HQ 545289: Protest No. 2304-93-100051; formula for determining the price actually paid or payable;post-importation rebate

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 545289

                        September 29, 1994



VAL CO:R:C:V 545289 CRS

CATEGORY:  Valuation

District Director
U.S. Customs Service
P.O. Box 3130
Laredo, TX 78044-3130

RE:  Protest No. 2304-93-100051; formula for determining the price actually paid or payable;
post-importation rebate

Dear Sir:

     This is in reply to an application for further review (AFR) of the above-referenced protest,
forwarded under cover of a memorandum, dated April 22, 1993, from the Acting Assistant
District Director, Commercial Operations.  The protest was filed February 25, 1993, on behalf
of Kemin Industries, Inc. (the "protestant"), by counsel Rode & Qualey.  An additional
submission was made by counsel under cover of a letter dated June 20, 1994.  We regret the delay
in responding.

FACTS:

     The protested merchandise consists of two entries of marigold meal imported from Peru. 
The two entries were filed, respectively, in July and August, 1992.  Counsel states that pursuant
to an agreement between the protestant and an unrelated seller, Pigmentos Especiales, S.A. (the
"seller"), the payment for the merchandise is based on a formula.  In a memorandum in support
of the AFR, counsel stated that the protestant had advised Customs of the terms of the agreement
in late 1988, and that since that time the protestant's practice had been to request suspension of
liquidation until a final settlement price was established.  A copy of the agreement was not
attached to the AFR; however, one was subsequently provided by counsel.

     According to the agreement, dated June 17, 1991, the price of the imported merchandise
is based on the price per gram of xanthophyll contained in the marigold meal.  The amount shown
on the commercial invoice is a base price.  Upon importation a laboratory analysis is conducted
to determine the xanthophyll content of the marigold meal.  Based on this analysis a final
settlement price is determined in accordance with the established formula.

ISSUE:

     The issue presented is whether a valid formula for determining the price actually paid or
payable was in effect prior to the date of export of the protested merchandise such that certain
adjustments claimed by the protestant do not constitute post-importation rebates.

LAW AND ANALYSIS:

     Merchandise imported into the United States is appraised in accordance with section 402
of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
 1401a).  The preferred method of appraisement under the TAA is transaction value, defined as
"the price actually paid or payable for the merchandise when sold for exportation to the United
States," plus certain additions to the extent applicable.  19 U.S.C.  1401a(b)(1).  Absent
information to the contrary we have assumed that transaction value is indeed the appropriate basis
of appraisement.

     Section 402(b)(4)(A) of the TAA defines the term "price actually paid or payable" as "the
total payment (whether direct or indirect...) made, or to be made, for imported merchandise by
the buyer to, or for the benefit of, the seller."  The price actually paid or payable will be
considered without regard to the method of derivation, and may be determined by the application
of a formula.  Such formulas must be in effect on the date of export.  19 C.F.R.  152.103(a)(1). 
However, rebates, or any other decrease in the price actually paid or payable made or effected
after the date of importation are to be disregarded for the purposes of determining transaction
value.  19 U.S.C.  1401a(b)(4)(B).

     Protestant submitted a copy of an agreement with the seller, dated June 17, 1991, to
support its claim that the price actually paid or payable was determined pursuant to a formula in
effect prior to the date the subject merchandise was exported.  Accordingly, it is our position that
the post-importation adjustment does not constitute a rebate under section 402(b)(4)(B) of the
TAA.  The adjustment to the invoice price should be taken into account in determining transaction
value.

HOLDING:

     The protest should be allowed in full.  The protested merchandise should be appraised on
the basis of the price actually paid or payable as stated on the entry documentation.  The final
settlement price derived from the formula set forth in the agreement constitutes the price actually
paid or payable for the imported merchandise.

     In accordance with section 3(A)(11)(b), Customs Directive 099 3550-065, dated August
4, 1993, this decision should be mailed to the protestant no later than sixty days from the date of
this letter.  Any reliquidation of the entry in accordance with the decision must be accomplished
prior to the mailing of the decision.  Sixty days from the date of this decision the Office of
Regulations and Rulings will take steps to make the decision available to Customs personnel via
the Customs Rulings Module in ACS, and to the public via the Diskette Subscription Service, the
Freedom of Information Act and other public access channels.

                         Sincerely,





                         John Durant, Director
                         Commercial Rulings Division