HQ 544630: Global Apparel Corporation; definition of related party; 19U.S.C. 1401(g)(1)

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 544630

                         April 15, 1992

VAL-CO:R:C:V 544630 GG

CATEGORY:  Valuation

Leonard L. Rosenberg, Esq.
Sandler, Travis & Rosenberg, P.A.
The Waterford
5200 Blue Lagoon Drive
Miami, Florida 33126-2022

RE:  Global Apparel Corporation; definition of related party; 19
U.S.C. 1401(g)(1)

Dear Mr. Rosenberg:

     This is in response to the ruling request, dated January 18,
1991, which you made on behalf of your client, Global Apparel
Corporation ("Global").  The request asks for confirmation that
Global is not related, as defined by the Customs valuation law,
to Inducol Ltda. ("Inducol"), the Colombian
manufacturer/assembler of the wearing apparel imported by Global.

FACTS: 
     
     The facts, as presented by you, are that Global, a
wholesaler of wearing apparel, imports garments under heading
9802, Harmonized Tariff Schedule of the United States, from
Inducol of Colombia.  Global is a Florida corporation, owned by
xxxx xxxxx.  It negotiates the prices for assembly and other
operations directly with Inducol personnel; it has no direct or
indirect control or ownership in Inducol, and neither it nor its
stockholders, officers, directors or employees own, directly or
indirectly, any stock in the Colombian company.

     Inducol was purchased by two Japanese companies, Tishan
Industries A.V.V. and Fujimara Industries A.V.V., on December 3,
1990.  Before that time, the shares of the company had been owned
by two trusts, the beneficiaries of which were the children and
grandchild of xxxx xxxxxxxxxx.  xxxx xxxxxxxxxx was the trustee
of one trust and her son, xxxxxx xxxxxxxxxx, xxx, the trustee of
the other.  Neither the trusts, the trustees, nor the
beneficiaries have any remaining ownership or control, either
directly or indirectly, in Inducol; they also are not (with
possibly one exception, which will be discussed later) employees
of Inducol, and have no knowledge of the current books, operating
expenses, or other economic data concerning Inducol.  Similarly,
the Japanese owners of Inducol have no interest, control or
direction over Global.

     As part of the purchase agreement for Inducol, xxxx
xxxxxxxxxx, who was general manager of Inducol, agreed to travel
to Colombia to assist the new general manager and to facilitate
the transition from one ownership group to another.  She was to
receive no compensation for this assistance, which was to be
offered for approximately one year.  Under this arrangement, xxxx
xxxxxxxxxx was "totally at the whim of the new owners", who could
ask her to leave at any time.

     xxxx xxxxxxxxxx is also a salaried employee of Global.  Her
daughter, xxxxx x. xxxxxxxxxx, works there too.  At the time of
this ruling request, xxxxx xxxxxxxxxx and her sister xxxxxx were
in the process of acquiring a majority stock ownership in Global. 
xxxx xxxxxxxxxx has no stock ownership in Global.

     Tishan Industries A.V.V. and Fujimara Industries A.V.V.,
Inducol's new owners, are aware of xxxx xxxxxxxxxx'x employment
by Global.  xxxx xxxxxxxxxx reportedly does not assist Inducol in
any way in the setting of prices for production or assembly of
Global's work or for any other work performed by Inducol.

     xxxx xxxxxxxxxx is part owner of another company, Sumar Inc.
("Sumar"), which used to import apparel produced by Inducol. 
Sumar no longer imports.  At the time of its previous
importations, Sumar always declared itself related to Inducol due
to the then overlapping control of the producer and the importer.

ISSUE:

     Whether Global, the buyer, is related to Inducol, the
seller, as defined by Section 402(g)(1) of the Tariff Act of
1930, as amended by the Trade Agreements Act of 1979 (TAA; 19
U.S.C. 1401a(g)(1))?

LAW AND ANALYSIS:

     The primary method of customs valuation for imported
merchandise is transaction value.  The transaction value of
imported merchandise is the price actually paid or payable for
the merchandise when sold for exportation, plus amounts for
certain items enumerated in Section 402(b)(1) of the TAA.  The
transaction value may be subject to special scrutiny and possible
rejection in cases involving related parties.  Section 402(g)(1)
of the TAA defines related parties as follows:

     (g)(1)  For purposes of this section, the persons specified
     in any of the following subparagraphs shall be treated as
     persons who are related:

          (A)  Members of the same family, including brothers and
          sisters (whether by whole or half blood), spouse,
          ancestors, and lineal descendants.

          (B)  Any officer or director of an organization and
          such organization.

          (C)  An officer or director of an organization and an
          officer or director of another organization, if each
          such individual is also an officer or director in the
          other organization.

          (D)  Partners.

          (E)  Employer and employee.

          (F)  Any person directly or indirectly owning,
          controlling, or holding with power to vote, 5 percent
          or more of the outstanding voting stock or shares of
          any organization and such organization.

          (G)  Two or more persons directly or indirectly
          controlling, controlled by, or under common control
          with, any person.

     From the facts presented, it appears that Global and
Inducol, which are corporations, are not "members of the same
family".  Neither party is an officer or director of the other
organization, and Global and Inducol are not officers or
directors of their own corporations who are also officers or
directors of the other.  They are not partners.  And while it can
be argued that xxxx xxxxxxxxxx was an employee of both Global and
Inducol during the period in which she offered assistance to
Inducol (although her status at Inducol was probably that of an
independent contractor rather than employee), the law does not
consider two companies having the same employee to be related.

     When Inducol was sold to the two Japanese companies, the
xxxxxxxxxx trusts were divested of any ownership or control in
Inducol.  Therefore Global, in which xxxxx and xxxxxx xxxxxxxxxx
have acquired or are in the process of acquiring a majority
interest, does not directly or indirectly own, control, or hold
with power to vote, 5 percent or more of the outstanding voting
stock or shares of Inducol, or vice versa.  Finally, there is no
evidence that Global and Inducol control, are controlled by, or
are under common control with, any person.

     In summary, Inducol and Global are not related as defined by
the customs valuation law.  This result is reached based on the
facts as presented by the importer's counsel; should the facts
turn out to be otherwise, then in accordance with 19 CFR
177.9(b)(1), this ruling will have no applicability and may be
subject to modification or revocation.

HOLDING:

     Global and Inducol are not related as defined by section
402(g)(1) of the TAA.

                               Sincerely,



                               John Durant
                               Director, Commercial