OT:RR:CTF:VS H255619 AJR
Port Director
U.S. Customs and Border Protection
10 Causeway Street, Suite 603
Boston, MA 02222-1059
RE: Application for Further Review of Protest No. 0401-14-100052; Price Actually Paid or Payable; Dehydrated Garlic
Dear Port Director:
This is in response to an Application for Further Review (“AFR”) of Protest No. 0401-14-100052, timely filed by counsel on behalf of the importer, Lyco Product LLC (“Lyco”) and forwarded to our office by your port. At issue is the price actually paid or payable of dehydrated garlic granules entered by Lyco.
FACTS:
From January 1, 2012 to February 28, 2013, Lyco imported dehydrated garlic granules and other dried spices from China through its primary supplier, Flourish International Group Limited (“Flourish”). In a Notice of Action from November of 2013, your office assessed dehydrated garlic granules, exported on October 3, 2012, and entered on November 2, 2012, at $50,359 after determining that Lyco did not provide valid documentation to support the declared value of $19,350.
The Regulatory Audit Division of the Miami Field Office (“Regulatory Audit”) of U.S. Customs and Border Protection (“CBP”) also initiated an audit of Lyco. Regulatory Audit examined the following documents:
An entry summary (CBP Form 7501) dated November 14, 2012, and an entry/immediate delivery (CBP Form 3461) dated November 2, 2012, showing Lyco as the Importer of Record and Ultimate Consignee for 18,000 kilograms (kg) of dehydrated garlic granules valued at $19,350, exported from China to Boston on October 3, 2012;
A commercial invoice and packing list dated September 20, 2012, issued by Flourish to Lyco for 18,000 kg of dehydrated garlic granules valued at $19,350 containing 720 cartons and shipped from Qingdao, China to Boston, MA;
A bill of lading dated October 4, 2012, which lists Flourish as the shipper with an address in Shandong Foreign Trade Mansion, 810 811 Rooms No. 18 Baoding Road, Qingdao, China, and Lyco as the consignee and “notify party,” showing that 720 cartons of of dehydrated garlic granules weighing 18,720 kg were shipped from Qingdao, China to Boston, MA;
A contract, referred to as the “old garlic contract,” dated January 5, 2012, between Lyco with an address in Weston, FL, and Flourish with an address in Shandong Foreign Trade Mansion, 810 811 Rooms No. 18 Baoding Road, Qingdao, China. The old garlic contract specifies that 330 metric tons (MT) of dehydrated garlic will be delivered FOB from Qingdao, China to Miami, FL at a rate of $820 per MT, amounting to a total contract price of $270,600. The payment terms for this contract state that $110,000 of the contract price was due within 14 days of signing the contract, and the remainder by May 30, 2012. The shipping terms for this contract state that the entire order must be delivered by December 31, 2012;
Two contracts, referred to as the “old pepper contract” and the “old MSG contract,” dated February 1, 2012, and March 1, 2012, respectively, between Lyco and Flourish, for 70 MT of pepper valued at $83,000 and 205.656 MT of MSG valued at $140,874, with payment terms and shipping terms similar to the old garlic contract;
A contract, referred to as the “new garlic contract,” dated May 9, 2012, between Lyco with an address in Weston, FL, and Flourish with an address in Shandong Foreign Trade Mansion, 810 811 Rooms No. 18 Baoding Road, Qingdao, China. The new garlic contract specifies that 497.47 MT of dehydrated garlic will be delivered FOB from Qingdao, China to Miami, FL at a rate of $980 per MT, amounting to a total contract price of $487,520. The payment terms for this contract state that $60,000 of the contract price was due within 14 days of signing the contract, and the remainder by March 31, 2013. The shipping terms for this contract state that the entire order must be delivered by December 31 2013;
Two contracts, referred to as the “new pepper contract” and the “new MSG contract,” dated September 1, 2012, and June 1, 2012, respectively, between Lyco and Flourish, for 62.28 MT of pepper valued at $86,570 and 361 MT of MSG valued at $274,320, with payment terms and shipping terms similar to the new garlic contract;
