HQ 544787: Payment of shipping agency bonus

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 544787
                      February 20, 1992


VAL CO:R:C:V 544787 ILK

CATEGORY:  Valuation
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RE:  Payment of shipping agency bonus

Dear Mr. -----:

     This is in response to your request, dated June 25, 1991,
(hereinafter referred to as "Request") for a ruling on a
proposed shipping bonus arrangement between ---------------------
-------, Inc. (hereinafter referred to as the "Importer") and ---
---- ----- Mfg. Co. Ltd, (hereinafter referred to as the
"Seller").  You request a ruling on the effect of the shipping
bonus on the transaction value.  We regret the delay in
responding.

FACTS:

     The imported goods consist of furniture imported through
Seattle, Tacoma, Los Angeles and Long Beach.  The importer is
proposing payment of a -% shipping agency bonus to the seller for
meeting specified shipping criteria.  The criteria proposed are
as follows:

     1)  Quantities must be within --% of the original or
     revised order quantity.

     2)  Orders must be shipped in consecutive order and not
     taken out of sequence.

     3)  A minimum of two weeks notice, prior to the
     scheduled shipment date, must be given to ------
     regarding problems that would require the adjustment of
     the shipping schedule.

     4)  A minimum of four containers per week must be
     shipped with two exceptions that allow for only three
     containers to be shipped.

     5)  Ashley may adjust the purchase order dates and will
     adjust the shipping schedule and bonus accordingly.

     6)  The quality of goods must be acceptable to ------.
     A two week period for correction of defects is provided
     for.  Unacceptable quality is caused (sic) for
     nullification of this agreement.  (p. 1 of Request)

     The method for determining the bonus will be arrived at
prior to importation, and it will be related to performance on
specific importations, but it may not be possible to confirm
whether or not a bonus will be paid prior to importation.
Payment of the bonus is anticipated to be made at the end of each
month via wire transfer of funds.

ISSUES:

     Whether the transaction value includes the amounts paid to
the seller pursuant to the shipping agency bonus program.

LAW AND ANALYSIS:

     The preferred method of appraisement is transaction value
which is defined by TAA section 402(b)(1) as "the price actually
paid or payable for the merchandise when sold for exportation to
the United States..."  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.

It has been the longstanding position of the Customs Service that
all moneys paid to the foreign seller are part of the "price
actually paid or payable" for the imported merchandise.  See
Generra Sportswear Co. v. United States, 715 F. Supp. 1101 (CIT
1989); Headquarters Ruling Letter (HRL) 542169 (TAA #6), dated
September 18, 1980.

      The fact that it may not be possible to determine whether a
bonus is to be paid prior to importation is immaterial to the
inquiry of whether the bonus payment is to be included in
transaction value.  Pursuant to TAA section 402(b)(1) the
transaction value is the price actually paid or payable for the
merchandise "when sold for exportation."  In situations in which
the price actually paid or payable is to be ascertained according
to a formula which is in existence prior to the exportation of
the merchandise, the price has been set prior to exportation.
Thus, even though it may not be possible at the time of
exportation to ascertain an exact dollar amount owed for the
goods, a price actually paid or payable has been set.  HRL 543189
dated October 19, 1983.

     Pursuant to the proposed bonus program, the -% payment is
made for the imported merchandise, and by the buyer to the
seller.  The bonus is to be determined according to a formula
which is in existence prior to the exporation of the
merchandise.  Thus, the bonus payment meets the dutiability
requirements of TAA section 402 (b)(4)(A).  Therefore, the bonus
payment would  be part of the "price actually paid or payable"
for the merchandise, and  would  be part of the transaction value
of the merchandise.

HOLDING:

     The bonus payment under the proposed shipping agency bonus
program is for the merchandise, paid by the buyer to the seller
and is part of the "price actually paid or payable" for the
imported merchandise.  Thus the bonus payments will  be included
in the appraised value of the merchandise.

                                   Sincerely,


                                   John Durant, Director
                                   Commercial Rulings Division