HQ 545628: Discrepancies between visaed and commercial invoices; T.D. 86-56

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 545628

                          July 29, 1994



VAL CO:R:C:V 545628 CRS

CATEGORY:  Valuation

Mr. John Joerger
Import/Traffic Manager
Winning Ways, Inc.
9700 Commerce Parkway
Lenexa, KS 66219

RE:  Discrepancies between visaed and commercial invoices; T.D. 86-56

Dear Mr. Joerger:

     This is in reply to your letter of April 22, 1994, in which you requested a ruling on the
acceptability of entry documentation where there are differences in the prices reflected on the visaed
and commercial invoices.

FACTS:

     Winning Ways, Inc., imports wearing apparel from various Asian countries, including Hong
Kong, Taiwan, China and Indonesia.  The company recently negotiated a new air freight contract that
gives it control of costs and routing.  Whenever circumstances call for a shipment to be sent by air
rather than by sea, Winning Ways will pay the costs of air freight, and the suppliers will reduce the
price of the merchandise accordingly.  Neither the original nor the renegotiated price will include
shipping costs.  In each case Winning Ways will issue a new purchase order that reflects the
renegotiated price of the merchandise.  The suppliers will confirm the new purchase order, and any
letters of credit will be amended to reflect the revised pricing, as will the commercial invoices.  The
re-negotiation will occur prior to exportation.

     However, it may not be possible in all instances to obtain revised visaed invoices.  In such
cases, the export licenses or visaed invoices that accompany the foreign commercial invoices and the
air bills of lading will reflect higher prices for the merchandise than will actually have been paid by
Winning Ways.

ISSUE:

     The issue presented is whether entry documentation is acceptable to Customs where there are
discrepancies in the visaed and commercial invoice prices resulting from a re-negotiated price.

LAW AND ANALYSIS:

     Customs has held that if a buyer and seller subsequently agree to a lower price for imported
merchandise than was originally negotiated, the lower price will be accepted as the basis of
transaction value provided it can be established that the lower, renegotiated price was agreed to
before the merchandise was exported to the U.S.  E.g., Headquarters Ruling Letter 544645 dated July
16, 1991.  However, if there is no evidence to show that price reductions were effected before the
date of exportation, Customs may properly appraise on the basis of the price originally negotiated. 
Esprit de Corp v. United States, 817 F.Supp. 975 (Ct. Int'l Trade 1993).  In consequence of the new
air freight contract negotiated with your vendors you have advised that should it be necessary to ship
by air rather than by sea, the price of the imported merchandise will be reduced.  In neither case will
the price include shipping costs and therefore no adjustment to the price will be necessary in this
respect.  Accordingly, provided that the evidence submitted establishes that any price reductions were
agreed to before the merchandise is exported to the U.S., the renegotiated price will constitute the
price actually paid or payable for such merchandise.

     Under Treasury Decision (T.D.) 86-56, any differences or discrepancies in the information
in the entry documentation presented to Customs in connection with imported merchandise raise the
presumption that the documents contain false or erroneous information.  T.D. 86-56 provides further
that entry documentation containing erroneous price or value information will not be accepted and
must be returned to the importer for correction.  20 Cust. B. & Dec. 175, 177.  However, the field
instructions implementing T.D. 86-56, issued by Headquarters on May 1, 1986, state that Customs
may accept an entry so long as an importer can provide an acceptable explanation for any differences
in the price or value information contained in the entry documentation.

     You have asked whether any discrepancies between the visaed and commercial invoices prices
that may occur as a result of the circumstances described above will render the entry documentation
unacceptable under T.D. 86-56.  In the instant case, the discrepancies will be attributable from the
re-negotiated price due to the change from ocean freight to air freight.  On the basis of the
information presented, and provided the transaction conforms to the facts set forth above, the
differences in the invoice values have been adequately explained in accordance with T.D. 86-56. 
Consequently, the documents need not be returned for correction.  A copy of this decision should be
attached to the documentation presented with entries of the imported merchandise.

HOLDING:

     Pursuant to the foregoing, the renegotiated price will constitute the price actually paid or
payable of the imported merchandise.  In addition, the discrepancies between the visaed and
commercial invoices have been adequately explained for the purposes of T.D. 86-56.

                         Sincerely,





                         John Durant, Director
                         Commercial Rulings Division