A 2012 federal tax return from Lyco, which shows an amount of $1,308,870 under “cost of goods sold”;
Two general ledgers (“GLs”) provided by Lyco’s certified public accountant (“CPA”), covering Lyco’s financial transactions from March 31, 2012 to February 28, 2013. The GLs shows that Lyco had an inventory of garlic valued at $190,000 on March 31, 2012. The GLs show three garlic purchases during the covered period for $60,000, $24,000, and $77,968, amounting to a garlic inventory of $351,968.89. The GLs show two pepper purchases amounting to a pepper inventory of $84,000. The GLs show two MSG purchases amounting to a MSG inventory of $141,000. The GLs show eight pre-payment transactions amounting to $855,000;
Two trial balances (“TBs”) provided by Lyco’s CPA, covering Lyco’s financial transactions from March 31, 2012 to February 28, 2013. The TBs show that on February 28, 2013, Lyco had a garlic inventory of $351,968.89, a pepper inventory of $84,000, and a MSG inventory of $141,000. The TBs show that Lyco had made pre-payment debits amounting to $855,000;
A list of Lyco’s wire transfers per Citibank from January 1, 2012 to February 28, 2013. On this document Lyco identifies wires dated:
January 10, 2012, February 24, 2012 April 23, 2012, and May 7, 2012 for $110,000, $80,000, $60,000, and $24,000, respectively, as payments made to Flourish for the old garlic contract;
March 3, 2012 and June 14, 2012 for $510,000 and $90,000, respectively, as payments made to Flourish for the old MSG contract;
April 9, 2012 and April 30, 2012 for $58,000 and $26,000, respectively, as payments made to Flourish for the old MSG contract;
May 23, 2012, for $60,000 as the down payment made to Flourish for the new garlic contract;
June 26, 2012, for $31,000 as the down payment made to Flourish for the new MSG contract;
September 12, 2012, for $82,000 as the down payment made to Flourish for the new pepper contract;
From October 25, 2012 to February 15, 2013 (5 wires), amounting to $682,000 as mixed-payments made to Flourish for the remaining amounts due on the new garlic, new MSG, and new pepper contracts;
June 7, 2012, July 11, 2012, and July 25, 2012 for $20,000, $79,000, and $20,000, respectively, as shipping payments made to Qingdao Shengjinhai International (“QIS”) and Honest Phoenix Holdings Ltd;
August 6, 2012 for $77,968.89 as garlic purchased from a New York company, J&F International Trading;
Information received on October 17, 2011, that Jirui Yu, owner of Lyco and Winji, allegedly changed the declared value of imported products by having Jirui’s father alter paperwork through a company in China, Flourish Group Co., Ltd.;
Documents dated October 2, 2012 from Lyco’s website stating that “Lyco is a branch company of the Flourish (Group) CO., LTD in China,” and that its China office is located at Foreign Trade Mansion, 810 No. 18, Baoding Road, QingDao City, Shandong P.R. China; and
Company profiles of QIS dated May 13, 2013 listing its legal representative and CEO as Jirui Yu; and addresses as Room 801 No. 18, Baoding Road, Shinan Dist., Qingdao City, Shandong, China, and 8f Room 810, Shandong Foreign Trade Mansion, 18 Baoding Road, Qingdao, Shandong, China.
Within the audit scope period of January 1, 2012 to February 28, 2013, Regulatory Audit found that the total payments to Flourish exceeded the values Lyco had declared by $856,455. When Regulatory Audit asked Lyco about this discrepancy, Lyco explained that the additional payments to Flourish were pre-payments for future shipments of the new garlic, MSG, and pepper contracts. Regulatory Audit stated that these pre-payments for future shipments did not agree with the terms of the new contracts, that it was not able to obtain a schedule for when these future shipments were supposed to be received, and that a new supplier for Lyco had been identified for April 2013, just after the audit scope period. Regulatory Audit also found that the amounts listed as pre-payments for the GLs and TBs were included under the “cost of goods sold” in Lyco’s 2012 tax return, concluding that the GLs and TBs were not accurate in showing the identified additional payments as pre-payments. Regulatory Audit also found information suggesting that Lyco and Flourish were related parties.
