OT:RR:CTF:VS H322091 RMC
Center Director
Apparel, Footwear and Textiles CEE
U.S. Customs and Border Protection
555 Battery Street, Room 401
San Francisco, CA 94111
Attn.: Grace Carmichael, CBP Senior Import Specialist
RE: Application for Further Review of Protest No. 2704-21-156119; Valuation; Pajamas; Jackets
Dear Center Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 2704-21-
156119, filed on behalf of i5 Inc. (“importer” and “buyer”), concerning the valuation of imported
pajamas and jackets.
FACTS:
On October 10, 2020, the importer/buyer entered 636 dozen pajamas under subheading
6107.21.00, Harmonized Tariff Schedule of the United States, and 788 dozen jackets under
subheading 6201.93.60, HTSUS, at the Port of Los Angeles/Long Beach. According to the invoice
provided with the entry documentation, the merchandise was purchased from Xiao Xian Longyuan
Garment Co., Ltd., located in Xinzhuang, China, at prices of $19.90 per dozen and $51.00 per
dozen, respectively.
The purchase order for the pajamas was issued on March 17, 2020. It lists 7,200 pieces of
Style MFPJ53 “MENS FLANNEL PJ BOTTOM” with a total price of $11,880. The purchase
order for the ladies’ jackets was issued on the same date. It lists 3,300 pieces of Style L904
“LADIES HOODED BUBBLE W/GO” with a total price of $14,025. The purchase order
includes instructions to ship the merchandise to the buyer in Los Angeles.
1
A September 27, 2020 commercial invoice that allegedly ties to the above entry lists the port
of loading as Shanghai, China; the final destination as Los Angeles, California; and totals of 7,627
units of Style MFPJ53 (for a total of $12,584.55) and 1,834 units of Style L904 (for a total of
$7,794.50). A corresponding packing list, also dated September 27, 2020, contains the same
information on styles and quantities.
A bank wire transfer statement from the buyer to Xiao Xian Longyuan is dated January 8,
2021, in the amount of $20,000. The wire transfer contains no reference to an invoice.
U.S. Customs and Border Protection (“CBP”) issued a CBP Form 28 (Request for
Information) related to the entry on November 19, 2020, seeking information on the customs value
of the imported merchandise. On December 16, 2020, the importer requested an extension.
Although CBP agreed to extend the deadline for the importer’s response until January 8, 2021, the
importer never provided the information requested in the CBP Form 28.
CBP issued a Form 29 (Notice of Action – Proposed) on January 13, 2021 and a Form 29
(Notice of Action – Taken) on February 4, 2021, in which the importer was informed the entry had
been value advanced. CBP determined the value in accordance with the 2020 aggregate value of
goods of the same class or kind from China.
On February 19, 2021, the importer contacted CBP to ask how the final determination had
been made and to inform CBP that a “clerical error” had been made with respect to the quantity of
ladies jackets reported on the entry. According to the importer, the broker mistakenly listed 788
dozen units, instead of 153 dozen. Following this conversation, the importer timely protested,
challenging CBP’s rejection of the declared transaction values and seeking a correction to the
quantity listed on the entry documents.
On July 14, 2021, CBP issued Informed Compliance Notices notifying the importer and its
customs broker that the submitted invoice failed to provide a detailed description of the
merchandise, the country of origin, and the entity performing the origin-conferring operations as
required under 19 C.F.R. §§ 141.86(3) and (10) and 19 C.F.R. § 102.23(a), and that filing of
inaccurate information was a material false statement or omission, which could result in 19 U.S.C. §§
1641 and 1592 penalties.
ISSUES:
I. Whether transaction value is the proper method of appraisement in the import transactions
in question.
II. Whether the documentary evidence is sufficient to support a determination that the importer
overpaid duties as a result of a clerical error in reporting the quantity on the entry.
