CLA-02 RR:CTF:VS H056445 RSD
Ms. Analisa Coria
Trade Consultant
UPS Trade Management Services
1515 W. 190th Street, Suite 300
Gardena, California 90248
RE: Valuation of gold, silver, and platinum articles that customers in Canada will send to the United States through couriers for future payment by the importer; 19 U.S.C. 1401a(f),19 CFR 145.11
Dear Ms. Coria:
This is in reference to your letter dated March 25, 2009, on behalf of Cash4Gold (C4G) requesting a ruling providing guidance how gold, silver and platinum articles that it will receive at its facility in the United States should be appraised. In an email dated April 24, 2009, we received a subsequent submission, which contained an invoice from a sample transaction.
FACTS:
C4G is a Florida based company that buys gold, silver and platinum jewelry and other articles made from these precious metals from customers, who ship such items to C4G through the mail or by other couriers, such as Federal Express or UPS. After C4G receives the articles at its facility, it weighs and assays (test for precious metal content) them. C4G determines a price that it will pay for the articles and quotes it to the customer, who had shipped the item. The customer can either accept the price, at which point C4G will send a check in that amount to the person or reject the offer. If the customer rejects the offer, C4G will return the item to the customer. Customers who want to ship items to C4G can go on its website to obtain a free insure “refiners return kit”.
According to C4G’s website, all jewelry sent must be insured by FedEx, UPS or United State Postal Service to provide security. Jewelry shipped via FedEx will be insured for up to $500. Jewelry shipped through other methods will be insured for up to $100. If additional packaging or insurance are required, the customers are instructed to call C4G for further assistance. After receiving the
jewelry, C4G will weigh and evaluate the jewelry and provide the customer with a quote by email. C4G purchases the jewelry solely for refining its precious metal content, and not for resale. Except for small diamonds, prices for jewelry are based solely on the weight of the jewelry and karat grade contained in the Jewelry, and not on its potential value if resold intact.
If the customer accepts the quote, they are directed to reply to the email that they have received indicating that they have accepted the quote. If the quote is not accepted, C4G will return the jewelry back to the customer. C4G will insure the jewelry for no more than the amount they offer for the jewelry, (regardless of what the jewelry was insured for when it was mailed to C4G), unless the Customer notifies C4G by phone that he agrees to pay for the additional insurance requested. To be compensated for the jewelry, the customer may select to be paid by direct deposit or check.
You state that this process has worked extremely well in the United States and C4G is planning to expand its operations into Canada with the necessary modifications to ensure compliance with all U.S. Customs and Border Protection (CBP) rules and regulations. After the jewelry is entered into the United States, it will be sent to C4G’s Florida facility for processing. The C4G website will be modified for customers in Canada, who will be able to key in information necessary to allow C4G’s Customs broker to prepare and file entry documents for each packaged shipped to the U.S from Canada. For the Canadian transactions, it is our understanding that most of the shipments will be handled by UPS rather than through the Canadian postal services, but C4G will act as the importer of record. C4G is working closely with its Customs brokers, who will prepare entries based on the information obtained from its interface with the C4G website. C4G’s Customs brokers will be instructed not to deliver shipments to C4G until they are released by CBP.
You have further advised that the C4G will use the traditional brokerage services of United Parcel Services (UPS), and that the shipments will not be handled as expressed consignments. It is anticipated that the customer will act as the shipper and will file an entry when they send the gold jewelry and other precious metal articles from Canada to C4G’s facility in the United States. On the entry, the shipper will provide the valuation of the merchandise based on the insurance value of the merchandise. After C4G receives the precious metal articles, it will evaluate the items and make an offer to the customer regarding how much it will pay for the items. Once the offer is made, it will be transmitted to the customs broker who will revise the valuation information submitted to CBP when it submits the entry summary. This revised valuation information on the entry summary will be based on the price that C4G offers its Customer to buy the articles. In other words, you are proposing to base the entered value on the price
C4G offers for the jewelry. This amount will be declared on the entry summary that is submitted to CBP within ten working days after the merchandise was entered into the United States. At that time, the duties and fees owed on the merchandise will be paid. It is our understanding that you anticipate that the merchandise will be entered through the port of Louisville, but you are unsure at this point whether the entries will be consolidated or made individually.
ISSUE:
What is the correct method of appraising the jewelry and the other assorted articles that are made of precious metals?
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 order for imported merchandise to be appraised under the transaction value method it must be the subject of a bona fide sale between a buyer and seller and it must be a sale for exportation to the United States. In the instant case, there is no sale when the imported gold, silver or platinum articles enter the United States, and therefore they cannot be appraised under the transaction value method set forth in section 402(b) of the TAA. 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), 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, or 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. Since the value of imported merchandise cannot be determined on the basis one of the methods set forth in sections 402(b)-(e), it is our position that the value of the imported jewelry or other precious metal articles that are the subject of this ruling request 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 particular basis is not specifically precluded under section 402(f)(2)(D).
In this case, we recognize that appraising the subject merchandise raises some unique difficulties because C4G’s customers will not know the exact amount that C4G will offer for the merchandise until after it is imported into the United States and C4G receives it and has as opportunity to weigh and assay it. Moreover the price actually or paid will not be known until the offer is accepted. However, even in the particular circumstances of this case, all "reasonable ways and means" must be used to appraise the merchandise, subject to the prohibitions in 19 U.S.C. 1401a(f).
If a formal entry is filed- or required- it is our position that subject to the prohibitions in 19 U.S.C. 1401a(f), a reasonable basis of appraisement for the jewelry can be ascertained based on the price that C4G offers to pay its customers for the imported precious metal items. According to the C4G representatives, it will only take a few days after importation for C4G to weigh and assay the imported precious metal articles. After these operations are completed, C4G will then be able to offer an amount to its customers regarding how much it will pay for the imported precious metal articles. Once the offer is made to the customer, the amount of the offer will be transmitted to UPS, who will act as the customs broker for the transactions. UPS as the Customs brokers will then be able to report the revised valuation to CBP on the entry summary. Although there is no sale for exportation to the United States, the proposed method for appraisement of the imported precious metal items constitutes a modified version of transaction value under the fall back method of section 402(f). Since the price that C4G will pay for the items should be known within a few days after the merchandise has been entered into the United States, we find that this appraisement method is acceptable under the fallback method as set forth in 19 U.S.C. 1401a(f). This method of appraisement is acceptable, however, only if the port director at the port of entry is satisfied that the information regarding the amount offered for the precious metal articles by C4G to its customers in Canada can be reported on the entry summary and conveyed to CBP in a timely manner.
Nevertheless, we also recognize that the vast majority of the entries will have a value of less than $2,000, and thus they may be subject to the informal entry procedures described in 19 CFR 143.21-28. Under 19 CFR 159.10(a)(1) such entries will be liquidated at the time of payment of duties which are due on the entry merchandise. Accordingly, if the appraising officer concludes that the value declared at entry, e.g. the insurance value constitutes an acceptable value for purposes of section 402(f), the merchandise may be appraised, and the entry liquidated on that basis.
HOLDING:
The imported gold and precious metal articles shall be appraised under the fallback method of section 402(f) of the TAA by using the price C4G offers its customers after the merchandise has been imported into the United States provided that the port of director at the port entry is satisfied that the revised valuation information can be declared to CBP on the entry summary in a timely manner.
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