Lyco disagreed with the findings made by Regulatory Audit, claiming that its entries were properly declared and that the pre-payments were adequately shown in the new garlic, MSG, and pepper contracts. Additionally, Lyco claimed that its “cost of goods sold” included amounts not actually imported by Lyco into the United States. Thus, Lyco argued, Regulatory Audit incorrectly used Lyco’s “cost of goods sold” to determine the price Lyco paid for the entries in question. Lyco also maintained that it was not related to Flourish.
On November 29, 2013, Regulatory Audit concluded that Lyco undervalued 22 entries, including the entry in question, because Lyco’s claims and additional arguments were unsupported and unverifiable. On December 6, 2013, CBP made formal demands on Lyco for payment of the duties owed for the entry in question.
On June 3, 2014, counsel for Lyco timely filed this protest arguing that the 18,000 kg of dehydrated garlic granules should be valued at $19,350 as entered and that that an appraisement based on the report by Regulatory Audit was flawed because Regulatory Audit analyzed incorrect data and did not explain its conclusion for the appraisement of the entry in question.
In the course of evaluating Lyco’s valuation, CBP received the sales confirmation, vendor invoices, freight invoices, and proof of payment for three entries of dehydrated garlic granules from another importer. One, exported on November 1, 2012, and entered on December 5, 2012, declared the value of 19,549 kg of dehydrated garlic granules exported from Qingdao, China at $46,894 ($2.39/kg).
ISSUE:
What is the proper method of appraisement for the imported dehydrated garlic granules involved in this case?
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 enumerated statutory additions. 19 U.S.C. § 1401a(b)(1).
The term “price actually paid or payable” is defined as the “total payment […] 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). There is a rebuttable presumption that all payments made by a buyer to a seller, or a party related to a seller, are part of the price actually paid or payable. See Headquarter Ruling (“HQ”) 545663 dated July 14, 1995. This position is based on the meaning of the term "price actually paid or payable" as addressed in Generra Sportswear Co. v. United States, 8 CAFC 132, 905 F.2d 377 (1990). In Generra, the court considered whether quota charges paid to the seller on behalf of the buyer were part of the price actually paid or payable for the imported goods. In reversing the decision of the lower court, the appellate court held that the term "total payment" is all-inclusive and that "as long as the quota payment was made to the seller in exchange for merchandise sold for export to the United States, the payment properly may be included in transaction value, even if the payment represents something other than the per se value of the goods." The court also explained that it did not intend that Customs engage in extensive fact-finding to determine whether separate charges, all resulting in payments to the seller in connection with the purchase of imported merchandise, were for the merchandise or something else.
In HQ 544375 dated July 6, 1990, the issue concerned whether transaction value was the proper method of appraisement in purchasing agreements where buyers paid cash advances to sellers in order to obtain a “set” or “market price” for the imported merchandise. The ruling held that transaction value may be used in those cases where cash advances are made to the seller by and for the benefit of the buyer, if the amount and means of recovering these advances are clear. However, it also holds that transaction value cannot be used, where no agreed upon price or a bona fide formula for determining the price exists, or where cash advances are made but the amount is not disclosed.
In HQ 545032 dated December 4, 1993, the amount actually paid or payable to the seller under transaction value was not ascertainable from a contract because even though the contract purportedly contained all the terms under which the price actually paid or payable was determined, the importer later revealed that a cash advance was provided by the importer to the seller. The ruling held that in the absence of specific information pertaining to the cash advance and any other amounts exchanged between the parties, it was unable to confirm the total payment for the merchandise and thus appraisement under transaction value was not appropriate.
In HQ 545487 dated June 14, 1994, the transaction value was determined on the basis of the actual payments recorded in the importer’s accounting records because the importer was not able to provide documentation to support its argument that the additional payments uncovered by audit were deductible as freight costs.
HQ 082455 dated November 19, 2009, notes that transaction value appraisement is not precluded by the inability to trace lump-sum payments to particular entries, so long as the payments are reasonably apportioned in accordance with generally accepted accounting principles.
