HQ 545069: Application for Further Review of Protest No. 3801-0-002242

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 545069

                        December 23, 1993

VAL CO:R:C:V 545069 ph

CATEGORY: Valuation

District Director
477 Michigan Avenue
Detroit, MI 48266

RE: Application for Further Review of Protest No. 3801-0-002242

Dear Sir:

     The above-referenced application for further review concerns
the appraisement of certain imported merchandise, based on
invoices that were presented to Customs; the accuracy of such
invoices is in doubt due to conflicting documentation.  At issue
in this protest are all formal entries made by the importer,
Ensign Emblem Ltd. (hereinafter "Ensign"), during the years 1986,
1987 and 1988.  It is noted that numerous mail entries were made
between 1983 and 1986.  Those entries are not addressed in this
protest.  We regret the delay in reply.    

FACTS:

     According to a Customs Report of Investigation dated
February 20, 1991, during the period of January 1983 to January
1988 Ensign presented invoices to Customs for textile emblems
imported from Taiwan, which indicated prices for the merchandise
that were considerably lower than industry-wide prices.  The
report indicates that in a June 1986 interview, Ensign's
corporate treasurer examined two invoices to Ensign (from two
different foreign manufacturers) and stated that the prices
indicated on the two invoices were not the prices Ensign paid. 
In a May 1989 interview this employee and the president of Ensign
both stated that it was common practice for Ensign to ignore the
invoice that accompanied each shipment, and that payment for the
merchandise was made according to a prearranged pricing system
established by the foreign manufacturers.  Customs was not able
to obtain a copy of the price list nor any ledger or record of
accounts payable and receivable.  

     Customs used 19 U.S.C. 1500(a) as the authority for
determining the price paid for the imported merchandise.   

ISSUE:

     Whether the imported merchandise was properly appraised.

LAW AND ANALYSIS:

     Section 402(a) through (f) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C.
1401a) sets forth the hierarchy of methods used in determining
the value of imported merchandise.  The preferred method of
appraisement is transaction value, set forth in section 402(b) of
the TAA, is defined as "the price actually paid or payable" plus
certain enumerated additions.  Section 402(f) of the TAA provides
for a method of determing a value for imported merchandise if
other values cannot be determined or used. 

     Section 500 of the Tariff Act of 1930, as amended by the
Trade Agreements Act of 1979 (TAA: 19 U.S.C. 1500) is the general
authority for Customs to appraise merchandise.  Section 500(a)
states that the appraising officer shall, under rules and
regulations prescribed by the Secretary:

     appraise merchandise by ascertaining or estimating the
     value thereof, under section 1401a of this title, by
     all reasonable ways and means in his power, any
     statement of cost of costs of production in any
     invoice, affidavit, declaration, other document to the
     contrary notwithstanding...

As noted in the Statement of Administrative Action:

     section 500 of the TAA authorizes the appraising
     officer to weigh the nature of the evidence before him
     in appraising the imported merchandise.  This could be
     the invoice, the contract between the parties, or even
     the recordkeeping of either of the parties to the
     contract.  For example, if information contained in an
     invoice is negated by sworn statements contained in
     affidavits, the appraising officer has the authority to
     appraise the merchandise based on information contained
     in the affidavits.

     In this case, an investigation produced statements from
employees of the importer that records of accounts payable and
receivable were kept; such ledgers were never produced.  
Transaction value could not be used to appraise the imported
merchandise because "the price actually paid or payable" for the
imported merchandise could not be acertained.  That is, the total
number of checks written to its foreign suppliers in 1986,1987
and January of 1988 did not correlate to the invoices submitted. 
Therefore, utilizing an appraisement method in accordance with
402(f) of the TAA and the authority provided for in section 500
of the TAA, the import specialist ascertained the price actually
paid or payable for the imported merchandise in accordance with
the amount indicated by the checks written.

     We find the import specialist's method of appraisement to be
in accordance with the above-referenced statutory authority.  The
issue of how to appraise the merchandise became an evidentiary
one when Customs discovered that the invoices submitted did not
correlate to the amount indicated by the checks Ensign wrote to
its foreign suppliers.  The appraising officer, under authority
of section 500, considered all the evidence available, and
determined an appropriate and reasonable value for the imported
merchandise.

HOLDING:

     Based on the circumstances presented, we find that the
appraising officer used reasonable ways and means to determine
the appropriate value for the imported merchandise.  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 sixty days from the date of this letter.  Any
reliquidation of the entry in accordance with the decision must
be accomplished prior to mailing 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 access channels.

                              Sincerely,

                              John Durant, Director
                              Commercial Rulings Division