HQ 545592: Application for Further Review of Protest No. 1901- 93100046; Dutiability of Foreign Inland Freight Charges.

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 545592

                        September 15, 1994
VAL CO:R:C:V  545592 er

CATEGORY: Valuation

District Director
Mobile, Alabama

RE:  Application for Further Review of Protest No. 1901-
     93100046; Dutiability of Foreign Inland Freight Charges.

Dear Sir:

     This is in response to the above-referenced protest, filed
with your office on August 13, 1993 by xxxxxxxxxx on behalf of
their client [protestant] ("importer"), and forwarded to this
office for reply.  We regret the delay in responding.

FACTS:

     The imported merchandise consists of certain tiles
manufactured by [manufacturer] in Italy and purchased by the
importer.  The merchandise was entered on June 6, 1989, and the
entry was liquidated on July 2, 1993.  Protestant disputes the duty
increase attributable to foreign inland freight charges. 
Protestant claims that in view of the fact that a buying agency
agreement exists which provides that the foreign inland freight
charges are paid by the agent, the charges should not have been
added to the claimed ex-factory price of the imported merchandise. 
The manufacturer and the buying agent are the same company, xxx. 
A copy of the buying agency agreement was not included with this
submission.

     It is your position that because the terms of sale are C&F 
Mobile, and not ex-factory as claimed by protestant, under section
402(b) of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979, ("TAA"), only international freight charges
can be deducted because there is no through bill of lading.  

ISSUE:

     Whether the foreign inland freight charges should have been
excluded from the transaction value of the imported merchandise?

FACTS:

     The primary basis of appraisement under the valuation statute,
section 402 of the TAA is transaction value.  This is defined in
section 402(b) of the TAA as "the price actually paid or payable
for the imported merchandise when sold for exportation to the
United States," plus amounts for packing costs which are incurred
by the buyer, any selling commission, the value of any assist, any
royalty or license fee the buyer is required to pay as a condition
of the sale, and the proceeds of any subsequent resale that accrue
to the seller.

     The price actually paid or payable is defined in section
402(b)(4)(A) of the TAA as the "total payment, ... made, or to be
made, for the merchandise buy the buyer to ... the seller."  The
price actually paid or payable does not include 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.  Deductions may be made for costs incurred for
transportation of the merchandise after importation, if such costs
are identified separately from the price actually paid or payable.

     Foreign inland freight charges are considered to be incident
to the international shipment of merchandise, and are not added to
the price actually paid or payable by the buyer to the seller for
imported merchandise, when the sale was based on an ex-factory
price.  Section 152.103(a)(5)(i) of the Customs Regulations (19 CFR
152.103(a)(5)(i)).  An ex-factory price is the cost of the goods at
the seller's loading dock and usually includes export packing, but
no other costs.  It does not include foreign inland freight costs. 
See Incoterms, 1980 edition; and 19 CFR 152.103(a)(5)(i).  The
existence of an ex-factory sale must be established for the
importer to be able to exclude, under this provision, foreign
inland freight charges from the price actually paid or payable.

     Protestant claims that the terms of sale were ex-factory but
submits no evidence to this effect.  To the contrary, the
manufacturer's invoice reveals that the terms of sale are C&F
Mobile, which is consistent with the facts described by your
office.  Consequently, an ex-factory sale has not been established. 
Customs correctly appraised the merchandise using the C&F Mobile
price.

     A sale on C&F terms means that the seller must pay the costs
and freight necessary to bring the goods to the named destination. 
See, Incoterms, 1980 edition.  Foreign inland freight charges will
be one of those costs, in instances where foreign inland freight
charges are incurred.  By regulation, when the price actually paid
or payable for imported merchandise includes a charge for foreign
inland freight, as it does here in this C&F sale, then that charge
will be part of the transaction value to the extent it is included
in the price.  It is immaterial that the freight charges were
itemized separately on the invoice.  Section 152.103(5)(ii) of the
Customs Regulations (19 CFR 152.103(5)(iii).  However, charges for
foreign inland freight may be considered incident to the
international shipment of that merchandise, and thus excludable, if
they are identified separately and they occur after the merchandise
has been sold for export to the United States and placed with a
carrier for through shipment to the United States.  Id.  A sale for
export and placement for through shipment to the United States is
established by means of a through bill of lading.  Section
152.103(5)(iii) of the Customs Regulations (19 CFR
152.103(5)(iii)).  The bill of lading presented by protestant
reflects shipment of the merchandise from Bremerhaven to Mobile; it
does not show through shipment from Fiorano Modenese, Italy, where
the factory apparently is located, to Mobile.  The protest is
denied because there is no evidence of through shipment from the
manufacturing site to the United States.

HOLDING:

     The foreign inland freight charges were properly included in
the transaction value of the imported merchandise, because the sale
for exportation was based on C&F, not an ex-factory, price and no
through bill of lading was furnished by the importer.  You are
instructed to deny this protest in full.  

     In accordance with section 3A(11) 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 the public via the Diskette
Subscription Service, Lexis, Freedom of Information Act and other
public access channels.

                                   Sincerely,



                                   John Durant, Director
                                   Commercial Rulings Division