In this case, the imported merchandise was appraised on the basis of the entered value plus the additional amounts paid by Lyco to Flourish as uncovered by the wire transfers and accounting records in accordance with HQ 545487 and HQ 082455. As noted in Generra, the total payment made to Flourish may be included in the transaction value, even if the payments represent something other than the per se value of the good. However, similar to HQ 545032, Lyco informs Regulatory Audit that the total from the lump-sum payments contained payments that were pre-payments for future purchases and were additional to the declared payments for the entries at issue. This “pre-payment” takes the same form as the “cash advances” described in HQ 544375. Similar to HQ 545032, Lyco failed to provide information to show that the pre-payments were made for future shipments, creating an absence of specific information pertaining to the pre-payments. As noted in HQ 545032 and HQ 544375, without this information the total payment for the merchandise cannot be confirmed and transaction value cannot be used. By contrast, the protestant’s lack of documentation in HQ 545487 concerned the deductibility of freight costs and did not affect the ability to determine the total payment for the merchandise, differing from this case. Therefore, because there was no specific information pertaining to the down-payments and no clear means for ascertaining how these advances would be recovered by Lyco, the transaction value method is not available.
We also conclude that the transaction value is not available in this case for a separate reason, namely whether this transaction was made at arm’s length. To be viable under the transaction value method, the transaction must be a sale negotiated at arm’s length, free from any non-market influences, and involving goods clearly destined for the United States. See Nissho Iwai American Corp. v. United States, 16 C.I.T. 86, 786 F. Supp. 1002, reversed in part, 982 F. 2d 505 (Fed. Cir. 1992); see also, Synergy Sport International, Ltd. v. United States (Ct. of Int’l Trade, 1993). There is a presumption that a transaction will meet this standard if the buyer and seller are unrelated. If the parties are related, then “it is necessary to provide Customs with information which demonstrates that transaction value may be based on the related party sale as provided in 19 U.S.C. § 1401a(b)(2)(B). (i.e., that the circumstances of sale indicate that the relationship did not influence the price or that the transaction value closely approximates certain test values.)” See Treasury Decision (T.D.) 96-87, dated January 2, 1997.
In this case, Lyco claims that it is not related to Flourish, implying that the
sale between the parties is presumed to be an arm’s length sale. However, 19 U.S.C. § 1401a(g) provides, in relevant part:
For purposes of this section, the persons specified in any of the following subparagraphs shall be treated as persons who are related:
Members of the same family, including brothers and sisters (whether by whole or half blood), spouse, ancestors, and lineal descendants.
Any officer or director of an organization and such organization.
An officer or director of an organization and an officer or director of another organization, if each individual is also an officer or director in the other organization.
In this case, CBP has reason to reject the claim that the transactions between Lyco and Flourish should be treated as arm’s length transactions. Lyco’s webpage indicates that it is owned by a “Flourish (Group) CO., LTD in China,” which appears to be the same Flourish that was Lyco’s main supplier. Lyco’s webpage also lists an address in China that is the same as Flourish’s address in China. In addition, Lyco’s owner, Jirui Yu, is listed as the legal representative and CEO for QIS, which Flourish assigned to Lyco for shipment payments. QIS also shares the same address in China as Lyco and Flourish. Lastly, information was received that indicates Jirui Yu’s father prepared Flourish’s invoices for Lyco in China. Aside from Lyco’s assertion that it is not related to Flourish, no additional documentation was provided to show that the transaction between Lyco and Flourish should be treated as an arm’s length transaction.
HQ 563400 dated March 29, 2006 concerned whether the “circumstances of the sale” test, prescribed by 19 U.S.C. § 1401a(b)(2)(B) and 19 C.F.R. §152.103(1), had been met for a sale between related parties. CBP found that sufficient information had not been submitted to establish that the test had been met and, consequently, that the goods could not be appraised using transaction value. Similarly, we do not have sufficient information to establish whether the circumstances of the sale has been met, and thus cannot appraise the imported merchandise using transaction value.
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 methods of appraisement in order of precedence are: the transaction value of identical or similar merchandise (19 U.S.C. § 1401a(c)); deductive value (19 U.S.C. § 1401a(d)); computed value (19 U.S.C. § 1401a(e)); and the “fallback” method (19 U.S.C. § 1401a(f)).
