VAL RR:IT:VA 546191
Port Director
U.S. Customs Service
135 High Street
Hartford, CT 06103
RE: Internal Advice request 40/95 concerning dutiability of antidumping duties; Section 402(b)(3)(B) of the TAA; HRL 545304
Dear Director:
This is in response to your memorandum received by our office on November 20, 1995, requesting internal advice concerning the dutiability and assessment of antidumping duties (ADD) on flat-rolled steel sold by Hoogovens Ijmuiden, Netherlands (HI) and imported by N.V.W. (USA) Inc. (NVW). Your inquiry concerns, in pertinent part, whether the ADD form part of the duty paid price as set forth in Headquarters Ruling Letter (HRL) 545304, issued January 4, 1994. Your additional question, e.g., whether the described invoicing practice constitutes reimbursement of the ADD, has been, and will be, addressed by the Department of Commerce (Commerce) in the course of their administrative reviews. We regret the delay in our response.
FACTS:
Cold-rolled sheet steel is sold by HI to related and unrelated purchasers at essentially the same price and terms. NVW is the importer of record, depositor of the ADD with Customs, and acts as sales agent for HI. They do not purchase, nor take title to, the steel. Prior to August 1993, the regular duty of 5% was included in the duty paid price. In August 1993 an AD order was published, requiring a cash deposit of 20.19% as an estimated margin. After this order was issued, the terms of sale on the HI-NVW invoices were changed from “DEQ (delivered ex quay) duty paid” to “DEQ duty and ADD paid.” Once HRL 545304, supra, was issued providing that ADD forming part of the price should not be included in transaction value, NVW began deducting 20.19%, along with other non-dutiable charges, from the invoice value. See §402(b)(3)(B) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA) codified at 19 U.S.C. 1401a. Both before and after the AD order, prices were based on U.S. steel list prices, less a discount, plus any applicable extras.
It is our understanding that the price of the steel was not affected by the AD order or, in other words, that the price which now allegedly included an additional 20.19% for the ADD did not increase proportionately by this amount. Counsel has provided that HI's sales terms for the cold-rolled products at issue provide for a duty paid price and in all such cases NVW, rather than HI's customers, pays all applicable import duties. Additionally, after the issuance of the AD order, HI revised its description of the terms of sale to clarify to its customers that the term duty paid included ADD. Furthermore, the U.S. purchasers of the cold-rolled steel remit their payments to HI, and HI transfers funds to NVW to cover NVW's expenses and disbursements, including duties.
Your office submits that the ADD does not form part of the duty paid price, insofar as the price for the steel essentially was unaffected by the AD order. In particular, you state in your Importer's Premises Visit Report (CF 213) that NVW representatives provided that its customers would not be expected to incur the expense of the ADD cash deposit which would be absorbed or carried by HI pending resolution of the case by Commerce. In essence, you submit that increases or decreases in the dumping margin at liquidation do not devolve to the U.S. purchaser, but to the seller through its agent. NVW submits that because the U.S. purchaser pays the invoice amount and no more, and the terms of sale are worded to include a deposit of ADD, the duty is included in the price. Commercial invoices, special summary steel invoices, purchase orders, sales confirmations, and proof of payment were available for our review.
ISSUES:
Whether the specific amounts claimed to constitute ADD qualify as customs duties and/or other federal taxes forming a part of the duty paid price for the merchandise and as such are to be treated as non-dutiable charges to be deducted from the transaction value.
LAW AND ANALYSIS:
As you are aware, the preferred method of appraising merchandise imported into the United States is transaction value pursuant to §402(b) of the TAA. Section 402(b)(1) of the TAA provides, in pertinent part, that the transaction value of imported merchandise is the "price actually paid or payable for the merchandise when sold for exportation to the United States" plus the enumerated statutory additions.
Because NVW serves as a selling agent with regard to the subject transactions, we understand bona fide sales to exist between HI and the U.S. purchasers. Thus, appraisement appropriately would be based on the transaction value represented by the price between those parties. Moreover, while we note that some of the U.S. purchasers may be related to HI, the question concerning the acceptability of the related party pricing under §402(b)(2)(B) has not been presented for our consideration. For purposes of this decision we therefore will assume the relationship between the parties did not influence the price actually paid or payable and that transaction value is the appropriate method of appraisement. In addition, while we recognize that additional or side payments may be made to NVW, perhaps in the form of commissions or indirect payments, neither matter has been presented for our consideration.
The "price actually paid or payable" is defined in §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...) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller."
Furthermore, §402(b)(3) provides that:
[t]he transaction value of imported merchandise does not include any of the following, if identified separately from the price actually paid or payable . . . :
(B) The customs duties and other Federal taxes currently payable on the imported merchandise by reason of its importation . . . .
In HRL 545304, supra, Customs, in the context of these same transactions, set forth the general proposition that ADD constitute “customs duties and other Federal taxes” not to be included in the transaction value provided such amounts, forming part of the duty paid price, are identified separately from the price actually paid or payable for the imported merchandise.
However, the cognizant Customs officials have harbored specific doubts or concerns as to whether the declared value for the imported steel represents the total amount actually paid or payable for the imported steel.
In the instant matter, the change in the terms of sale, e.g., from “DEQ duty paid” to “DEQ duty and ADD paid,” was clear and at all times made known to Customs. This is confirmed from the submitted invoices and supporting documentation included in the file. Moreover, the evidence reflects that the importer of record paid the ADD duties to Customs at the time of entry. Regardless of the change, or in this case lack thereof, in the price actually paid or payable, there is no requirement set forth in the 19 U.S.C. §1401a valuation statute mandating that importers adjust the price actually paid or payable to reflect the imposition of dumping duties. The consequences, if any, of the additional deductions from the price actually paid or payable for the ADD amounts is a matter to be addressed by Commerce through its antidumping procedures. To the contrary, the valuation statute enforced by Customs is not intended, nor designed, to combat dumping issues.
For these reasons, specifically noting the terms of sale “DEQ duty and ADD paid,” Customs is to consider such amounts to have been included in, or forming part of, the duty paid price. As maintained in HRL 545304, supra, ADD forming part of the price, where identified separately from the price actually paid or payable, would not be included in the transaction value.
HOLDING:
Based on the evidence presented, taking specific note of the “DEQ duty and ADD paid” terms of sale, Customs is to consider the specific amounts claimed to constitute ADD as customs duties and/or other federal taxes. Insofar as the ADD amounts form part of the price and are identified separately from the price, these amounts would not be included in the transaction value. Reimbursement of dumping duties has been, and will be, addressed by Commerce in the course of their administrative reviews. Furthermore, Customs should follow the liquidation instructions issued by Commerce for the 1994-1995 entries in this case.
This decision should be mailed by your office to the internal advice requester no later than sixty days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Thomas L. Lobred
Chief, Value Branch