VAL CO:R:C:V 545416 CRS
Matthew T. McGrath, Esq.
Barnes, Richardson & Colburn
1819 H Street, N.W.
Washington, D.C. 20006
RE: T.D. 86-56; visaed invoice; price actually paid or payable; 19
U.S.C. 1484(a); trade statistics
Dear Mr. McGrath:
This is in reply to your letter of July 15, 1993, on behalf of
American Tourister, Inc., concerning visa invoice requirements for
textile luggage imported from Thailand through the port of Los
Angeles. A second submission, dated December 2, 1993, was
submitted following a meeting at Customs on November 23, 1993. The
transaction described below is based on the information set forth
in your letter of December 2nd.
FACTS:
American Tourister contracts with J.C. Penney Co., Inc. (the
importer) to supply certain luggage to be sold in the importer's
department stores. American Tourister subsequently contracts with
a Thai manufacturer to produce the luggage and export it to the
U.S.
In your letter of December 2, 1993, you state that the
importer will establish a letter of credit (L/C) in favor of
American Tourister in the amount of the purchase price of the
luggage. American Tourister will assign its rights under the L/C
to the Thai manufacturer which will in turn draw on the L/C in full
payment for the luggage. Under a separate arrangement, the Thai
manufacturer will subsequently pay a portion of this amount, i.e.
the amount it receives under the L/C for each shipment, to American
Tourister as compensation for its role in the transaction.
American Tourister will not take title to the merchandise.
Instead, the manufacturer will send the merchandise via a freight
consolidator to the port of export, at which point the importer
will take title and assume risk of loss. American Tourister, J.C.
Penney and the Thai manufacturer are not related within the meaning
of 19 U.S.C. 1401a(g).
The amount reflected on the commercial and visaed invoices
will be the full price paid by the importer for the imported
merchandise. The invoices will identify the manufacturer as the
exporter and J.C. Penney as the importer and consignee. You submit
that the visaed invoice will accurately reflect the transaction and
should be acceptable under Treasury Decision (T.D.) 86-56, 20 Cust.
B. & Dec. 175 (1986). Moreover, you contend that the price paid by
American Tourister for the merchandise constitutes a valid
transaction value.
ISSUES:
The issues presented are whether the total contract price
represents the transaction value of the imported merchandise; and
whether the visaed invoices submitted with the imported merchandise
are 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 under the TAA is transaction
value, which is defined as the "price actually paid or payable for
the merchandise when sold for exportation to the United States,"
plus certain enumerated additions, if applicable. 19 U.S.C.
1401a(b)(1). The price actually paid or payable means 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. 19 U.S.C. 1401a(b)(4)(A). For the purposes of this
ruling we have assumed that transaction value is the appropriate
basis of appraisement.
For Customs purposes, the word "sale" has been defined as a
transfer of ownership in property from one party to another for a
consideration. J.L. Wood v. United States, 62 CCPA 25, 33; C.A.D.
1139 (1974). While J.L. Wood was decided under the prior
appraisement statute, Customs adheres to this definition under the
TAA. The primary factors to consider in determining whether there
has been a transfer of property or ownership are whether the
alleged buyer has acquired title and assumed the risk of loss.
E.g., Headquarters Ruling Letter (HRL) 5443708 dated April 21,
1988.
The circumstances of the instant transaction are as follows.
The importer establishes a L/C in favor of American Tourister in
the full amount of the contract price. American Tourister assigns
its rights under the L/C to the Thai manufacturer (the seller).
The seller draws on the L/C and subsequently remit a portion of the
amount received to American Tourister as compensation for its role
in the transaction. American Tourister never takes title to the
luggage and thus there is no sale between the seller and American
Tourister. Accordingly, for appraisement purposes, the total
contract price, i.e., the amount drawn under the L/C, represents
the price actually paid or payable for the imported merchandise.
Under T.D. 86-56, differences or discrepancies contained in
entry documentation presented to Customs raise the presumption that
the documents contain false or erroneous price or value
information. Such documentation will not be accepted and will be
returned to the importer for correction. You contend that the
documentation submitted in connection with the instant transaction
will be acceptable under T.D. 86-56 since the visaed invoice will
state the full price paid by the buyer for the merchandise. In the
circumstances you set forth in your letter of December 2nd the
visaed invoice will accurately reflect the purchase price received
by the seller, i.e., the total payment by the buyer to the seller.
As noted in T.D. 86-56, section 484(a) of the Tariff Act of
1930, as amended (19 U.S.C. 1484(a)(1)), provides in pertinent
part that importers must file such documentation as is necessary to
enable Customs, inter alia, to collect accurate statistics with
respect to the merchandise. The visaed invoices submitted in
connection with the instant transaction will satisfy the
requirement imposed by 19 U.S.C. 1484(a)(1)(B). Accordingly,
based on the information set forth in your letter of December 2nd,
the visaed invoice and other entry documentation submitted in
connection with the instant transaction will be acceptable under
T.D. 86-56.
HOLDING:
The total contract price of each shipment, i.e., the amount of
the L/C, represents the transaction value of the imported
merchandise.
The visaed invoice submitted with the imported merchandise
pursuant to the transaction described above is acceptable under
T.D. 86-56.
Sincerely,
John Durant, Director
Commercial Rulings Division