HQ 544687: Application for Further Review of Protest No. 2704-87-004022; foreign inland freight

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 544687

                         August 13, 1992


VAL CO:R:C:V  544687 DPS

CATEGORY:  Valuation

District Director
Los Angeles, California

RE:  Application for Further Review of Protest No. 
     2704-87-004022; foreign inland freight

Dear Sir:

     The subject protest and application for further review
concerns the appraisement of luggage imported from Taiwan by
J.C. Penney Purchasing Corp. ("Penney" or "protestant").

FACTS:

     The protestant protests the assessment of duty based on
the entered value of xxxxxxxxxx.  Penney claims that the
inland freight charges associated with the imported luggage
should not be included in the dutiable value of the
merchandise, and that the entered value should be xxxxxxxxxx.

     In support of its position, Penney cites T.D. 84-235,
submits copies of the Customs Entry Summary and special
Customs invoice associated with the entry, and provides
assorted documents including a "packing/weight list" and a
"combined transport bill of lading".  


ISSUE:

     Based on the information presented by the protestant,
whether the subject merchandise was shipped on a through bill
of lading so as to make the foreign inland freight charges
nondutiable in accordance with T.D. 84-235 and section
152.103(a)(5), Customs Regulations [19 CFR 152.103(a)(5)].







LAW & ANALYSIS:

     As amended by T.D. 84-235, section 152.103(a)(5),
Customs Regulations, reads as follows:

     (5)  Foreign inland freight and other inland
     charges incident to the international shipment of
     merchandise.

          (i) Ex-factory sales.  If the price actually
          paid or payable by the buyer to the seller for
          the imported merchandise does not include a
          charge for foreign inland freight and other
          charges for services incident to the
          international shipment of merchandise (an ex-
          factory price), those charges will not be
          added to the price.

          (ii) Sales other than ex-factory.  As a
          general rule, in those situations where the
          price actually paid or payable for imported
          merchandise includes a charge for foreign
          inland freight, whether or not itemized
          separately on the invoices or other commercial
          documents, that charge will be part of the
          transaction value to the extent included in
          the price.  However, charges for foreign
          inland freight and other services incident to
          the shipment of the merchandise to the United
          States may be considered incident to the
          international shipment of that merchandise
          within the meaning of section 152.102(f) if
          they are identified separately and they occur
          after the merchandise has been sold for export
          to the United States and placed with a carrier
          for through shipment to the United States.

          (iii) Evidence of sale for export and
          placement for through shipment.  A sale for
          export and placement for through shipment to
          the United States under paragraph (a)(5)(ii)
          of this section shall be established by means
          of a through bill of lading to be presented to
          the district director.  Only in those
          situations where it clearly would be
          impossible to ship merchandise on a through
          bill of lading (e.g., shipments via the
          seller's own conveyance) will other
          documentation satisfactory to the district
          director showing a sale for export to the 
          

          

          United States and placement for through
          shipment to the United States be accepted in
          lieu of a through bill of lading...

     In numerous rulings issued by Customs construing the
language set forth above, Customs has adopted the requirement
that a through bill of lading be presented in order to
establish through shipment from the point of manufacture to
the port of importation in the United States.  Absent such
documentation, foreign inland freight charges are not
deductible from the price actually paid or payable. See
Headquarters Ruling Letter (HRL) 544003, dated January 21,
1988, HRL 543744, dated July 30, 1986, and HRL 544393, dated
November 3, 1989, among others.

     In HRL 543744, dated July 30, 1986, we discussed T.D.
84-235 in detail.  There, we pointed out:

          The intent of the T.D. in question was to
     permit foreign inland freight to be nondutiable
     where such charges are identified separately, and
     they occur after merchandise has been sold for
     export to the United States and placed with a
     carrier for through shipment to the United States. 
     To ensure that the above criteria have been met
     Customs mandated in the T.D. that a "through bill
     of lading" be presented.  "Through bill of lading"
     for the purpose of the T.D. was defined in field
     instructions dated February 6, 1985, as "a
     contract, waybill, invoice, issued by one carrier
     or forwarder which controls the manner of shipment
     from the point or place of manufacture or origin to
     the U.S. port of importation or beyond (although
     the shipment may extend over two or more lines of
     connecting carriers), shows the origin and
     destination of the shipment, consignor and
     consignee, route of movement and applicable rate or
     rates."

     The documentation submitted with the protest fails to
meet the criteria of a through bill of lading.  No
information concerning the foreign inland freight charges is
provided on the submitted documents.  The documents show that
the merchandise was purchased on an FOB basis.  No
documentation is provided indicating that the FOB charges
were incident to international shipment or were, in any way
associated with the ocean freight transaction.  The documents
show, instead, that these charges were incident to the
purchase of the merchandise.




HOLDING:

     Absent documentation in the form of a through bill of
lading, showing specifically the charges incurred for foreign
inland freight, the foreign inland freight charges the
protestant seeks to have deducted from the dutiable value are
not deductible.

     Accordingly, you are directed to deny the protest.  A
copy of this decision should be attached to the Customs Form
19, Notice of Action, sent to the protestant.



                              Sincerely,



                              John Durant, Director