The transaction value of identical or similar merchandise is based on sales at the same commercial level and in substantially the same quantity of merchandise exported to the United States at or about the same time as the merchandise being appraised. See 19 U.S.C. § 1401a(c). To use this method, the transaction value of the identical or similar merchandise must be a previously accepted value; that is, it must be demonstrated that the transaction value is fully acceptable under section 402(b) of the TAA at the time of appraisement of the merchandise under consideration in order to be applied as the transaction value of identical or similar goods under section 402(c). See T.D. 91-15, 25 Cust. Bull. 31 (1991); see HQ H234029 dated April 22, 2013. As explained in T.D. 91-15, the previously accepted value is determined on the basis of information provided by the importer or already available to CBP.
HQ 546217 dated April 8, 1998, addressed the issue of what is meant by the requirement of “at or about the same time” under section 402(c) of the TAA, with respect to the transaction value of identical or similar merchandise. The ruling concluded that “at or about the same time” should cover a period of time, as close to the date of exportation as possible, within which commercial practices and market conditions which affect the price remain the same. It was also stated that these types of determinations will vary as between different kinds of goods and the circumstances unique to the particular merchandise and industry at issue. In the case of perishable produce (asparagus was the merchandise at issue), it was concluded that “about” the time of exportation is a time period of one week before or after the date of exportation (a total of 14 days). Customs further concluded that this time period is presumptively appropriate for perishable produce unless overcome by evidence of market or production conditions that warrant a shorter or longer time period.
In this case, it was not possible to appraise the merchandise on the basis of the transaction value of identical or similar merchandise because CBP did not have a previously accepted value for entries in the same subheading and from the same country of origin that were exported at or about the same time as the entry at issue.
When the value of the imported merchandise cannot be determined under 19 U.S.C. § 1401a(c), then CBP may resort to deductive value method. Under the deductive value method, merchandise is appraised on the basis of the price at which it is sold in the United States in its condition as imported and in the greatest aggregate quantity either at or about the time of importation, on or before the close of the 90th day of importation. See 19 U.S.C. § 1401a(d)(2)(A)(i),(ii). This price is subject to certain enumerated deductions. See 19 U.S.C. § 1401a(d)(3). Based on the record, CBP was not given any information on the United States sales price of the merchandise. Consequently, the deductive value method was inapplicable.
When the value of the imported merchandise cannot be determined under 19 U.S.C. § 1401a(d), then CBP may resort to computed value method. Under the computed value method, merchandise is appraised on the basis of the material and the processing costs incurred in the production of imported merchandise, plus an amount for profit and general expenses equal to that usually reflected in sales of merchandise of the same class or kind, and the value of any assists and packing costs. See 19 U.S.C. § 1401a(e). No information on these various elements was provided, making the computed value method also unavailable as an appraisement method.
When the value of imported merchandise cannot be determined under the methods set forth in 19 U.S.C. § 1401a(b)-(e), it may be appraised on the basis of a value derived from one of those methods, reasonably adjusted to the extent necessary to arrive at a value. This is known as the “fallback” valuation method. Certain limitations exist under this method, however. For example, merchandise may not be appraised on the basis of the price in the domestic market of the country of export, the selling price in the United States of merchandise produced in the United States, minimum values, or arbitrary or fictitious values. See 19 U.S.C. § 1401a(f); 19 C.F.R. § 152.108.
Under Section 500 of the Tariff Act of 1930, as amended, which constitutes CBP’s general appraisement authority, the appraising officer may:
[F]ix 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).
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 is the general authority for Customs to appraise merchandise. It is not a separate basis of appraisement and cannot be used as such. Section 500 allows Customs to consider the best evidence available in appraising merchandise. It allows Customs to consider the contract between the buyer and seller, if available, when the information contained in the invoice is either deficient or is known to contain inaccurate figures or calculations…. Section 500 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.
In those transactions where no accurate invoice or other documentation is available, and the importer is unable, or refuses, to provide such information, then reasonable ways and means will be used to determine the appropriate value, using whatever evidence is available, again within the constraints of section 402.
Statement of Administrative Action, H.R. Doc. No. 153, 96 Cong., 1st Sess. Pt 2, reprinted in Department of Treasury, Customs Valuation under the Trade Agreements Act of 1979 (Oct. 1981), at 67.
