OT:RR:CTF:VS H337458 EE
Center Director
Base Metals Center of Excellence and Expertise
U.S. Customs and Border Protection
610 S. Canal St.
Chicago, IL 60607
Attn: Terrence L. Jarriell, Import Specialist
RE: Application for Further Review of Protest No. 1303-23-104102; Transaction
Value; Formula
Dear Center Director:
This is in reference to the Application for Further Review (“AFR”) of Protest
No. 1303-23-104102, timely filed on November 21, 2023, on behalf of PerenniAL
Group Inc., formally known as Rusal America Corp., (hereinafter, the “protestant”),
concerning the valuation of certain aluminum products.
FACTS:
The protestant is an importer of aluminum products. The protestant states
that when an order is placed with the unrelated foreign seller, Rusal Marketing
GmbH (“Rusal Marketing”) 1, the ultimate price of the product is unknown. The
seller ships the goods to the protestant accompanied with a provisional invoice
setting forth the preliminary pricing to be later finalized pursuant to the formula in
effect prior to export to the United States. After importation, when the final price is
known pursuant to the formula based on the Official London Metal Exchange
Aluminum “High Grade” Cash Settlement quotation in US dollars averaged over
the quotational period 2 plus the applicable premium, the seller issues the
protestant a final invoice for the imported merchandise. The protestant claims that
since the price is determined pursuant to an objective formula agreed upon prior to
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The protestant states the parties were related until April 2022. In April 2022, there was a management
buyout of the protestant, and the company started operating under its new name, PerenniAL Group, and
under new U.S. ownership, and was no longer related to Rusal Marketing.
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The quotational period is the period starting from the first day of the month of the shipment through the last
day of the fourth month after the month of shipment.
importation, the post-importation price decreases are acceptable. The protestant
participates in U.S. Customs and Border Protection’s (“CBP”) reconciliation
program and files its reconciliation entries with this revised data. However, the
protestant states that a small number of entries were inadvertently not flagged for
reconciliation by the protestant’s customs broker due to an oversight. These
entries are the subject of the protest at issue.
The protestant provided the following documents:
-The sales contract between Rusal Marketing and the protestant, dated April 29,
2022.
-Market price and premium used for finalization of the price.
-The provisional invoice issued by Rusal Marketing to the protestant for a sample
transaction and the corresponding final invoices issued by Rusal Marketing to the
protestant reflecting the final prices.
-Payment records for payment against the provisional invoices and the credits in
the protestant’s accounting records for the difference between the provisional and
the final invoices.
ISSUE:
Whether the post-importation value decreases are acceptable.
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”) codified at 19 U.S.C. § 1401a. The preferred method of
appraisement under the TAA is transaction value, defined as “the price actually
paid or payable for the merchandise when sold for exportation to the United
States,” plus five statutorily enumerated additions. 19 U.S.C. § 1401a(b)(1).
The “price actually paid or payable” is defined as the:
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).
The price actually paid or payable is considered “without regard to its
method of derivation.” 19 C.F.R. § 152.103(a). Paragraph (a) further clarifies that
the “word ‘payable’ refers to a situation in which the price has been agreed upon,
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but actual payment has not been made at the time of importation.” Id. Therefore,
“[the price actually paid or payable] may be the result of discounts, increases, or
negotiations, or may be arrived at by the application of a formula, such as the price
in effect on the date of export in the London Commodity Market.” Id.
If the final sales price of imported merchandise is not ascertainable at the
time of importation, the phrase “price in effect on the date of export” may be
determined by application of a formula, provided that the formula is fixed at the
time of importation and depends on some future event or occurrence over which
neither the seller nor the buyer have any control. See, e.g., Headquarters Ruling
(“HQ”) H023813, dated December 1, 2008. In other words, only the methodology
must be fixed at the time of importation; the actual amount can be calculated at a
later date. See, e.g., HQ H288233, dated December 12, 2017. If, however, the
future event is subject to the control of either the seller or the buyer, then the
formula fails to establish a “price actually paid or payable” for purposes of
transaction value. See, e.g., HQ 545388, dated October 21, 1994.
For example, in HQ H023813, CBP held that the methodology described
constituted a valid formula for purposes of determining the price actually paid or
payable of aluminum products sold for exportation to the United States. In that
case, the formula was based on the average market price of aluminum on the
London Metal Exchange adjusted for a regional premium. CBP found that the
formula was based on the objective standard over which neither the seller nor the
buyer had any control.
Here, as in HQ H023813, the protestant has established a valid formula for
purposes of determining the price actually paid or payable. The sales contract
between Rusal Marketing and the protestant setting out the formula was entered
into on April 29, 2022, which is prior to the entry of the imported merchandise on
June 27, 2022. The final price that the protestant will pay depends on an objective
standard over which neither the seller nor the protestant has any control - namely
the Official London Metal Exchange. Accordingly, we find that the pricing formula
constitutes an acceptable mechanism to determine the price actually paid or
payable for the imported merchandise for purposes of the transaction value
method.
HOLDING:
Based on the information provided, the final price that the protestant pays
Rusal marketing is determined according to an acceptable formula such that it
constitutes the price actually paid or payable. The protest should be ALLOWED.
You are instructed to notify the protestant 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
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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, Director
Commercial and Trade Facilitation Division
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