VAL CO:R:C:V 545296 ILK
Area Director
Kennedy Airport Area
Jamaica, New York 11430
RE: Application for Further Review of Protest No. 1001-91-
103317; inclusion of commission in price actually paid or
payable for imported merchandise
Dear Sir:
The subject protest and application for further review
concerns the inclusion of an agency commission in the price
actually paid or payable for merchandise imported by --------, -
--. (hereinafter referred to as the "protestant").
FACTS:
Protest is made against the liquidation of an entry of men's
wearing apparel at the invoiced price which includes a six
percent buying commission. On November 2, 1990 the protestant
entered men's wearing apparel. The entry documents include a --
--- ---------- Corp. Ltd. (hereinafter referred to as "WEC")
invoice for men's zipper pullover jackets. The invoice total is
$45,570.00, and includes a separately itemized commission of
$2,278.50. The protestant requests that the entry be
reliquidated based on the invoice price exclusive of the
commission. Submitted with the protest is a copy of a buying
agency agreement dated December 1990 between protestant and WEC.
The agreement sets forth the obligations of each party, including
the protestants compensation of WEC at the rate of six percent of
the FOB price of the merchandise ordered and shipped according to
the agreement. It is the protestant's position that WEC is a
bona fide buying agent. No other documents have been submitted
on behalf of the protestant.
ISSUE:
Whether the relationship between protestant and WEC meet the
criteria of a bona fide buying agency relationship.
LAW AND ANALYSIS:
The preferred method of appraisement is transaction value
which is defined by 402(b)(1) of the Tariff Act of 1930, as
amended by the Trade Agreements Act of 1979 (TAA, 19 U.S.C.
1401a(b)) as "the price actually paid or payable for the
merchandise when sold for exportation to the United States..."
plus certain additions specified in 402(b)(1) (A) through (E).
The term "price actually paid or payable" is defined in TAA
402(b)(4)(A) as:
...the total payment (whether direct or indirect...)
made, or to be made, for imported merchandise by the
buyer to, or for the benefit of, the seller.
For the purpose of this ruling, we are assuming that transaction
value is the appropriate basis of appraisement. It is clear from
the statutory language that in order to establish transaction
value one must know the identity of the seller and the amount
actually paid or payable to him.
In a general notice published in the Customs Bulletin on
March 15, 1989, Customs provided an explanation of its position
on buying commissions:
While bona fide buying commissions are nondutiable,
evidence must be submitted to Customs which clearly
establishes that fact. In this regard, Headquarters
Ruling Letter 542141, dated September 29, 1980, also
cited as TAA No. 7, provided: ...an invoice or other
documentation from the actual foreign seller to the
agent would be required to establish that the agent is
not a seller and to determine the price actually paid
or payable to the seller. Furthermore, the totality of
the evidence must demonstrate that the purported agent
is in fact a bona fide buying agent and not a selling
agent or an independent seller.
In this case the protestant has not provided Customs with an
invoice or other documentation from a party that it claims is the
seller of the imported merchandise. Customs has only been
provided with an invoice from the purported agent and that is
insufficient to establish that WEC is not a seller. The only
price that Customs has upon which to base appraisement under
transaction value is the total invoice price on the WEC invoice.
While buying commissions cannot be added to the price actually
paid or payable, neither may they be deducted. See TAA #7. In
this case, the price actually paid or payable includes the
payment to WEC for the alleged commission, and Customs has no
authority to deduct the purported commission from the price.
Generally additional factors are considered in determining
the existence of a bona fide buying agency, however in this case
we do not reach those factors as we have only been provided the
one invoice from the purported buying agent.
HOLDING:
Consistent with the foregoing, we are not satisfied that the
protestant and WEC meet the criteria of a bona fide buying
agency, and that WEC is not the seller of the imported
merchandise, therefore the "commission" is included in the price
actually paid or payable for the imported merchandise.
Consistent with the decision set forth above, you are hereby
directed to deny the subject protest. A copy of this decision
should be attached to the Customs Form 19 mailed to the
protestant as part of the notice of action on the protest.
Sincerely,
John Durant, Director
Commercial Rulings Division
Cc: Regional Commissioner of Customs
c/o Protest and Control Section
6 World Trade center, Rm. 761