2
LAW AND ANALYSIS:
CBP’s valuation determination is protestable under 19 U.S.C. § 1514(a)(1). Regarding the
second issue presented and the importer’s claim that a clerical error occurred in reporting the
quantity on the entry, which affected the amount of duties chargeable, we noted in Headquarters
Ruling (“HQ”) H286298, dated October 13, 2017, “[t]he Miscellaneous Trade and Technical
Corrections Act of 2004 repealed 19 U.S.C. § 1520(c) and amended 19 U.S.C. § 1514(a) to include
‘any clerical error, mistake of fact, or other inadvertence’ that occurs in an ‘entry, liquidation, or
reliquidation’ as protestable events. See Pub. L. 108-429, Title II, § 2015, Dec. 3, 2004, 118 Stat.
2598.” Accordingly, the second issue presented is protestable as well. The protest was timely filed
within 180 days of liquidation for the entry. See 19 U.S.C. § 1514(c)(3). Further review of this
protest is properly accorded to the importer pursuant to 19 C.F.R. § 174.24(b) because the issues
protested involve questions of law or fact, which have not been ruled upon.
I. Method of Appraisement
Merchandise imported into the United States is appraised for customs purposes 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. See 19 U.S.C. § 1401a(b)(1).
19 U.S.C. § 1401a(b)(2) states, in relevant part:
(A) The transaction value of imported merchandise determined under paragraph (1) shall be
the appraised value of that merchandise for the purposes of this chapter only if –
(i) there are no restrictions on the disposition or use of the imported merchandise by
the buyer other than restrictions that –
(I) are imposed or required by law.
(II) limit the geographical area in which the merchandise may be resold, or
(III) do not substantially affect the value of the merchandise;
(ii) the sale of, or the price actually paid or payable for, the imported merchandise is not
subject to any condition or consideration for which a value cannot be determined with
respect to the imported merchandise;
(iii) no part of the proceeds of any subsequent resale, disposal, or use of the imported
merchandise by the buyer will accrue directly or indirectly to the seller, unless an appropriate
adjustment therefor can be made under paragraph (1)(E); and
3
(iv) the buyer and seller are not related, or the buyer and seller are related but the
transaction value is acceptable, for purposes of this subsection, under subparagraph (B).
Here, counsel for the importer argues that CBP erred in departing from the declared
transaction value because none of the four circumstances in 19 U.S.C. § 1401a(b)(2) exist.
Regarding the difference between the amount of the wire transfer ($20,000) and the invoice amount,
counsel states that “the paid amount was slightly lower than the commercial invoice amount because
of quality issues with certain items.” However, no evidence of communications with the seller about
alleged quality issues was provided.
In HQ H322092, dated August 17, 2022, CBP held that transaction value did not apply to
i5’s importations of apparel and that the Apparel, Footwear and Textiles Center of Excellence and
Expertise (“Center”) properly appraised the merchandise based on the aggregate value of similar
merchandise under the fallback method. In that case, we noted that the buyer’s payment could not
be linked to the imported merchandise. Therefore, the Center was unable to obtain sufficient proof
of payment from the importer. That is also the case here, as the wire transfer contains no reference
to an invoice, and the amount does not match the invoice provided at entry. Moreover, we
emphasized that no information was available about a potential relationship between the buyer and
the seller, which could also affect the applicability of the transaction value method. This case also
lacks such information. Finally, as lack of sufficient information regarding the price actually paid or
payable renders “the transaction value of the imported merchandise . . . as one that cannot be
determined,” 19 U.S.C. § 1401a(b)(1), transaction value is likewise inapplicable in this case.
When imported merchandise cannot be appraised on the basis of transaction value, it is
appraised in accordance with the remaining methods of valuation, applied in hierarchical order. See
19 U.S.C. § 1401a(a)(1). As in H322092, the transaction value of identical merchandise method (19
U.S.C. § 1401a(b)) and the transaction value of similar merchandise method (19 U.S.C. § 1401a(c))
do not apply because the Center was unable to ensure that other entries in the same subheading and
from the same country of origin were of the same component materials and characteristics as, or
were commercially interchangeable with, the goods being appraised. The deductive value method
(19 U.S.C. § 1401a(d)) and computed value methods (19 U.S.C. § 1401a(e)) are likewise inapplicable
because no information was provided to establish the various elements of those methods.
When the value of imported merchandise cannot be determined under the methods set 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 under 19 U.S.C. § 1401a(f). Certain limitations exist under this method.
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 U.S.,
minimum values, or arbitrary or fictitious values.
