HQ 545532: Application for Further Review of Protest No. 3126-93- 100006; Price Actually Paid or Payable; Post Importation Adjustments.

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 545532
                        September 14, 1994

VAL  CO:R:C:V  545532 er

CATEGORY:  Valuation

District Director
Anchorage, Alaska

RE:  Application for Further Review of Protest No. 3126-93-
     100006; Price Actually Paid or Payable; Post Importation
     Adjustments.

Dear Sir:

     This is in response to the above-referenced protest, which was
filed with your office on February 26, 1993, by xxxxxxxxxxxxxxx on
behalf of their client, [protestant] ("importer").  We regret the
delay in responding.

FACTS:

     The imported merchandise consists of 87 cases of caviar (.986
tons) sold to the importer from xxxxxxxxxxxxxxxxxxxxxxx ("seller"). 
The merchandise was appraised, and the entry subsequently
liquidated on December 28, 1992, based on the stated invoice value,
at $y ($x less non-dutiable charges).

     The merchandise was entered on June 22, 1992.  On October 8,
1992, the importer filed a complaint against the seller in the
Superior Court for the Third Judicial District at Anchorage, which
complaint arose out of certain alleged acts or omissions by the
seller in connection with the sales contract between the parties
involving the subject merchandise.  On December 18, 1992, the
parties entered into a settlement agreement which provides that in
consideration of the payment terms called for in the settlement
agreement, the parties agreed to discharge each other from any and
all obligations arising from the contract for the purchase of the
subject merchandise.  The terms in the settlement agreement
arguably create a lower sales price for the imported merchandise
than that originally stated on the invoice.  Protestant argues that
the merchandise should be appraised based on the terms outlined in
the settlement agreement and that, accordingly, the imported
merchandise should be valued at $z per ton.  

ISSUE:

     Whether the post importation payment terms contained in the
settlement agreement may form the basis of transaction value.



LAW AND ANALYSIS:

     As you know, transaction value, the preferred method of
appraisement, is defined in section 402(b) of the Trade Agreements
Act of 1930, as amended ("TAA"), as "the price actually paid or
payable for the merchandise when sold for exportation to the United
States...", plus certain statutory additions.

     The "price actually paid or payable" is defined in section
402(b)(4)(A) of the TAA as "the total payment (whether direct or
indirect, and exclusive of any 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) made,
or to be made, for the imported merchandise by the buyer to, or for
the benefit of, the seller." 

     Section 402(b)(4)(B) of the TAA provides that "[a]ny rebate
of, or other decrease in, the price actually paid or payable that
is made or otherwise effected between the buyer and seller after
the date of importation of the merchandise into the United States
shall be disregarded in determining the transaction value ..." of
the imported merchandise.  The corresponding Customs regulation is
found in 19 CFR 152.103(a)(4).  

     In considering the issue presented we are of the opinion that
the terms outlined in the settlement agreement, to the extent they
may represent a decrease in price which occurs subsequent to the
importation of the imported merchandise, may not form the basis of
transaction value.  This position is in accord with section
402(b)(1) of the TAA, which defines transaction value to be "the
price actually paid or payable for the merchandise when sold for
exportation to the United States, ..." (emphasis added).  This
language precludes the consideration of the terms outlined in the
settlement agreement from forming the basis of transaction value. 
(See, TAA 31, published as 542275 and dated June 11, 1981).  

HOLDING:

      You are directed 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