HQ 546122: Application for Further Review of Protest number 5501-95-100325;

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 546122
                         January 11, 1996
      
RR:IT:VA  546122 RSD

CATEGORY: VALUE

Port Director 
United States Customs Service
1205 Royal Lane
Dallas Ft Worth Airport, Texas 75261

RE: Application for Further Review of Protest number 5501-95-100325;

Dear Sir:

     This is in response to the memorandum dated August 21, 1995,
from the Assistant District Director, Commercial Operations of
the former Dallas/Ft Worth District forwarding the application
for further review of Protest number 550195100325 filed on behalf
of USA Credo, Inc. by Sekin Transport International.  Two sample
jackets were sent for our consideration.  These samples will be
returned under separate cover.

FACTS:

     The importer, USA Credo Inc. (hereinafter Credo), entered a
shipment of men's water resistant jackets and pants made in
Korea.  The shipment consisted of factory close-out garments with
various defects and imperfections.  Credo claims that it realized
that it was purchasing substandard merchandise from the
manufacturer, at the time it made the purchase.

      The jackets were invoiced at $2.24 per piece, and the pants
were invoiced at $1.70 per piece.  The merchandise was allegedly
paid for in cash by the brother of  Credo's owner.  There were no
sales contracts, purchase orders, copies of canceled checks, nor
wire transfers.  Customs questioned the value of the merchandise. 
In response, the importer furnished two letters in Korean with
English translations from the manufacturers.  The translated
letters state the number of pieces purchased and the amount of
money in Korean currency with a conversion into U.S. dollars that
was received for the merchandise.  
     
     The district was not satisfied with the evidence of proof of
payment and decided that the merchandise could not be appraised
under transaction value.  Instead the district attempted to
appraise the merchandise using a transaction value of identical
or similar merchandise.    Apparently, no adjustment was made to
reflect the fact that the merchandise imported was "substandard". 
 Now your office is proposing to adjust the appraised value to
take this into account.


ISSUE:

     Whether the protestant has proffered sufficient evidence to
prove that Customs unreasonably ascertained the value of the
imported merchandise in the circumstances described above?

LAW AND ANALYSIS:

     As you know, merchandise imported into the United States is
appraised in accordance with 402 of the Tariff Act of 1930, as
amended by the Trade Agreement 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 merchandise when sold for exportation to the
United States," plus certain enumerated additions.  19 U.S.C.
Section 1500 (section 500 of the Tariff Act of 1930 as amended by
the TAA ) provides the general authority for Customs to appraise
merchandise.  This section states that the appropriate Customs
officer shall, under rules and regulations prescribed by the
Secretary:

     appraise merchandise by ascertaining or estimating the
     value thereof, under section 1401a of this title, by
     all reasonable ways and mean in his power, any
     statement of cost or costs of production in any
     invoice, affidavit, declaration, other document to the
     contrary notwithstanding.  

With regard to section 500, the Statement of Administrative
Action provides:

     Section 500 allows Customs to consider the best evidence
     available in appraising merchandise.  It allows Customs to
     consider the contract between the buyer and the seller, if
     available, when the information contained in the invoice is
     either deficient or is known to contain inaccurate figures
     or calculations.  Likewise, a contract which has been
     outdated by subsequent renegotiations prior to exportation
     would not be considered when an 
     invoice which reflects these renegotiations is presented. 
Section 500 authorizes the    appraising officer to weigh the
nature of the evidence before him in appraising the         imported merchandise ... under the constraints of section 402.

     In this case, when appraising the imported merchandise, the
appraising officer at the port of entry requested evidence of
proof of payment from the importer.  However, the importer failed
to provide adequate evidence of proof payment.  No checks, money
orders, evidence of wire transfers, bank records, or book keeping
records were presented.  The importer also did not present actual
receipts from the sellers.  Instead, the importer submitted
letters supposedly written by the sellers, which stated the price
of the imported merchandise.  There is no way of knowing whether
the letters are authentic.  Since it is not clear that the
sellers actually prepared the letters, or if they accurately
reflect the price the importer paid for the imported goods, we
find that it was reasonable for the appraising officer to
conclude that these letters were not a reliable indicator of

the price of the imported merchandise.  It seems  highly unusual
to pay for a large transaction in cash with virtually no record
of it.  Accordingly, it was proper for the appraising officer to
reject transaction value as the method of appraising the imported
merchandise.

     Based on the facts presented, especially in light of the
fact that the protestant has not provided any other documentation
such as contracts, or record keeping to show otherwise, we find
that the protestant has not proffered sufficient evidence to
prove that Customs employed unreasonable ways and means to
ascertain the value of the imported merchandise.  The appraising
officer, under authority of Section 500, appropriately considered
all the evidence made available by the protestant and used "all
reasonable ways and means in his power" to appraise the
merchandise.

     However, at this point, if you conclude that it is
appropriate to make adjustments to the appraised value in order
to account for the fact that the imported merchandise consisted
of factory "seconds", you may do so as long as the procedures
used are consistent with the TAA and the applicable Custom
regulations.   

HOLDING:

     The protestant has not proffered sufficient evidence to
prove that Customs employed unreasonable ways and means to
ascertain the value of the imported goods. 

     You are instructed to deny the protest, except to the extent
reappraisement of the merchandise as indicated above results in a
partial allowance.  A copy of this decision with the Form 19
should be sent to the protestant.  In accordance with Section
3A(11)(b) of Customs Directive 099 3550-065, dated August 4,
1993, Subject: Revised Protest Directive, this decision should be
mailed by your office to the protestant no later than 60 days
from the date of this letter.  Any reliquidation of the entry in
accordance with the decision must be accomplished prior to
mailing of the decision.  Sixty days from the date of the
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,



                         Acting Director
                               International Trade Compliance
Division