us-cbp-cross-rulings-hq-554998•HQ 554998: Decision on Application for Further Review of Protest No. 3801-6-001205
HQ 554998: Decision on Application for Further Review of Protest No. 3801-6-001205
us-cbp-cross-rulings-hq-554998HQ 554998: Decision on Application for Further Review of Protest No. 3801-6-001205Guidance
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 554998
January 24, 1989
CLA-2 CO:R:CV:V 554998 VLB
CATEGORY: Valuation
District Director of Customs
Detroit, Michigan 48226-2568
RE: Decision on Application for Further Review of Protest
No. 3801-6-001205
Dear Sir:
This protest was filed against your decision in the
liquidation of various entries made by --------------------------
a lumber distributor (hereinafter referred to as the
"distributor"). The merchandise was appraised pursuant to
section 402(b) of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979 (19 U.S.C. 1401a(b); TAA).
FACTS:
The merchandise in question is waferboard (particle board)
that is manufactured in Canadian mills. The valuation of
Canadian waferboard is the subject of hundreds of protests
arising out of the various importers' manner of doing business.
In correspondence dated March 28, 1988, forwarding the
protests, the National Import Specialist lists the following
three general methods used to sell the merchandise in question:
(1) A Canadian manufacturer sells to a distributor (a
Canadian or a U.S. company) for export to the United
States, e.g. F.O.B. mill. All documents, including a
through bill of lading, show that the merchandise is to be
shipped from point of manufacture or origin to the United
States port of importation or beyond.
(2) A Canadian manufacturer sells F.O.B. mill to a
distributor (a Canadian or a U.S. company) for shipment to
a "storage-reload center" located near the border but on
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the Canadian side. In turn, the distributor sells the
merchandise from the "storage-reload center" to U.S. buyers
for export to the United States (F.O.B. "storage-reload
center" or duty paid delivered).
(3) A Canadian manufacturer sells to a distributor (a
Canadian or a U.S. company) for export to the United
States, e.g. F.O.B. mill. All documents, including a
through bill of lading, show that the merchandise is to be
shipped from point of manufacture or origin to the United
States port of importation or beyond. However, the
shipment is routed through a "storage-reload center" in
Canada. The only thing that happens at the reload center
is either a change in the transportation conveyance or a
stop over on the way to the United States. There is no
change in quantities or destination.
Finally, each of the three methods described may have
variations and the details of each transaction may differ
slightly. Therefore, we will examine the documentation submitted
by each protestant.
'
In this case, the distributor has submitted documentation
for numerous transactions. There are three relevant documents in
each transaction: (1) An Entry Summary Form indicating that the
distributor is the ultimate consignee and importer of record;
(2) A John V. Carr (Broker) Invoice stating that Newman Terminals
and Transportation (Reload Center) is the exporter and that the
lumber is sold to the distributor but shipped to the
distributor's U.S. customer; (3) The Distributor's Invoice to
its U.S. customer.
Documents 1 and 2, presented to Customs at the time of
entry, contain the price that the distributor paid to the
Canadian manufacturer. Document 3 contains the price that the
U.S. customer paid the distributor for the merchandise.
You determined that the transaction value of the
merchandise was the price the U.S. customer paid the distributor
for the merchandise. The distributor argues that the transaction
value is the price it paid to the Canadian manufacturer.
ISSUE:
Whether the sale between the manufacturer and the
distributor, or the sale between the distributor and its
customer, is the price actually paid or payable for the
merchandise when it was sold for exportation to the United
States.
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LAW AND ANALYSIS:
Transaction value, the preferred method of appraisement, is
defined in section 402(b) of the TAA as the "price actually paid
or payable for the merchandise when sold for exportation to the
United States. . ." (emphasis added). Section 101.1(k) of the
Customs Regulations (19 CFR 101.1(k)), defines "exportation" as a
severance of goods from the mass of things belonging to this
country with the intention of uniting them to the mass of things
belonging to some foreign country.
In C.S.D. 84-54 and Headquarters ruling 542928 cited as TAA
#57, we held:
. . . the transaction to which the phrase `when sold for
exportation to the United States' refers, when there are
two or more transactions which might give rise to a
transaction value, is the transaction which most directly
causes the merchandise to be exported to the United States.
Headquarters also issued ruling 543687 dated May 6, 1986,
in response to hypothetical questions posed by a lumber industry
trade journal. In that ruling we stated the following:
. . . if sales for exportation to the United States
actually occur from the border reload point (in Canada),
and these sales are the sales that directly cause the
merchandise to be exported from Canada, the transaction
value would be based upon those sales. (emphasis added)
Finally, on May 22, 1986, Headquarters issued ruling 543746
involving specific waferboard entries. In that case, a U.S.
company purchased and imported waferboard products from various
unrelated sources in Canada. The terms of sale were "F.O.B.
mill". Therefore, the company took title to the merchandise at
the mill.
However, the product was shipped to reload centers in
Canada where it was stored and consolidated. The company
frequently obtained orders for resale of the product to unrelated
U.S. purchasers prior to the consolidation at the staging yards.
Relying on ruling 543687, we held that the sale from the
company (distributor) to its U.S. customer most directly caused
the merchandise to be exported to the U.S.
The facts of the present case are similar, if not identical
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to the facts in ruling 543746. These facts fall under your
Scenario 2 that was discussed previously. You argue that under
this scenario the sale between the mill and the distributor does
not cause the goods to be exported to the U.S., but only to be
shipped to the storage-reload centers in Canada. You state that
the transaction that most directly causes the waferboard to be
exported to the U.S. is the sale that occurs at the storage-
reload center. Therefore, you conclude that the sale between the
distributor and its customer is the sale for exportation to the
U.S. and the appropriate appraisement value.
The documents submitted by the distributor in this protest
support your conclusion. The invoices presented to Customs
indicate that the reload center is the exporter, not the mill.
In addition, the date of the distributor's invoice to its
customer contains the same date as the date of exportation or a
date shortly after exportation. Therefore, we conclude that the
merchandise was sold by the distributor at the reload center.
This is the sale that severed the goods from the mass of things
belonging to Canada with the intent of uniting them with the mass
of goods belonging to the U.S. Thus, this sale directly caused
the merchandise to be exported from Canada to the U.S. and is the
price actually paid or payable under transaction value.
HOLDING:
The facts in this case fall under Scenario 2 that was
discussed previously. We hold that in that factual pattern the
sale between the distributor and its U.S. customer is the sale
that directly caused the merchandise to be exported from Canada
to the U.S. Therefore, the amount of that sale is the price
actually paid or payable for the goods under transaction value.
The protest should be denied. A copy of this decision
should be attached to Form 19, Notice of Action, to be sent to
the protestant.
Sincerely,
John Durant, Director,
Commercial Rulings Division
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