VAL OT:RR:CTF:VS H144039 EE
.
Rolando Portal
XX
XX
XX
RE: Transaction value; charges incident to the international shipment of the merchandise; foreign inland freight
Dear Mr. Portal:
This is in reply to your letter, dated January 3, 2011, in which you request a ruling on whether certain charges for services provided by forwarder A should be included in the transaction value of merchandise imported by the importer, the wholly owned subsidiary of the parent company.
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:
You state that the importer is the importer of record. Shipper X, located in China, is the seller of the imported merchandise. You claim that the importer and shipper X are not related. You state that forwarder A, a foreign freight forwarder, provides certain services to the importer including a variety of origin related services. For the purposes of this ruling request, the fees for the services provided by forwarder A include the following:
Container Yard (“CY”) administration charge or Container Freight Station (“CFS”) receiving fee;
Terminal handling charge;
Port wharfage or port construction charge;
Port security or terminal security charge;
Booking fee for cargo booking;
Documentation fee for handling of documents and/or Freight Cargo Receipt (“FCR”) charge;
Export customs clearance fee;
Inland transportation from factory to the port terminal.
You provided sample documentation which includes: a commercial invoice and a packing list from shipper X to the importer, an invoice from forwarder A to shipper X, a sea waybill from shipper X to the importer, and an invoice from the transportation company to shipper X. The commercial invoice from shipper X to the importer lists the quantity, the unit price, and the total price for the imported merchandise. The bottom section of the invoice contains what you describe as the nondutiable charges, which is the list of services and fees charged by forwarder A. You also handwrote an amount for the entered value, which is the total invoice price less the nondutiable charges. The terms of sale listed on the invoice is “FOB Dalian port of China.” The invoice from forwarder A to shipper X provides the breakdown of charges per container or bill of lading. You state that, although the services and fees listed on the sample commercial invoice from shipper X to the importer do not match those noted on the sample invoice from forwarder A to shipper X, the services and fees reflected on the actual documents relating to the described transaction will correspond to one another. The waybill from shipper X to the importer identifies the port of loading as Dalian, China and the place of delivery as Los Angeles, CA. You state that the information on the sea waybill for the actual transactions will correspond to the information on the invoices and packing lists.
You claim that the dutiable value should be based upon the shipper X invoice value less the charges assessed by forwarder A on the basis that those charges are incident to the international shipment of the merchandise.
ISSUE:
Whether certain charges for services provided 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).
U.S. Customs and Border Protection (“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 forwarder A are incident to the international shipment of the merchandise to the importer: CY administration charge or CFS receiving fee, terminal handling charge, port wharfage or port construction charge, port security or terminal security charge, booking fee for cargo booking, documentation fee for handling of documents and/or FCR charge, and export customs clearance fee. See HQ H092560, dated April 7, 2010.
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.
Forwarder A’s invoice to shipper X itemizes the various charges. As previously noted, you state that, although the various charges listed on the sample invoice from forwarder A to shipper X do not match those noted on the sample commercial invoice from shipper X to the importer, the services and fees reflected on the actual documents will correspond to one another. 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 provided documentation is presented to support the claim.
As previously noted, the invoice issued by shipper X to the importer specifies “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.
In All Channel Products v. United States, 16 CIT 169, 173, 787 F. Supp. 1457, 1460 (1992), aff'd, 982 F.2d 513 (Fed. Cir. 1992), the court interpreted 19 C.F.R. § 152.103(5)(ii) and (iii) as permitting the deduction of foreign inland freight charges in a CIF or other non-ex-factory sale as incident to international shipment of the merchandise “only in cases where the merchandise was placed with one freight forwarder or carrier for through shipment from the factory to the United States documented by a through bill of lading (or other satisfactory documentation establishing through shipment).”
The waybill submitted reflects the shipment of the merchandise from the port of Dalian to the port of Los Angeles; it does not show through shipment from the factory to the port of Los Angeles. You state that a third party carrier transports the merchandise from the factory to the port terminal and that a separate bill of lading is issued by this third party carrier. There is no evidence of through shipment from the factory to the U.S. Without such evidence, no deduction may be made for foreign inland freight charges.
HOLDING:
Based on the information presented, the following costs charged by forwarder A shall be excluded from the price actually paid or payable for the imported merchandise: CY administration charge or CFS receiving fee, terminal handling charge, port wharfage or port construction charge, port security or terminal security charge, booking fee for cargo booking, documentation fee for handling of documents and/or FCR charge, and export customs clearance fee, provided that all documentary requirements are satisfied.
The foreign inland freight charges should be included in the price actually paid or payable for the imported merchandise.
Please note that 19 C.F.R. §177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
Reference to this ruling letter should be made in the entry documents filed at the time the subject goods are entered. See CBP Form 7501 - Instructions, Additional Data Elements (available online at: www.cbp.gov). If the entry summary has been filed without reference to this ruling letter, the ruling letter should be brought to the attention of the appraising officer at the port of entry.
Sincerely,
Monika R. Brenner
Chief
Valuation & Special Programs Branch