VAL OT:RR:CTF:VS H092560 EE
.
Gregory Watts
X
680 Knox Street, Suite 200
Torrance, CA 90502
RE: Transaction value; charges incident to the international shipment of the merchandise; foreign inland freight
Dear Mr. Watts:
This is in reply to your letter, dated October 6, 2009, in which you request a ruling on whether certain charges for services provided by X should be included in the transaction value of merchandise imported by Y.
In accordance with 19 C.F.R. § 177.2(b)(7), you have requested that certain information in your submission be treated as confidential. Pursuant to your request, we will excise the bracketed confidential information from public versions of this decision.
FACTS:
The Y sources products from throughout the world and utilizes the services of X to assist with the origin coordination, supplier/vendor communication, cargo handling, and a variety of other origin related services. You state that the fees for the services offered encompass the following as examples:
10+2 management fee to assist Y in providing the required information to U.S. Customs and Border Protection (“CBP”);
Camcontrol fee charged by the Cambodia Quality Control department;
Fee charged by the carrier’s booking agent for booking services;
Fee charged by the carrier for issuing the bill of lading;
Container Freight Station (“CFS”) receiving fee for receiving and packing cargo into containers at the loading port;
Foreign customs clearance fee;
Container Yard (“CY”) monitoring fee for handling the cargo;
Documentation fee for issuing the Freight Cargo Receipt (“FCR”) or the House Bill of Lading (“HBL”);
Drayage/haulage/trucking in the country of export;
Fee charged by the carrier for equipment management;
Fee for handling Less than Container Load (“LCL”) cargo;
Port construction fee;
Port security charge;
Supply chain security fee;
Terminal handling charge;
Wharfage charge.
You provided documentation from three sample transactions for illustrative purposes. The documentation consists of commercial invoices, purchase orders, and packing lists from the suppliers to Y for certain apparel. Each invoice lists the merchandise, the quantity, the unit price, and the total price. You state that the charges are included in the invoice as part of the price of the merchandise. On the first page of each invoice, you handwrote an amount for what you describe as the nondutiable charges, which is the sum of the fees charged by X. You also wrote in an amount for the entered value, which is the total invoice price less the nondutiable charges. The terms of sale listed on each invoice are “FOB port of export or foreign country.” The purchase orders issued by Y to the foreign vendors also specify “FOB” delivery terms.
You also submitted invoices from X to the suppliers which provide the breakdown of charges based upon the quantity and units of measure as indicated on the vendor documentation. Additionally, you submitted three bills of lading which correspond to the invoices and packing lists. The waybills identify the ports of lading as Laem Chabang, Thailand; Yantian, China; and Sihanoukville, Cambodia, and the ports of discharge as Los Angeles and Long Beach, CA.
You claim that the dutiable value should be based upon the supplier invoice value less the charges assessed by X, on the basis that those charges were incident to the international shipment of the merchandise.
ISSUE:
Whether certain charges that are included in the invoice price for the imported merchandise may be properly excluded from transaction value as costs incident to the international shipment of the merchandise.
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 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 amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. 19 U.S.C. § 1401a(b)(1). If, for any reason, sufficient information is not available with respect to the additions to the price actually paid or payable, the transaction value of the imported merchandise is treated as one that cannot be determined. 19 U.S.C. § 1401a(b)(1).
The term “price actually paid or payable” is defined as:
[T]he 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 from the country of exportation to the place of importation in the United States) 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).
