HQ 545086: Transaction value; price actually paid or payable; cost ofacquisition of an assist calculated on a quarterly basis.

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 545086

                          April 1, 1993



VAL CO:R:C:V 545086 CRS

CATEGORY:  Valuation

Margaret S. Solinger, Esq.
Du Pont Corporation
3525 Silverside Road
Concord Plaza
Read Building
Wilmington, DE 19898

RE:  Transaction value; price actually paid or payable; cost of
acquisition of an assist calculated on a quarterly basis.

Dear Ms. Solinger:

     This is in reply to your letter dated August 27, 1992, in
which you requested a binding ruling on the valuation of certain
pharmaceutical products.  This matter was also discussed at a
meeting with members of my staff on February 11, 1993.  Your
request for confidentiality with regard to costs, product names,
and the identity of other parties concerned has been granted
pursuant to   177.2(b)(7), Customs Regulations (19 CFR  
177.2(b)(7)).

FACTS:

     Injection ampules will be manufactured for Du Pont by an
unrelated party in England.  The active ingredient for the
ampules will be purchased by Du Pont in bulk form from another
unrelated party at a price equal to 20 percent of the average net
selling price of the ampules in the U.S.  This price will cover
all royalties and license fees, including those for the finished
product.

     The active ingredient, still in bulk form, will be imported
into the U.S. under TIB for quality control testing.  After
having been tested the bulk material will be sent to England
where it will be manufactured into injection ampules.  Du Pont
will supply the active ingredient free of charge to the English
manufacturer.  In addition, Du Pont will pay the manufacturer a
fixed amount per ampule for its services.  It is anticipated that
the merchandise in question will be imported through the port of
Atlanta.

ISSUE:

     The issue presented is whether the merchandise in question
can be appraised on the basis of transaction value when the cost
of acquisition of an ingredient incorporated into the merchandise
is not determined until after the time of importation.

LAW AND ANALYSIS:

     As a general matter, 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 is
transaction value, defined as "the price actually paid or payable
for merchandise when sold for exportation to the United States,"
plus five enumerated additions, including the value, apportioned
as appropriate, of any assist.  19 U.S.C.   1401a(b)(1)(C).

     Pursuant to section 402(b)(4)(A) of the TAA, the term "price
actually paid or payable" is defined as:
 
     [T]he total payment (whether direct or indirect, and
     exclusive of any costs, charges or expenses incurred
     for transportation, insurance and related services
     incident to the international shipment of the
     merchandise from the country of exportation to the
     place of importation in the United States) made, or to
     be made, for imported merchandise by the buyer, to, or
     for the benefit of, the seller.

19 U.S.C.   1401a(b)(4)(A).  In this instance, the total payment
for the imported merchandise is the amount paid by Du Pont to the
U.K. manufacturer for producing the ampules.

     In order to determine the transaction value of the imported
merchandise, the value of any assist provided by Du Pont to the
U.K. manufacturer must be added to the price actually paid or
payable.  The term "assist" includes any materials incorporated
in imported merchandise that are supplied directly or indirectly,
and free of charge or at reduced cost, by the buyer of imported
merchandise, for use in the production of the merchandise.  19
U.S.C.   1401a(h)(1)(A).

     Du Pont provides the U.K. manufacturer with the active
ingredient used in the imported ampules, i.e., with an assist. 
However, since the value of the assist is based on the average
net selling price of the imported ampules, calculated on a
quarterly basis, the value of the assist will be undetermined at
the time of importation.

     Accordingly, transaction value will be an acceptable basis
of appraisement for the merchandise in question only if, at the
discretion of the port of entry, liquidation can be withheld in
order to permit a determination of the cost of acquisition of the
assist to be made.

HOLDING:

     The basis of appraisement is transaction value pursuant to
19 U.S.C.   1401a(b) provided liquidation can be withheld until
such time as the value of the assist can be determined.

     If the port determines that liquidation cannot be withheld,
the merchandise shall be appraised in accordance with the first
applicable method arrived at through a sequential application of
the statutorily enumerated methods.

                         Sincerely,





                         John Durant, Director