HQ 223989: Request for Internal Advice Regarding Applicability of the Merchandise Processing Fee (MPF) to Payments for Assists Disclosed After Entry of Merchandise; 19 U.S.C. 58c(a)(9)(A); 19 U.S.C. 58c(b)(8)(A)(i); 19 U.S.C. 58c(b)(8)(B); 19 U.S.C. 58c(b)(8)(D)(ii); 19 CFR 24.23

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 223989

                        November 18, 1992

ENT-1-03-CO:R:C:E  223989 JRS

CATEGORY:  Entry/Liquidation

Regional Director, Regulatory Audit Division
U. S. Customs Service
Pacific Region
1 World Trade Center, Suite 705
Long Beach, CA 90831-0700

RE:  Request for Internal Advice Regarding Applicability of the
     Merchandise Processing Fee (MPF) to Payments for Assists
     Disclosed After Entry of Merchandise; 19 U.S.C.
     58c(a)(9)(A); 19 U.S.C. 58c(b)(8)(A)(i); 19 U.S.C.
     58c(b)(8)(B); 19 U.S.C. 58c(b)(8)(D)(ii); 19 CFR 24.23


Dear Sir:

     This responds to your request for internal advice (FILE:
AUD:8:O:R MCR, dated May 22, 1992) above-referenced.  Our advice
follows.

FACTS:

     Fujitsu Microelectronics, Inc. (FMI) imports semiconductors
and other electronic components from its parent company, Fujitsu
Ltd. of Tokyo, Japan (FJ).  The imported products originate from
either Japan, Singapore or Malaysia.

     Every quarter, FMI voluntarily disclosed additional payments
it made to the foreign supplier relative to previous
importations.  The payments for assists were mostly for
engineering, design and other similar services incurred outside
of the United States.  The company's correspondence to Customs
disclosing the assists specified the entry number or invoices
associated with the additional charges.  Also, the company
voluntarily tendered the additional duty on the assists related
to previously imported items which were dutiable.  However, the
company did not pay the merchandise processing fee related to the
assists pertaining to either the dutiable or duty free
importations.  The company explained that the user fee was not
paid because they were informed by the responsible import
specialist that the merchandise processing fee does not apply to
assists.

ISSUE:

     Whether payments for assists made by the importer and
disclosed to Customs after the entry of the related merchandise
are subjected to the merchandise processing fee.

LAW AND ANALYSIS:

       The Customs and Trade Act of 1990 (Public Law 101-382,
signed August 20, 1990) amended the law pertaining to the
merchandise processing fee (MPF) by restructuring the ad valorem
fee set forth in 19 U.S.C. 58c(a)(9) and (10) to conform it to
the international obligations of the United States under GATT. 
Section 111(b)(2) of the Act amended 19 U.S.C. 58c by providing,
in pertinent part, the following under 19 U.S.C. 58c(b)(8)(A)(i): 
"the fee charged under subsection (a)(9) for the formal entry or
release of merchandise may not exceed $400 or be less than $21." 
Under 19 U.S.C. 58c(a)(9), an ad valorem fee of .17% is imposed
on all formal entries for consumption and warehouse withdrawals
for consumption.

     Section 19 U.S.C. 58c(b)(8)(D)(ii) provides:  "The fee
charged under subsection (a)(9) or (10) of this section with
respect to processing of merchandise shall ... except as
otherwise provided in this paragraph, be based on the value of
the merchandise as determined under section 1401a of this title."
     
     The preferred method of appraisement is transaction value
which is defined by Section 402(b)(1) of the Tariff Act of 1930,
as amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C.
1401a(b)) as "the price actually paid or payable for the
merchandise when sold for exportation to the United States" plus
certain additions specified in 402(b)(1)(A) through (E).  The
term "price actually paid or payable" is defined in TAA section
402(b)(4)(A) 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 amounts actually paid to the seller should be included in the
price actually paid or payable, or included in the transaction
value of the merchandise as an addition to the price actually
paid or payable as "the value, apportioned as appropriate, of any
assist," pursuant to Section 402(b)(1)(C).  Any amount included
in the price actually paid or payable as an assist is dutiable. 
An assist, however, may be apportioned in a reasonable manner
appropriate to the circumstances and in accordance with generally
accepted accounting principles.  19 CFR 152.103(e).  Assists must
be declared at the time of entry.  Whether the assists are
itemized separately from the purchase price or included in the
purchase price listed on an invoice (19 CFR 141.86(a)(11) is left
to the discretion of the importer.  In either case, the assist
must be part of the entered value on the CF 7501.

     From the facts provided, it appears that the payments made
by the importer to the seller, or the assists provided by the
importer to the seller are to be included in the transaction
value of the imported merchandise.  Payments for assists
disclosed by FMI should be subjected to the MPF, irrespective of
whether the related merchandise was dutiable or free since they
are part of the value of the merchandise.  The payments made by
FMI increased the value of the imported products and are thus
part of the appraised value of the imported merchandise. 

     We agree with your analysis of the statute.  The assists
pertained to products which do not fall under Chapter 98 of the
Harmonized Tariff Schedule of the United States (which is exempt
from the MPF with the exception of subheadings 9802.00.60 and
9802.00.80); the imported products did not originate from a U.S.
Insular Possession, a least developing or Caribbean Basin
Initiative country; and the payments made by FMI increased the
value of the imported products.  19 U.S.C. 58c(b)(8)(B); 19
U.S.C. 58c(b)(8)(D)(ii).

     If a liquidation of an entry occurred without taking into
account an assist, Customs may voluntarily reliquidate, within
ninety days of the original liquidation, and assess the MPF on
the increased value of the imported product on reliquidation.  
19 U.S.C. 1501.

     The liability for the payment of all duties on the part of
the importer may be enforced "notwithstanding the fact that an
erroneous construction of law or regulation may have enabled the
importer to pass his goods through the customhouse without
payment."  19 CFR 141.1(b).  We note that under 19 U.S.C.
58c(g)(3) and 19 CFR 24.23(e), all administrative and enforcement
provisions of the Customs laws and regulations relating to
Customs duties apply to the MPF, as well as to all Customs user
fee provisions.  

HOLDING:

     Payment for assists made by the importer and disclosed to
Customs after entry of the related merchandise are subjected to
the MPF.  

                               Sincerely,



                               John Durant, Director