HQ 545140: Application for Further Review of Protest No. 3701-92-100073

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 545140

                         August 24, 1993

VAL CO:R:C:V  545140 ph

CATEGORY: Valuation

District Director
6269 Eighth Industrial Dr.
Cudahy, WI 53110

RE: Application for Further Review of Protest No. 3701-92-100073

Dear Sir:

     The above-referenced application for further review concerns
the dutiability of certain commissions by the importer to a third
party.

FACTS:

     According to a September 25, 1992 submission, Melco Clothing
Co., Inc. (hereinafter referred to as "Melco"), the importer,
paid F.J.& M./Winner Mate (hereinafter referred to as FJM), an
unrelated party, an 8% commission to purchase merchandise on
Melco's behalf.  The importer submitted a copy of a buying agency
agreement, dated January 1, 1986, between Melco and FJM. 
According to the terms of the agreement, FJM functions, in its
capacity as agent, included placing orders with foreign
manufacturers, at the specific direction of the importer;
inspecting or causing the inspection of the goods before shipment
to ensure compliance with the importer's specifications;
assisting the importer on buying trips; and locating vendors.  In
addition, it was stated in the agreement that the agent would
have no interest in any manufacturer or vendor from whom it
purchased goods and that no part of its commission would be paid
to or shared with any such manufacturer or vendor.  In addition,
the agent will submit a commercial invoice to the importer,
showing the price paid or payable for the merchandise.  Title to
the merchandise will vest in the importer, automatically, upon
delivery by the manufacturer.

     We note that Melco has previously submitted to Customs a
copy of the same agency agreement, with the same agent, in 1989. 
Based on additional information established by Customs at that
time, Customs determined at that time that FJM was not a bona
fide buying agent for Melco.

ISSUE:

     Whether the described agency is a bona fide agency.

LAW AND ANALYSIS:

     The preferred method of appraising merchandise is
transaction value which is defined in section 402(b) 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 enumerated additions.

     Buying commissions are not specifically included as one of
the additions to the price actually paid or payable.  The "price
actually paid or payable" is defined in section 402(b)(4)(A) of
the TAA as:

     The total payment (whether direct or indirect...) made,
     for imported merchandise by the buyer to, or for the
     benefit of the seller.

     Whether or not a bona fide buying agency exists between an
importer and an alleged "buying agent" is not determined by any
single factor, but depends upon the relevant facts of each case. 
Se J.C. Penney Purchasing Corp. v. United States, 451 F. Supp.
973 (Cust. Ct. 1978).  The primary consideration in determining
whether a bona fide buying relationship exists between an
importer and an alleged "buying agent" is the right of the
principal to control the agent's conduct with respect to matters
entrusted to the agent.  B & W Wholesale Co., Inc. v. United
States, 58 CCPA 92, C.A.D. 1010 (1971).  The totality of the
evidence must demonstrate that the purported agent is in fact a
bona fide buying agent and not a selling agent or an independent
seller.  (See General Notice, Customs Bulletin, March 15, 1989.)

     In this case, the evidence submitted for the subject protest
consists of a copy of the same agency agreement reviewed in
Headquarters Ruling Letter 544419, dated July 12, 1990.  In that
case, we found that additional evidence of the relationship
between the importer and the agent and the importer did not
support the existence of a bona fide buying agency.   That is,
the importer did not exert sufficient control over the agent and
it was not clear that the agent was not related to any of the
foreign manufacturers.  The subject protest does not address
whether any of those practices have been altered since HRL 544419
was issued.  In light of the fact that the parties are the same
and the agency agreement is the same, that issue would have been
addressed in the protest.

     Any determination of whether a bona fide buying relationship
exists, depends on the facts of the particular case.  The
appraising officer at the port of entry makes the actual
determination as to whether a bona fide buying agency exists,
based upon the documentation submitted.  In order to find that a
bona fide buying agency exists, satisfactory documentation must
be presented at the time of entry.  In this case, the appraising
officer determined that the importer had not submitted sufficient
documentation to overcome our holding in HRL 544419.  We support
the appraising officer's conclusion.

HOLDING:

     Based upon the information submitted and for the reasons
stated above, we find that the commission paid to the agent in
this case, does not constitute a bona fide buying commission.

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

                                Sincerely,

                                John Durant, Director
                                Commercial Rulings Division