HQ 545376: Application for Further Review of Protest No. 3701-93-100085; Dutiability of Selling Commission

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 545376

                         July 29, 1994

VAL CO:R:C:V 545376 LPF

CATEGORY: Valuation

District Director
U.S. Customs Service
6269 Ace Industrial Drive
P.O. Box 37260
Milwaukee, WI 53237-0260

RE: Application for Further Review of Protest No. 3701-93-100085;
    Dutiability of Selling Commission

Dear Sir:

    This is a decision on an application for further review of a
protest filed May 7, 1993, against your decision concerning the
valuation of cotton fabric.  The entry was liquidated on March
19, 1993.  We regret the delay in responding.

FACTS:

    On October 7, 1992, Teijin Shoji America, Inc. ("Teijin
America"), a U.S. corporation, made entry for cotton fabric at
Milwaukee, WI.  The file contains an invoice dated October 2,
1992, from Teijin Shoji Co., Ltd. ("Teijin Japan") to Teijin
America for 11 cartons of cotton fabric.

    Initially, Teijin America explained that they are related to
Teijin Japan and that the latter is the parent of the former,
that Teijin Japan pays Teijin America a 3 percent commission for
handling the merchandise for Customs clearance and for delivering
the merchandise to customers, and that the commission is included
on the invoiced price of the merchandise, billed directly to the
customer.  However, after Teijin America received a Notice of
Action (CF 29) from the Milwaukee District indicating that the
appraised value on current as well as future entries would
include a 3 percent selling commission, they stated that Teijin
Japan does not pay a commission to Teijin America, but instead
its customers pay a commission to Teijin America.  

    Apparently, in response to the Notice of Action, Teijin
America submitted a Debit Note dated May 31, 1992, from Teijin
Japan to Teijin America, as well as an invoice dated June 4,
1992, from Teijin America to J.H. Collectibles, a U.S. customer
located in Milwaukee, as evidence that the amount at issue was
not a selling commission.  We note, however, that the submitted 

                               -2-

Debit Note and invoice do not pertain to the specific transaction
and merchandise currently at issue, but apparently relate to
prior importations between Teijin America and Teijin Japan. 
Consequently, these documents have no particular relevance with
regard to this particular transaction.  The file contains no
other documents concerning the entry at issue.

    You appraised the merchandise at the price paid by Teijin
America, including the addition of a 3 percent selling
commission.  The protestant, Teijin America, claims that the
appraised value should be the price paid by Teijin America
without additions for a selling commission.

ISSUE:

    Whether the protestant has proffered sufficient evidence to
prove that it is operating other than as a selling agent and,
consequently, that the transaction value of the merchandise
should not include additions for a selling commission.
  
LAW AND ANALYSIS:

    As you are aware, the preferred method of appraisement is
transaction value pursuant to section 402(b) of the Tariff Act of
1930, as amended by the Trade Agreements Act of 1979 (TAA),
codified at 19 U.S.C. 1401a.  Section 402 (b)(1) of the TAA
provides, in pertinent part, that the transaction value of
imported merchandise is the "price actually paid or payable for
the merchandise when sold for exportation to the United States"
plus amounts for certain enumerated additions, including selling
commissions incurred by the buyer.  19 U.S.C. 1401a(b)(1).

    In Headquarters Ruling Letter (HRL) 544907, issued April 13,
1992, we determined that an invoiced amount qualified as a
selling commission as opposed to a trade discount.  In that
decision it was explained that an agency relationship was found
to exist between the parties (based on the admission of the
parties and their labeling the invoiced amount as a commission)
and that insufficient evidence was proffered to indicate that the
amount was anything other than a selling commission.

    Similarly, from the information contained in this file, it
appears that Teijin America operated as a selling agent.  The
protestant acted for the account of the seller by contacting
customers and arranging for entry and delivery of the goods.  The
remuneration Teijin America apparently receives for these 
services has been described as a "selling commission."  We
reiterate that initially the protestant stated that it was Teijin
Japan's agent and was paid a selling commission for its delivery
and clearance services and that even in response to the Notice of
Action the protestant explained that it was paid a selling
commission, albeit from its U.S. customers.


                               -3-

    In sum, we are not satisfied that the evidence presented by
the protestant in response to the Milwaukee District's Notice of
Action substantiates the claim that the amount at issue is other
than a selling commission.  Because the protestant has not
presented adequate evidence such as invoices, contracts, or
purchase orders which indicate otherwise, we find the amount at
issue to be dutiable as a selling commission.

HOLDING:

    Based on the facts presented, the protestant has proffered
insufficient evidence to prove that it is operating other than as
a selling agent and, consequently, that the transaction value of
the merchandise should not include additions for a selling
commission.

    You are directed to deny this protest.  A copy of this
decision with the Form 19 should be sent to the protestant.

    In accordance with Section 3A(11)(b) of Customs Directive 099
3550-065, dated August 4, 1993, Subject: Revised Protest
Directive, this decision should be mailed by your office to the
protestant no later than 60 days from the date of this letter. 
Any reliquidation of the entry in accordance with the decision
must be accomplished prior to mailing of the decision.  Sixty
days from the date of the decision, the Office of Regulations and
Rulings will take steps to make the decision available to Customs
personnel via the Customs Rulings Module in ACS, and to the
public via the Diskette Subscription Service, Lexis, the Freedom
of Information Act and other public access channels.

                              Sincerely,




                              John Durant, Director
                              Commercial Rulings Division