In H322092, i5’s merchandise was ultimately appraised under the same method used by the
Center here—namely, the 2020 aggregate value of similar merchandise classified in the same
subheading and imported from the same country at or about the same time as the merchandise
4
being appraised—under the fallback method. We noted that the methodology used by the Center
constituted reasonable adjustments, pursuant to 19 U.S.C. § 1401a(f), of the transaction values of
similar merchandise as provided for under 19 U.S.C. § 1401a(c), which was consistent with CBP’s
authority under 19 U.S.C. §§ 1401a(f) and 1500. For the same reasons, we hold that the Center
correctly used the same method to appraise the merchandise in the transaction at the issue in this
protest under the fallback method.
Finally, counsel observes that the CBP Form 29 (Action Taken) “incorrectly descib[es] the
ladies’ jackets as men’s jackets” and suggests that the Center’s calculations were erroneously based
on men’s jackets, rather than ladies’ jackets. However, any error in this regard is properly attributed
to the importer, which entered the goods under a subheading that provided for “men’s or boys’
anoraks, windcheater, wind jackets, and similar articles . . . ,” and subsequently failed to provide a
sample of the merchandise, as requested by the Center, or to protest the tariff classification of the
merchandise.
II. Clerical Error on Entered Quantity
When the documentation provided establishes that an error occurred in reporting the
quantity and value of imported merchandise, CBP has granted protests seeking refunds of duties in
the amount of overpayment. For example, in HQ 228951, dated January 9, 2001, the importer
protested CBP’s denial of its petition, pursuant to 19 U.S.C. § 1520(c), seeking refunds of duties on
men’s shirts and shorts imported from Honduras. The importer claimed that the manufacturer’s
employee responsible for preparing the invoice and shipping documents failed to realize that the
goods were sold as sets. As a result, the employee incorrectly doubled the quantity and value of the
merchandise on the documents, leading the broker to file erroneous entries and deposit double the
appropriate duties. The importer provided financial records showing its purchases from the
manufacturer and a letter from the manufacturer explaining the mistake. CBP concluded that
“[f]rom the facts presented, it is evidence that the error was a clerical error.” Accordingly, it
concluded that the importer’s petition was in compliance with 19 U.S.C. § 1520(c) and granted the
protest in full, with refunds of duties in the amount of overpayment.
As noted above, 19 U.S.C. § 1520(c) was repealed in 2017, at which time 19 U.S.C. § 1514(a)
was amended to include to include “any clerical error, mistake of fact, or other inadvertence” that
occurs in an “entry, liquidation, or reliquidation” as protestable events. As the claimed quantity
overreporting affected the “amount of duties chargeable,” 19 U.S.C. § 1514(a)(2), the only issue is
whether the documents provided substantiate that a “clerical error” has occurred.
Here, counsel argues that the entry erroneously listed the quantity for the ladies’ jackets as
788 dozen, instead of 153 dozen. It suggests that the broker may have mistakenly taken the number
of total cartons in the shipment and listed it as the quantity for the jackets. The documents,
however, are inconsistent as to the number of jackets purchased and imported. While the packing
list and commercial invoice both list the quantity for the jackets as 1,834 (i.e., 152.8 dozen), the
purchase order lists 3,300. Moreover, as discussed above, the wire transfer information appeared to
be a lump-sum payment that could not be linked to a specific invoice, which prevents us from
5
verifying the number of jackets that i5 actually paid for. Based on the documents provided, we find
that the importer has not substantiated its entitlement to a refund of duties based on a clerical error.
HOLDING:
Protest No. 2704-21-156119 should be DENIED. The subject merchandise was correctly
appraised by the Center under the fallback method set forth in 19 U.S.C § 1401a(f) based on the
2020 aggregate value of similar merchandise classified in the same subheading and imported from
the same country at or about the same time as the merchandise being appraised.
You are instructed to notify the importer, through counsel, of this decision no later than 60
days from the date of this decision. Any reliquidation of the entry or entries in accordance with the
decision must be accomplished prior to this notification. Sixty days from the date of the decision,
the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and
the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/, or
other methods of public distribution.
Sincerely,
for Yuliya A. Gulis, Acting Director
Commercial and Trade Facilitation Division
6