HQ 545308: Application for Further Review of Protest No. 1001-2-104390; transaction value of identical or similar merchandise

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 545308
                         January 19, 1995
VAL CO:R:C:V 545308 IOR

CATEGORY: Valuation

Area Director
Kennedy Airport Area
Bldg. 178, Room 330B
Jamaica, New York  11430


RE:  Application for Further Review of Protest No. 1001-2-104390;
     transaction value of identical or similar merchandise

Dear Sir:

     The subject protest and application for further review
concerns the appropriate appraisement method for caviar imported
by xxx xxxxxxxxxx xxxxxxxxxxx (hereinafter referred to as the
"protestant").  Our file also includes a supplemental submission
dated October 14, 1993.  A meeting with this office was requested
on behalf of the protestant, however due to the unavailability of
the protestant, counsel for the protestant was unable to arrange
a meeting.  We regret the delay in responding.

FACTS:

     On May 31, 1991 the protestant entered 4070 90-gram tins of
caviar produced in the former Soviet Union, purchased from
xxxxxxx xxxxx xxxxxxxxxxxxtxxx. (hereinafter referred to as the
"seller") of Poland.  The merchandise was entered at a value of
$3.30 per tin.  The entry was liquidated on April 10, 1992 at a
value of $20.00 per tin based on the transaction value of a
similar product.  

     In its memorandum in support of the protest (hereinafter
referred to as the "memorandum"), the protestant states that the
merchandise was purchased on consignment.  The protestant does
not agree that there is identical or similar caviar on which to
base appraisement, because it believes that the $20.00/tin price
represents a purchase of superior quality caviar with an adequate
shelf life from a source other than the former Soviet Union.  The
protestant states that the subject caviar was not first quality
and had a shelf life which would expire on September 1, 1991,
three months after importation.

     The protestant has provided a copy of a contract between the
protestant and seller dated May 23, 1991, translated from Russian
to English.  The contract provides that the price of the caviar
is fixed at $3.30 per tin and that the payment will be made after
the merchandise is sold.  The contract further provides that the
shelf life of the caviar expires on September 1, 1991, and the
price per tin may be decreased from $3.30 when the shelf life of
the caviar has expired. 

     The concerned import specialist takes the position that the
imported merchandise was sold for exportation to the U.S. and was
not consigned.  However, because the protestant has failed to
prove the amount it paid for the caviar the import specialist
takes the position that the merchandise should be appraised on
the basis of the transaction value of similar merchandise, as
provided by 402(c) of the Tariff Act of 1930, as amended by the
Trade Agreements Act of 1979 (TAA, 19 U.S.C. 1401a(c)), for an
appraised value of $20.00 per tin, or a total of $81,400. 

     In support of its position that the subject caviar was not
identical or similar to the $20.00/tin caviar, the protestant's
supplemental submission contains a copy of an advertisement taken
from a Russian-language newspaper published in New York, dated
November 7-8, 1992.  According to the English translation, the
advertisement was placed by a wholesale-retail warehouse, and was
for 90 gram tins of black caviar at $12.00 per tin.  The
advertised $12.00/tin caviar is not the caviar at issue, but
according to the protestant, it demonstrates the retail prices of
caviar of the same general quality.  The wholesale/retail
warehouse is one of the protestant's customers.  Consequently,
the protestant asserts that the merchandise should have been
appraised on the basis of deductive value.

     According to the import specialist, there are three grades
of caviar from the former Soviet Union.  The three grades are
beluga, which is of the highest quality, ocetra, and sevruga,
which is of the least quality.  The subject caviar was appraised
based on a previously examined and accepted transaction value of
sevruga caviar, produced in the former Soviet Union, imported in
90-gram tins.  According to the import specialist, within grade
distinctions of quality are impossible without expert tasters.   

     The documents provided also include a copy of an invoice
from the protestant to the seller.  The invoice refers to tins of
pickles with a unit price of $3.30, but contains the Harmonized
Tariff Schedule of the United States classification number, 1604
30 20008, for caviar.  Customs has not been provided with any
proof of payment by the protestant.

ISSUE:

     Was the imported merchandise properly appraised?