CBP has previously determined that fuel surcharges, security charges, and freight handling fees were charges incident to the international shipment. See Headquarters Ruling (“HQ”) H004683, dated April 12, 2007. Similarly CBP has determined the following to be costs that are incident to the international shipment of the merchandise: terminal handling charges (HQ 547146, dated May 14, 1999); freight forwarder commissions (HQ 547074, dated September 17, 1999); documentation fee paid to shipping company for preparation and delivery of a bill of lading or waybill (HQ547302 dated March 29, 1999); brokerage fees (HQ 545173, dated September 19, 1994). CBP in HQ 547074 noted that the types of fees ordinarily paid to freight forwarders are appropriately excluded from the price actually paid or payable. Consistent with these rulings, the following costs charged by X are incident to the international shipment of the merchandise to Y: 10+2 management fee, carrier agent booking fee, carrier bill of lading, CFS receiving, customs clearance, CY monitoring, documentation fee, equipment management fee, FCR/HBL issuance, LCL handling, port construction charge, port security charge, supply chain security fee, terminal handling charge, and wharfage.
In Treasury Decision (“T.D”) 00-20, CBP reiterated its longstanding position that with regard to freight, insurance and other costs incident to international shipment, including foreign inland freight, the importer of record must deduct the actual costs for these charges from the price actually paid or payable in determining transaction value, if these costs are included in the price actually paid or payable. The notice advised that CBP considers actual costs to constitute those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freight/insurance costs, a freight/insurance bill, a through bill of lading or proof of payment of the freight/insurance charges (i.e., letters of credit, checks, bank statements) are examples of some documents which typically serve as proof of such actual costs. Other types of evidence may be acceptable.
X’s invoices to the suppliers of the merchandise itemize the various charges. Although the suppliers’ invoices to Y do not provide a similar itemization, the use of the “FOB” term of sale on the invoices and the purchase orders indicate that the charges are included in the price for the garments. Accordingly, the charges that we have determined to be incident to the international shipment shall be excluded from the price actually paid or payable for the imported merchandise.
As previously noted, the invoices as well as the purchase orders issued by Y to the foreign vendors specify “FOB” delivery terms. With respect to foreign inland freight in sales other than ex-factory, section 152.103(a)(5)(ii), CBP Regulations (19 C.F.R. § 152.103(a)(5)(ii)), provides:
Sales other than ex-factory. As a general rule, in those situations where the price actually paid or payable for imported merchandise includes a charge for foreign inland freight, whether or not itemized separately on the invoices or other commercial documents, that charge will be part of the transaction value to the extent included in the price. However, charges for foreign inland freight and other services incident to the shipment of the merchandise to the United States may be considered incident to the international shipment of that merchandise within the meaning of § 152.102(f) if they are identified separately and they occur after the merchandise has been sold for export to the United States and placed with a carrier for through shipment to the United States.
According to section 152.103(a)(5)(iii), CBP Regulations (19 C.F.R. § 152.103(a)(5)(iii)):
Evidence of sale for export and placement for through shipment. A sale for export and placement for through shipment to the United States under paragraph (a)(5)(ii) of this section shall be established by means of a through bill of lading to be presented to the port director. Only in those situations where it clearly would be impossible to ship merchandise on a through bill of lading (e.g., shipments via the seller’s own conveyance) will other documentation satisfactory to the port director showing a sale for export to the United States and placement for through shipment to the United States be accepted in lieu of a through bill of lading.
Based on the information submitted, the costs charged by X related to drayage/haulage/trucking, which occur within the country of exportation, are separately identified in the invoices from X to the suppliers. The services occur after the merchandise has been sold for export to the U.S. and there is a through shipment of the merchandise evidenced by a through bill of lading from the sellers in Thailand and Cambodia to the U.S. Accordingly, we find that the costs related to drayage/haulage/trucking shall be excluded from the price actually paid or payable for the imported merchandise.
HOLDING:
Based on the information presented, the following costs charged by X shall be excluded from the price actually paid or payable for the imported merchandise: 10+2 management fee, carrier agent booking fee, carrier bill of lading, CFS receiving, customs clearance, CY monitoring, documentation fee, drayage/haulage/trucking, equipment management fee, FCR/HBL issuance, LCL handling, port construction charge, port security charge, supply chain security fee, terminal handling charge, and wharfage. However, the camcontrol fee charged by the local authority may not be excluded from the price actually paid or payable for the imported merchandise.
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch