OT:RR:CTF:VS H019073 GG

Mr. Michael J. Theodore
Livingston Consulting
300 Meridian Corporate Park
3636 – 23 Street NE
Calgary, Alberta
Canada T2E 8Z5

RE: Appraisement of contaminated soil; fallback method.

Dear Mr. Theodore:

This is in response to your ruling request, dated September 13, 2007, made on behalf of your client, US Ecology Idaho, Inc. (“US Ecology”). This letter addresses the valuation aspects of your ruling request.

FACTS:

Soil contaminated with low concentrations of depleted uranium is being imported from Kuwait for disposal at a waste site in Idaho. The proposed disposal will, reportedly, satisfy all Federal and State requirements. The soil has not been sold and has no commercial value. US Ecology is the operator of the disposal site and will be the importer of record.

US Ecology, in seeking guidance on the value to declare, suggests that Customs precedent would support an appraisement under the fallback valuation method, using the disposal fee.

ISSUE:

What is the correct method of appraising the contaminated soil?

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 (19 U.S.C. § 1401a; TAA). The primary 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 the value of certain statutorily enumerated additions thereto. 19 U.S.C. § 1401a(b)(1).

When imported merchandise cannot be appraised on the basis of transaction value, it is to be appraised in accordance with the remaining methods of valuation, applied in sequential order. The alternative bases of appraisement, in order of precedence, are: the transaction value of identical merchandise; the transaction value of similar merchandise; deductive value; and computed value. If the value of imported merchandise cannot be determined under these methods, it is to be determined in accordance with section 402(f) of the TAA, known as the “fallback method.” 19 U.S.C. § 1401a(a)(1).

In the instant case, the imported waste is not the subject of a sale and therefore cannot be appraised under the transaction value method set forth in section 402(b) of the TAA. Similarly, the methods of appraisement set forth in sections 402(c)-(e) of the TAA are inapplicable in the present circumstances. Accordingly, the imported merchandise must be appraised under the fallback method provided for under section 402(f) of the TAA.

Section 402(f) of the TAA provides that imported merchandise is to be appraised on the basis of a method derived from one of the methods set forth in sections 402(b)-(e), such methods reasonably adjusted to the extent necessary to arrive at a value. However, there are certain prohibited bases of appraisement under section 402(f), including the selling price of merchandise produced in the United States, minimum values and arbitrary or fictitious values. 19 U.S.C. § 1401a(f)(2).

Nevertheless, under section 500 of the Tariff Act of 1930, as amended, which sets forth Customs’ general appraisement authority, the appraising officer may:

Fix the final appraisement of merchandise by ascertaining or estimating the value thereof, under section 1401a of this title, by all reasonable ways and means in his power, any statement of cost or costs of production in any invoice, affidavit, declaration, other document to the contrary notwithstanding....

19 U.S.C. § 1500(a) (emphasis added).

In this regard, the Statement of Administrative Action (SAA), which forms part of the legislative history of the TAA, provides in pertinent part: Section 500 allows Customs to consider the best evidence available in appraising merchandise....[It] authorize (sic) the appraising officer to weigh the nature of the evidence before him in appraising the imported merchandise. This could be the invoice, the contract between the parties, or even the recordkeeping of either of the parties to the contract.

Statement of Administrative Action, H.R. Doc. No. 153, 96 Cong., 1st Sess., pt 2, reprinted in, Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 (October 1981), at 67. Accordingly, if the value of imported merchandise cannot be determined on the basis of a method derived from sections 402(b)-(e), it is our position that the value of the imported waste material that is the subject of the instant protest may be determined under the fallback method provided for in section 402(f) of the TAA, using all reasonable ways and means, so long as the method is not specifically precluded under section 402(f)(2)(D). US Ecology proposes to declare a value under the fallback method of valuation that is based on the disposal fee it receives. This same approach was followed in Headquarters Ruling Letters (HRL) 545017, dated August 19, 1994, HRL 547061, dated March 19, 1999, and HRL 547147, dated March 23, 1999, with regard to the importation and disposal of waste materials. Accordingly, we agree with US Ecology’s proposal to appraise the contaminated soil under the fallback valuation method using the disposal fee.

HOLDING:

The imported contaminated soil shall be appraised under the fallback method using the disposal fee.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction.

Sincerely,

Monika R. Brenner
Chief,
Valuation and Special Programs Branch