HQ 545846: Application for Further Review of Protest No. 1101-94-100667; inclusion of commission in price actually paid or payable for imported 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 545846
                         December 9, 1994

VAL CO:R:C:V 545846 IOR

CATEGORY: Valuation

District Director
Philadelphia, Pennsylvania

RE:  Application for Further Review of Protest No. 1101-94-100667; inclusion of commission in price actually paid or
     payable for imported merchandise

Dear Sir:

     The subject protest and application for further review
concerns the inclusion of an agency commission in the price
actually paid or payable for merchandise imported by xxxxxxxx
Inc. (hereinafter referred to as the "importer").  The protest
was filed by Morris Friedman & Company (hereinafter referred to
as the 'protestant"), as agent for the importer.  

FACTS:

     Protest is made against the liquidation of an entry of
artificial flowers and Christmas decorations at the invoiced
price which includes a seven percent buying commission.  On June
17 1994 the importer entered artificial flowers and Christmas
decorations.  The entry documents include a Falcon Industries
(Associated) Co. (hereinafter referred to as "FIA") invoice for
artificial flowers and Christmas decorations.  The invoice total
is $14,237.44, and includes a separately itemized agent
commission of $931.42.  The protestant requests that the entry be
reliquidated based on the invoice price exclusive of the
commission.  Submitted with the protest is a copy of a buying
agency agreement with an effective date of November 14, 1994
between the importer and FIA, a packing list from FIA and
declarations of origin executed by FIA.  The agency agreement
sets forth the obligations of each party, including the
importer's compensation of FIA at the rate of seven percent of
the FOB price of the merchandise ordered and shipped according to
the agreement.  It is the protestant's position that FIA is a
bona fide buying agent.  No other documents have been submitted
on behalf of the importer.

ISSUE:

     Whether the relationship between the importer and FIA meet
the criteria of a bona fide buying agency relationship.

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). 
The term "price actually paid or payable" is defined in TAA
402(b)(4)(A) as:

     ...the total payment (whether direct or indirect...)
     made, or to be made, for imported merchandise by the
     buyer to, or for the benefit of, the seller.

For the purpose of this ruling, we are assuming that transaction
value is the appropriate basis of appraisement.  It is clear from
the statutory language that in order to establish transaction
value one must know the identity of the seller and the amount
actually paid or payable to him.

     In a general notice published in the Customs Bulletin on
March 15, 1989, Customs provided an explanation of its position
on buying commissions:

     While bona fide buying commissions are nondutiable,
     evidence must be submitted to Customs which clearly
     establishes that fact.  In this regard, Headquarters
     Ruling Letter 542141, dated September 29, 1980, also
     cited as TAA No. 7, provided: ...an invoice or other
     documentation from the actual foreign seller to the
     agent would be required to establish that the agent is
     not a seller and to determine the price actually paid
     or payable to the seller.  Furthermore, the totality of
     the evidence must demonstrate that the purported agent
     is in fact a bona fide buying agent and not a selling
     agent or an independent seller.

     In this case the protestant has not provided Customs with an
invoice or other documentation from a party that it claims is the
seller of the imported merchandise.  Customs has only been
provided with an invoice from the purported agent and that is
insufficient to establish that FIA is not a seller.  The only
price that Customs has upon which to base appraisement under
transaction value is the total invoice price on the FIA invoice. 
While buying commissions cannot be added to the price actually
paid or payable, neither may they be deducted.  See TAA #7.  In
this case, the price actually paid or payable includes the
payment to FIA for the alleged commission, and Customs has no
authority to deduct the purported commission from the price.

     Generally additional factors are considered in determining
the existence of a bona fide buying agency, however in this case
we do not reach those factors as we have only been provided the
one invoice from the purported buying agent.


HOLDING:

     Consistent with the foregoing, we are not satisfied that the
importer and FIA meet the criteria of a bona fide buying agency,
and that FIA is not the seller of the imported merchandise,
therefore the "commission" is included in the price actually paid
or payable for the imported 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.  A copy of this decision should be attached to
the Customs Form 19 mailed to the protestant as part of the
notice of action on the protest. 



                              Sincerely,



                              John Durant, Director
                              Commercial Rulings Division