Section 152.107 of the CBP Regulations (19 C.F.R. § 152.107) provides:
Reasonable adjustments. If the value of imported merchandise cannot be determined or otherwise used for the purposes of this subpart, the imported merchandise will be appraised on the basis of a value derived from the methods set forth in §§ 152.103 through 152.106, reasonably adjusted to the extent necessary to arrive at a value. Only information available in the United States will be used.
Identical merchandise or similar merchandise. The requirement that identical merchandise, or similar merchandise, should be exported at or about the same time of exportation as the merchandise being appraised may be interpreted flexibly. Identical merchandise in any country other than the country of exportation or production of the merchandise being appraised may be the basis for customs valuation. Customs valuation of identical merchandise, or similar merchandise, already determined on the basis of deductive value or computed value may be used.
In HQ H119455 dated February 16, 2011, the fallback method was approved because the port was unable to rely on documents presented by the importer and the importer failed to respond to the port’s requests for information. Likewise, in this case, CBP was unable to rely on the documents presented by the importer to determine the transaction value of the imported merchandise, and CBP did not have sufficient information to apply a method of appraisement other than the fallback method. Though Lyco submitted new contracts to show that the additional payments were down-payments to secure future prices for shipments from Flourish, the new contracts specified that shipments were due by December 31, 2013, and no shipments pertaining to these new contracts had been received by that date. Furthermore, because Lyco and Flourish appear to be related parties, there was no reasonable basis for CBP to accept the transaction value between Lyco and Flourish, particularly since Lyco did not provide documentation to show that transactions between these two parties were arm’s length transactions. Here, while the merchandise was appraised on the basis of transaction value pursuant to 19 U.S.C. § 1401a(b), this method was not available because the total payment could not be confirmed based on the pre-payments and because an arm’s length transaction has not been established between Lyco and Flourish.
Furthermore, though the protestant did not submit additional information to find a previously accepted value for identical or similar merchandise exported at or about the same time as the entry in question, CBP has a previously accepted value of $46,894 for 19,549 kg ($2.39/kg) of dehydrated garlic granules, exported on November 1, 2012, and entered on December 5, 2012 from Qingdao, China. In this case, the imported merchandise in question was for a similar quantity (18,000 kg), concerned the same merchandise and industry (dehydrated garlic granules), and occurred during the same season (in late Fall before Winter started on December 21, 2012) as the entry for the previously accepted value, which would indicate appraisement under transaction value of identical or similar merchandise, per 19 U.S.C. § 1401a(c). However, because the entry for the previously accepted value, was not exported “at or about the same time” as the entry in question (exported on October 3, 2012, and entered on November 2, 2012), it cannot be used as a previously accepted value for the purposes of appraisement under transaction value of identical or similar merchandise.
Therefore, we find that the port should have used the fallback method under 19 U.S.C. § 1401a(f) on the basis of reasonable adjustments to the transaction value as provided for in 19 U.S.C. § 1401a(c). Under the fallback method, the previously accepted value of $2.39 per kg of dehydrated garlic granules entered on December 5, 2012 can be used for the appraisement of the entry in question. The entry for this previously accepted value was verified by CBP and contained a similar quantity of dehydrated garlic granules from China as the entry in question. Moreover, dehydrated garlic has a longer shelf life than the fresh asparagus in HQ 546217 cited above, making it reasonable to adjust the “about the time of exportation” to a longer period. Accordingly, as a verified dehydrated garlic granules entry within reasonable proximity to the entry in question, using this previously accepted value is a reasonable adjustment to 19 U.S.C. § 1401a(c).
Based on the information in the record, the port should have made reasonable adjustments, pursuant to 19 U.S.C. § 1401a(f), of the transaction value of identical or similar merchandise provided for under 19 U.S.C. § 1401a(c) to appraise the merchandise at $2.39 per kilogram.
HOLDING:
The imported merchandise may not be appraised on the basis of total payments made to Flourish because there was not specific information about the pre-payments. Transaction value was also not available because an arm’s length transaction could not be established between Lyco and Flourish. The correct method of appraisement is pursuant to 19 U.S.C. § 1401a(f), which allows for reasonable adjustments to transaction value of identical or similar merchandise under 19 U.S.C. § 1401a(c).
The protest should be denied. In accordance with the Protest/Petition Processing Handbook (CIS HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with this decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division