CLA-2 CO:R:C:V 544220 DHS
Area Director,
JFK Airport Area
RE: Dutiability of Payments Made
to Obtain Corrected Quota; IA 25/88
Dear Sir:
This is in response to an internal advice, regarding the
dutiability of quota charges incurred by the importer. The
merchandise was appraised pursuant to transaction value, section
402(b) of the Tariff Act of 1930, as amended by the Trade
Agreements Act of 1979 (TAA; 19 U.S.C. 1401a(b)). The question
arises as a result of an audit performed by the Regulatory Audit
Division of the New York Region.
FACTS:
The concerned companies include Sassco Fashions Ltd. and
Breckenridge Ltd., divisions of the Leslie Fay Company. You
assert that these companies have incorrectly categorized the
wearing apparel imported into the United States and therefore,
have acquired improper visas for their importation.
Sassco Fashions Ltd., during 1985 and 1986, shipped extra
non-coordinating skirts with their shipments of suits. You have
stated that after inquiries from Customs regarding these
shipments, Sassco made a voluntary disclosure regarding 38 of
these shipments. With respect to Breckenridge, 8 shipments of
jackets and skirts were entered as suits. You state that these
items should have been entered as sportswear components.
In order to rectify the quota violations, both Sassco and
Breckenridge purchased new visas with the correct categories from
the overseas shipper. It is this second payment for quota which
is in issue.
The importer contends that the payments for the replacement
visas are post importation costs and not directly related to the
prices paid for the merchandise. Therefore, these payments are
not part of the transaction value for the imported merchandise.
You have treated these payments as part of the "price
actually paid or payable" for the merchandise since the payments
were paid to the seller for the quota.
ISSUE:
Whether payments for obtaining additional quota from the
seller in order to comply with the correct quota category are
part of the price actually paid or payable for the imported
merchandise when sold for exportation to the United States.
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," plus certain enumerated additions. It has
consistently been the position of the Customs Service that quota
charges are part of the "price actually paid or payable for the
merchandise when sold for exportation to the United States", if
the quota is purchased from the seller.
In the present situation, the payments for the purchase of
the original quota were included in the "price actually paid or
payable for the merchandise when sold for exportation to the
United States" (emphasis added). These payments were included as
part of the transaction value. The payments to obtain the
correct visa category were made subsequent to the sale for
exportation of the imported merchandise. Therefore, they are not
part of the "price actually paid or payable for the merchandise
when sold for exportation to the United States."
HOLDING:
In view of the foregoing, we conclude that payments made for
obtaining additional quota from the seller after the sale of the
merchandise for exportation to the United States in order to
comply with the correct quota category are not part of the
transaction value.
Sincerely,
John Durant, Director
Commercial Rulings Division