DHS

          CATEGORY:  Valuation

          (name)
          (address)

          RE:  Salary Costs of Employees for Services
               Rendered Outside the United States

          Dear Mr.

                This is in response to your letter of November 10, 1987, in
          which you request a ruling as to whether salaries of United
          States employees working in Mexico will be considered dutiable
          assists under section 402 of the Tariff Act of 1930, as amended
          by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 1401a).

          FACTS:

                You state that the merchandise is to be assembled in Mexico
          and entered into the United States under item 807.00 of the
          Tariff Schedules of the United States (TSUS).  Three employees of
          the United States corporation are to be temporarily transferred
          to the Mexican assembly operation.  You informally state that
          these employees are to remain on the payroll of the United States
          corporation.  They are to hold the positions of plant manager,
          materials manager and production engineer.

          ISSUE:

                Do salary costs of employees for services rendered outside
          the United States constitute assists?

          LAW AND ANALYSIS:

                The term 'assist' is defined in section 402(h)(1)(A) of the
          Tariff Act as:

                    . . . any of the following if supplied directly or
                    indirectly, and free of charge or at reduced cost,
                    by the buyer of 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.












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                       (ii)  Tools, dies, molds, and similar items
                       used in the production of the imported
                       merchandise.

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

                       (iv)   Engineering, development, artwork,
                       design work, and plans and sketches that are
                       undertaken elsewhere than in the United States
                       and are necessary for the production of the
                       imported merchandise.

                With respect to the services described above, it has
          consistently been the position of the Customs Service that
          management services of the type described above are not assists
          within the definition of section 402(h)(1)(A) of the Tariff Act.
          See, TAA Nos. 4, 29, 46 and Headquarters Ruling Nos. 543820 dated
          December 22, 1986, and 543877 dated March 17, 1987.

          HOLDING:

                In view of the foregoing, it is our conclusion that the
          services to be rendered in Mexico by the United States employees,
          as a plant manager, a materials manager and a production
          engineer, are not assists.

                This conclusion is based upon the facts as provided in your
          letter of November 10, 1987.  If any changes occur prior to the
          application of this ruling, this ruling may be ineffective.
          Since you have not presented any information on the applicability
          of transaction value as a method of appraisement, we refrain from
          addressing the issue of its applicability at this time.


                                        Sincerely,




                                        John Durant, Director
                                        Commercial Rulings Division