HQ 545239: Price actually paid or payable; dutiability of delivery fee; invoicing; 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 545239

                          June 30, 1993



VAL CO:R:C:V 545239 CRS

CATEGORY:  Valuation

Robert L. Eisen
Karen Bysiewicz, Esq.
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7794

RE:  Price actually paid or payable; dutiability of delivery fee; invoicing; T.D. 86-56

Dear Mr. Eisen and Ms. Bysiewicz:

     This is in reply to your letter dated February 12, 1993, on behalf of Edison Brothers
Stores, Inc., in which you requested a ruling on the dutiability of a fee on merchandise imported
from the People's Republic of China, and on whether discrepancies in the visaed and commercial
invoices arising from the payment of the fee is acceptable under Treasury Decision (T.D.) 86-56.

FACTS:

     Edison purchases garments manufactured in China, the price of which is negotiated with
the provincial trade authorities, rather than with the actual manufacturer of the apparel.  Once a
price is set, the provincial authorities issue a visaed invoice for the garments.  Recently, however,
representatives of the factories that produce the merchandise have requested that Edison pay them
a per garment fee in addition to the price negotiated with the provincial authorities.  Factory
representatives have advised Edison that unless this fee is paid, they may not be able to produce
the garments within the required time, if at all.

     The fee will be paid directly to the factory that produces the garments, and consequently,
will not be included in the amount shown on the visaed invoice prepared by the provincial
authorities.  Edison will disclose the payment of the fee at the time the garments are entered;
however, because the fee will be paid directly to the factory there will be a difference between the
amount shown on the visaed invoice and that reflected on the commercial invoice.

     Since the fee is paid directly to the manufacturer rather than to the provincial authorities
with whom the price of the garments is negotiated, you contend that it is not part of the price
actually paid or payable for the imported merchandise.  However, should the delivery fee be
deemed part of the price actually paid or payable, you maintain that the explanation of the
discrepancy between the visaed and commercial invoices is acceptable under T.D. 86-56.

ISSUE:

     The issues presented are (1) whether the additional payment to the manufacturer is part of
the price actually paid or payable for the merchandise; and (2) whether the discrepancy between
the visaed and commercial invoices is acceptable under T.D. 86-56.

LAW AND ANALYSIS:

     Merchandise imported into the United States is appraised in accordance with section 402
of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA; 19 U.S.C. 
1401a).  The preferred method of appraisement is transaction value defined as "the price actually
paid or payable for the merchandise when sold for exportation to the United States," plus five
statutorily enumerated additions.  19 U.S.C.  1401a(b)(1).

     Pursuant to section 402(b)(4)(A) of the TAA, the term "price actually paid or payable" is
defined in pertinent part as "the total payment (whether direct or indirect...) made, or to be made,
for imported merchandise, to, or for the benefit of, the seller."  19 U.S.C.  1401a(b)(4)(A).  You
maintain that the fee at issue is not "'for the merchandise' to be imported but rather for services,"
and is therefore not part of the price actually paid or payable.  Letter of February 12, 1993, at 4.

     The payment in question will be made by the buyer of the merchandise in order to secure
delivery of the imported garments.  In Headquarters Ruling Letter (HRL) 544787, the payment of
a bonus for meeting specified shipping criteria was held to be part of the price actually paid or
payable for imported merchandise.  The instant payment is made for a similar purpose.  Indeed,
you note that unless the fee is paid, "the factories may not be able to produce the garments within
the time frame required...if at all."  Letter of February 12, 1993, at 2.  Consequently, we consider
the payment to be "for imported merchandise," under 19 U.S.C.  1401a(b)(4)(A).

     Furthermore, you state in your facsimile transmission of May 20, 1993, that the provincial
authorities (the seller) "would set the price for the merchandise to be imported and subsequently
determine how much of that total price would be given to the factory that actually produces the
garments."  Accordingly, we consider the fee to be part of the "total payment...made...to, or for
the benefit of the seller."  Since the fee is determined by the seller, and as the fee is for imported
merchandise, it is therefore part of the price actually paid or payable.  See also Headquarters
Ruling Letter (HRL) 544690 dated August 5, 1991.

     In addition, you contend that the discrepancy between the visaed invoice and entry
documentation that arises as a result of the additional payment is acceptable under T.D. 86-56 (20
Cust. B. & Dec. 175).  Under T.D. 86-56, differences or discrepancies contained 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 such documentation will not be accepted and must be returned to the importer for
correction.

     Nevertheless, the field instructions implementing T.D. 86-56, issued by this office on May
1, 1986, state that Customs may accept an entry so long as there is an acceptable explanation for
any differences in the price or value information contained in the entry documentation.

     Your client orders merchandise through Chinese provincial authorities who designate a
manufacturer to produce the goods.  The price negotiated with the provincial authorities will
appear on the visaed invoice.  However, the fee, which will be declared at the time of entry will
appear only on the commercial invoice.  Consequently, there will be a discrepancy between the
entry documentation and the visaed invoice.
     
     On the basis of the information presented, and provided the documentation described
above is presented at the time of entry, the differences that will arise have been adequately
explained in accordance with T.D. 86-56.  A corrected invoice will therefore not be necessary.

HOLDING:

     The additional fee is part of the price actually paid or payable for the imported
merchandise under section 402(b)(4)(A) of the TAA.

     Discrepancies between the visaed invoices and the entry documentation have been
adequately explained for purposes of T.D. 86-56.

                         Sincerely,





                         John Durant, Director
                         Commercial Rulings Division