HQ 544773: Application For Further Review of Protest No. 1704-91100091, concerning the Appraisement of Wearing Apparel Based on Visaed Invoices

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 544773

                        April 3, 1992



VAL CO:R:C:V  544773 ILK

CATEGORY:  Valuation

District Director
Savannah, GA

RE:  Application For Further Review of Protest No. 1704-91100091,
     concerning the Appraisement of Wearing Apparel Based on
     Visaed Invoices

Dear Sir:

     This protest decision was filed against your appraisement
decision in the liquidation of four entries made by xxxxx
xxxxxxxxxxxxx (hereinafter referred to as the "importer").  The
merchandise was manufactured in Indonesia, and sold by P.T.
Bintang Busanamas, for whom P.T. Kartini and P.T. Alas Comodo
Garment (hereinafter collectively referred to as the "seller")
acted as exporters of record.

FACTS:
     The importer imported 1248 dozen pairs of ladies
cotton/ramie shorts.  Upon entry, the importer presented Customs
with visaed invoices, issued by the seller, showing 600 dozen
shorts at $44.40 per dozen and 648 dozen shorts at $50.40 per
dozen. The visaed invoices show The Hartwell Company (hereinafter
referred to as "Hartwell") as the consignee or party to be
notified.  According to the importer,  the shorts had been
originally ordered by Hartwell at $50.40 and $44.40 per dozen,
who then subsequently cancelled the order.  After Hartwell
cancelled its order, the importer purchased the shorts at the
"cancellation price" of $25.00 per dozen, as stock lot goods. 
The importer states that P.T. Kartini and P.T. Alas Comodo
Garment acted as exporters of record to facilitate export.  

     It is claimed by the importer that upon entry Customs was
also presented with invoices for the 1248 dozen pairs of shorts
at the "cancellation price", and that these second invoices were
rejected because they did not match the visaed prices of the
goods.  There is no record of Customs having been presented with
the invoices, at the "cancellation price", until after entry. 
The importer, also, acting upon its understanding of instructions
from local Customs, obtained invoices from P.T. Kartini and P.T.
Alas Comodo Garment that reflected prices to the importer that
matched the visaed prices of the goods.  Of these four invoices
two are dated January 11, 1989, one is dated February 1, 1990,
and one is undated.  According to the importer, payment was never
intended to be made against these new invoices.  

        Of the four non visaed invoices with the "cancellation
price", two are undated, one is dated February 1, 1990 and one is
dated January 11, 1989.  The visas on the four visaed invoices
are dated as shown below, with respect to each entry:

Entry #             Export date    Import date    Visa date

xxxxxxxxxxxxx       01/19/90       02/17/90       02/22/90

xxxxxxxxxxxxx       02/02/90       02/24/90       02/16/90

xxxxxxxxxxxxx       02/02/90       02/24/90       03/06/90

xxxxxxxxxxxxx       02/02/90       02/24/90       03/06/90

The importer provided Customs with a contract dated August 8,
1990, between it and P.T. Bintang Busanamas, confirming a sale of
1248 dozen ladies ramie cotton shorts at $25.00 per dozen.    In
response to a Request for Information the importer has provided
Customs with a debit note from the importer's buying agent
referencing the subject transaction, documentation of
negotiations between the importer and the seller showing a unit
price of $25.00, and the importer's instructions for payment by
wire transfer to the seller and a corresponding debit note for
the subject merchandise, corresponding to the unit price of
$25.00 per dozen.  

     The merchandise was appraised at the visaed invoice prices
of $50.40 and $44.00 per dozen.  The importer takes the position
that the merchandise should be appraised at the "cancellation
price" of $25.00 per dozen.    

  
ISSUE:

     Whether the appraised value of the merchandise is properly
determined based on the visaed invoice prices when nonvisaed
commercial invoices with inconsistent amounts are presented to
Customs subsequent to entry.

LAW and ANALYSIS:

     The importer states that the "price actually paid or
payable" for purposes of determining 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)), is the price of

the merchandise, at the "cancellation price", as represented by
one of the sets of nonvisaed invoices.       

