HQ 545266: Internal Advice 85/92; assists; commissions paid to an agentfor procuring material used to manufacture imported merchandise;HRL 544423.

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 545266

                          June 30, 1993



VAL CO:R:C:V 545266 CRS

CATEGORY:  Valuation

Area Director
U.S. Customs Service
Hemisphere Center
Routes 1 & 9 South
Newark, NJ 07114

RE:  Internal Advice 85/92; assists; commissions paid to an agent
for procuring material used to manufacture imported merchandise;
HRL 544423.

Dear Sir:

     This is in reply to your memorandum dated December 10, 1992,
under cover of which you forwarded a request for internal advice
filed by ********************** on behalf **********************.

FACTS:

     The buyer imports leather gloves from its wholly-owned
Chinese subsidiary, **************.  Through its agent, *********
the buyer purchases the leather used in manufacturing the gloves
from independent tanneries in China, including ******************
and ***************.  Payment is remitted to the tanneries by the
subsidiary, and the tanneries ship the leather directly to the
subsidiary.  The buyer subsequently reimburses the subsidiary by
debit note.

     In addition to purchasing the leather on behalf of the
buyer, the agent inspects and arranges for the shipment of the
merchandise.  As compensation for its services, the agent
receives a commission of up to five percent of the f.o.b. value
of the leather.  The agent's commission is also paid through the
subsidiary, with the latter being reimbursed, as above, through
the issuance of debit notes from the buyer.  Counsel states that
payments generally are made only after the subsidairy receives
specific authorization from the buyer.

     The amount of the leather payments and commissions is not
included in the price actually paid or payable for the imported
gloves, but is declared as an assist.  Counsel contends that the
commissions are not part of the value of the assist.

     In support of this contention, counsel notes that the agent
has no interest in, or control of, the tanneries.  The agent is
not responsible for the cost of shipping and does not take title
to the leather.  The commissions do not inure to the benefit of
the tanneries.  While the agent has acted as agent for the buyer
for a number of years, this arrangement has recently been
formalized by a written agreement, a copy of which has been
submitted by counsel.

ISSUE:

     The issue presented is whether commissions paid to an agent
for services rendered in acquiring assists are part of the cost
of the assist such that they are added to the price actually paid
or payable the imported merchandise.

LAW AND ANALYSIS:

     Merchandise imported into the United States is appraised in
accordance with the provisions of section 402 of the Tariff Act
of 1930, as amended by the Trade Agreements Act of 1979 (19
U.S.C.   1401a; TAA).  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 statutory addition, including the value, apportioned as
appropriate, of any assist.  19 U.S.C.   1401a(b)(1)(C).

     The term "assist" refers to materials, components, parts and
similar items incorporated in imported merchandise, and supplied
free of charge or at a reduced cost by the buyer in connection
with the production or sale for export to the United States of
the merchandise.  19 U.S.C.   1401a(h)(1)(A)(i).  The leather
used in the production of the imported gloves is supplied free of
charge by the buyer through the services of the buyer. 
Accordingly, the leather constitutes an assist under 19 U.S.C.  
1401a(b)(1)(C).

     In Headquarters Ruling Letter (HRL) 544323 dated March 8,
1990, this office determined that the term "procurement assist"
was not a term specified in the TAA, which simply defines what
materials or services are considered assists.  In HRL 544423 of
June 3, 1991, we addressed the issue of whether commissions paid
to a buying agent for obtaining piece goods supplied to apparel
manufacturers and used in the production of imported garments
should be considered part of the cost of the assist.  There we
held that such commissions were part of the cost of acquiring the
assist and were therefore dutiable.

     Similarly, the commissions paid to the agent by the buyer
through the subsidiary for acquiring leather, i.e., assists, used
to manufacture imported gloves are part of the cost of
acquisition of the assist and should be added to the price
actually paid or payable for the imported merchandise.  Since
this conclusion is independent of whether the agent is a bona
fide buying agent, we do not reach this issue.

HOLDING:

     Commissions paid by a buyer of imported merchandise to an
agent for acquiring assists are part of the cost of acquisition
of the assist and are to be added to the price actually paid or
payable.

                         Sincerely,





                         John Durant, Director