LAW AND ANALYSIS:

     The preferred method of appraisement is transaction value
which is defined by 402(b)(1) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C.
1401a(b)) as "the price actually paid or payable for the
merchandise when sold for exportation to the United States..."
plus certain additions specified in 402(b)(1) (A) through (E).  

     Under the facts presented, the merchandise cannot be
appraised on the basis of transaction value whether or not the
merchandise was sold on consignment.  Transaction value cannot be
used as a basis for appraisement of consigned imported
merchandise.  See e.g. Headquarters Ruling Letter (HRL) 543403
dated September 24, 1984.  It is Customs' position that when
there is insufficient information to prove the amount of payment
for the imported merchandise, the price actually paid or payable
cannot be proved and the merchandise cannot be appraised on the
basis of transaction value.  In this case, the protestant has
failed to prove the amount paid for the imported merchandise,
consequently the imported merchandise cannot be appraised on the
basis of transaction value.

     The next alternative bases of appraisement in order of
statutory preference are transaction value of identical
merchandise and transaction value of similar merchandise under
402(c) of the TAA.  The statute requires that the identical or
similar merchandise upon which appraisement is based be exported
to the U.S. at or about the time that the merchandise being
appraised is exported to the U.S.  According to the protestant no
identical or similar merchandise imported into the U.S. can be
determined due to the nature of the caviar in question.

     In TAA 402(h)(2) the term "identical merchandise" is
defined as:

     (A) merchandise that is identical in all respects to,
     and was produced in the same country and by the same
     person as, the merchandise being appraised; or

     (B) if merchandise meeting the requirements under
     subparagraph (A) cannot be found..., merchandise that
     is identical in all respects to, and was produced in
     the same country as, but not produced by the same
     person as, the merchandise being appraised.

     In TAA 402(h)(4) the term "similar merchandise" is defined
as:

     (A) merchandise that-
          (i) was produced in the same country and by
          the same person as the merchandise being
          appraised,

          (ii) is like the merchandise being appraised
          in characteristics and component material,
          and

          (iii) is commercially interchangeable with
          the merchandise being appraised; or

     (B) if merchandise meeting the requirements of
     subparagraph (A) cannot be found..., merchandise that-

          (i) was produced in the same country as, but
          not produced by the same person as, the
          merchandise being appraised, and

          (ii) meets the requirement set forth in
          subparagraph (A) (ii) and (iii).

     In this case we have insufficient evidence to determine that
the imported caviar is identical in all respects to the
$20.00/tin caviar, and there is no evidence that both caviars
were produced by the same person.  However, according to the
protestant, the subject caviar was produced in the former Soviet
Union, the same country of production as the $20.00/tin caviar.  

     The requirement of TAA 402(h)((4)(B)(i) is met by the fact
that both caviars were produced in the former Soviet Union.  The
subject caviar was appraised on the basis of the lowest grade of
caviar exported from the former Soviet Union.  Based on the
evidence presented, the importer has not established that the
caviar being appraised is of a different grade from the
$20.00/tin caviar, or that the standard of comparison employed by
Customs was inadequate.  Therefore, we have assumed that the
$20.00/tin caviar is like the caviar being appraised "in
characteristics and component material" and is "commercially
interchangeable" with the caviar being appraised.

     Accordingly, we find that the caviar was correctly appraised
on the basis of the transaction value of similar merchandise,
using the transaction value of sevruga caviar as the appraised
value of the caviar in question.  In addition, in accordance with
T.D. 91-15, the imported merchandise was appraised on the basis
of the transaction value of identical or similar merchandise,
which value was fully acceptable at the time of the liquidation
of the subject merchandise.  Of course, if there exist two or
more transaction values for identical merchandise, or for similar
merchandise, the subject merchandise shall be appraised on the
basis of the lower or lowest of such values in accordance with
TAA 402(c)(2).  Consequently, we do not reach the issue of
deductive value.

HOLDING:

     The imported merchandise was appropriately appraised on the
basis of the transaction value of similar merchandise.

Consistent with the decision set forth above, you are hereby
directed to deny the subject protest.  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 the public via the Diskette
Subscription Service, Freedom of Information Act and other public
access channels.

                                    Sincerely,


                                   John Durant, Director
                                   Commercial Rulings Division



cc:  Regional Commissioner of Customs
     c/o Protest and Control Section
     6 World Trade Center, Room 761
     New York, New York  10048-0945