     Treasury Decision (T.D.) 86-56,dated March 6, 1986, stated
that:
     [A]ny differences or inconsistencies in the information
     contained in documents presented to Customs in
     connection with the importation of merchandise shall be
     considered as an indication that one or more of such
     documents contains false or erroneous information.  In
     such circumstances, the entry documentation will not be
     accepted by Customs but will instead be returned to the
     importer for correction.
          ... In situations where the visaed invoice or
     document presented to Customs (and necessary for the
     entry of the merchandise) contains erroneous value or
     price information, such invoice or document can only be
     corrected by the presentation to Customs of a new,
     corrected invoice or document stamped with the visa of
     the government of the country of origin.  Customs will
     not accept pro forma invoices in any case involving
     apparent differences in price or value information in
     the documents required to be submitted to Customs and
     which involve the production of a document which is
     required to contain a foreign country's visa.

     Instructions regarding the implementation of T.D. 86-56 were
issued by this office on May 1, 1986, Headquarters Ruling Letter
("HRL") 543731.  The instructions indicated that if an importer
provides an acceptable explanation for differences in the price
or value information in visas and invoices, then the entry may be
accepted by Customs.  Several examples were listed which set
forth acceptable scenarios in light of T.D. 86-56.  Although the
list was not exhaustive, the instructions stated that additional
legitimate reasons for differences in the entry documentation may
exist, and in these cases, Customs will act in accordance with
the policy set forth in T.D. 86-56.  As stated in C.S.D. 90-37
(HRL 544432, dated January 17, 1990) "the policy consideration
regarding the adoption of T.D. 86-56 is the proposition that
false or erroneous documents are not to be presented to customs."

     The facts before us are distinguishable from those present
in C.S.D. 90-37, which ruling is cited in support of the
importer's position.  In C.S.D. 90-37 the importer had not
produced any of the commercial documents to Customs, the "stock
lot" sale had not yet taken place, an importation had not
occurred, and the visas had already been issued.  In the instant
case a sale and exportation and/or importation has occurred prior
to the issuance of the visas, and subsequent to entry Customs has
been presented with  documents inconsistent with those presented
upon entry.  In this case it is admitted by the importer that the
invoices to the importer in the amount of the visaed invoices,
which were provided to Customs are essentially pro forma
documents.  This makes even more likely the possibility that the
invoices to the importer for shorts at the "cancellation price"
are also pro forma documents.  

     Given the post exportation dates on the visas (and post
importation dates in all but one instance), there does not appear
to be any commercially reasonable explanation for the
inconsistent documents.  The visas were not issued prior to the
sale to the importer.  Further, there is no evidence that any
invoices other than the visaed invoices were presented to Customs
at the time of entry.  The invoices with the "cancellation price"
were submitted to Customs only subsequent to entry.  Thus, the
application of T.D. 86-56 did not arise with respect to the entry
of the merchandise, but has arisen with respect to the value of
the merchandise.   The "contract" between the importer and P.T.
Bintang Busanamas does not warrant any consideration as evidence
as it is dated after the dates of the invoices and the dates of
importation, is not binding and appears to be a pro forma
document itself.

     Section 484(a), Tariff Act of 1930, as amended (19 U.S.C.
1484(a)) requires importers to file with Customs such
documentation as is necessary to enable Customs "to assess
properly the duties on the merchandise...."  As stated in C.S.D.
90-37 although "T.D. 86-56 was intended to prevent false or
erroneous invoicing, it was also intended to place upon the
importer the burden of proving the validity of information on the
documents and veracity of the transaction in question in order to
properly appraise the merchandise."  

     In HRL 544581 dated February 25, 1991, merchandise had been
allowed entry where the visaed invoices were inconsistent with
documentation submitted, however, the merchandise was appraised
based upon the visaed invoice amounts.  In view of the
inconsistencies between the visaed invoices and the nonvisaed
commercial invoices, the lack of a commercially reasonable
explanation for the inconsistencies, and the submission of
invoices with the "cancellation price" only subsequent to entry,
a proper appraisement of the merchandise should be based on the
invoice prices contained in the visaed invoices.

     On the basis of the information submitted, we find that the
appraised value of the imported merchandise was properly
determined using the invoice prices as reflected in the visaed
invoices.  

HOLDING:

     Based on the foregoing, we find that the merchandise was
properly appraised using the amount on the visaed invoices for
the merchandise.  The values on the commercial invoices were
inconsistent with those on the visaed invoices, and no acceptable
explanation of the inconsistencies was provided.

     Consistent with the decision set forth above, you are hereby
directed to deny the subject protest.  A copy of this decision
should be attached to the Customs Form 19 and mailed to the
protestant as part of the notice of action on the protest.


                                   Sincerely,


                                   John Durant, Director
                                   Commercial Rulings Division