Application for Further Review of Protest 1704-10-100046; Corrected invoice

HQ H110855 December 8, 2011 CLA-2 RR:CTF:VS H110855 ASM CATEGORY: Valuation Port Director U.S. Customs and Border Protection 4341 International Parkway Suite 600 Atlanta, GA 30354 RE: Application for Further Review of Protest 1704-10-100046; Corrected invoice Dear Port Director: This is in reply to the Application for Further Review of Protest (AFR) 1704-10-100046, which was timely filed on behalf of the Protestant. The Protest and AFR concerns the liquidation of one entry of Carboxymethyl Cellulose at the entered value. The protest was timely filed against your decision to liquidate the entries based on the original entered value presented in the first invoice and to reject the subsequent adjustment to the value which was reflected in a second invoice submitted after entry of the merchandise. FACTS: The Customs Form 7501 indicates that 19224 kilograms (gross weight) of Carboxymethyl Cellulose was imported on May 18, 2008, and that the Protestant entered the merchandise on May 20, 2008. The entry references an air waybill which indicates that the goods were sent via air on May 17, 2008 from the Netherlands and which references Protestant’s order number 41371580. At the time of entry, the Protestant declared the value of the merchandise to be $178,812 based upon intercompany Invoice No. 90932716, dated May 13, 2008, provided by the foreign supplier of the merchandise to its U.S. affiliate as the buyer and the protestant as the recipient. The intercompany invoice references Order No. 721354 dated April 9, 2008, and Customer Purchase Order 41371580 dated February 5, 2008 with a shipping date of May 13, 2008, on the Sealand Pride. However, after the entry was filed, the foreign supplier issued the Protestant an alleged “corrected” Invoice No. 90935042, dated May 30, 2008, for merchandise identified under Order No. 723726, having a declared value of $132,400.86. The “corrected” invoice indicates, “This order is to correct the correct set of books and replaces order 721354”. However, the referenced Customer Purchase Order is 41371580 dated May 14, 2008. The shipping date on the “corrected” invoice is June 2, 2008, but it also references a loading date of May 16, 2008, and it also indicates shipment on the Sealand Pride. A screen print of the Protestant’s accounts payable is also provided indicating a payment in the amount of $132,400.86 to the U.S. affiliate. The screen print references 90932715 (not 90932716). A Purchase Order Number 41371580 dated February 5, 2008, from the Protestant to the U.S. affiliate of the foreign supplier is also provided for an order of 48,502 pounds at the price of $3,310 per 1000 pounds. The information presented also includes a Delivery note from the foreign supplier to the Protestant for 18,144 kilograms of carboxymethyl cellulose with a delivery date of April 23, 1008 and which references Customer Purchase Order 41371580 dated February 5, 2008. On January 27, 2010, a Notice of Action was issued notifying Protestant that the merchandise had been rate advanced and there would be an increase in duties as the goods were subject to an antidumping order. The merchandise was liquidated on February 12, 2010, based on the higher value as set forth in the first commercial Invoice No. 90932716, dated May 13, 2008. The instant Protest and AFR was received by Customs and Border Protection (CBP) on March 4, 2010. Protestant claims that the first Invoice (original invoice) contained an erroneous value and that the correct value of the merchandise was $132,400.86, as established by the corrected invoice (second invoice) later issued by the foreign supplier and by Protestant’s actual payment of this corrected amount to the supplier. Finally, Protestant claims that duties, including antidumping duties and merchandise processing fees, should be assessed on the corrected entered value of $132,400.86. ISSUE:       Whether the value of the subject merchandise is $178,812 as set forth in the original invoice or $132,400.86 as set forth in a second invoice submitted after entry of the merchandise. LAW AND ANALYSIS:       Initially, we note that the matter is protested under 19 U.S.C. §1514(a)(2) The protest was timely filed within 180 days of liquidation of entry for entries made on or after November 19, 2009. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 2704-10-100339 was properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because Protestant alleges that the protest involves questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs Courts. In addition, consistent with 19 C.F.R. § 174.25(b)(2), Protestant asserts that it has not previously received an adverse administrative decision from the Commissioner of Customs or his designee, nor has it presently pending an application for an administrative decision on the same claim with respect to the same category of merchandise. As required by 19 C.F.R. § 174.13(a)(9), Protestant declares that this entry is not the subject of drawback, nor has it been referenced on a certificate of delivery or certificate of manufacture and delivery so as to enable a party to make such entry the subject of drawback. 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 merchandise when sold for exportation to the United States," plus five statutorily enumerated additions. 19 U.S.C. § 1401a(b)(1). In order for transaction value to be applicable for appraisement purposes, there must be a bona fide sale of merchandise for export to the United States. In order to determine if the merchandise at issue is “sold” at the time of exportation to the U.S., we must examine whether the elements of a sale have occurred. In VWP of America, Inc. v. United States, 175 F.3d 1327 (Fed. Cir. 1999), the Court of Appeals for the Federal Circuit found that the term “sold” for purposes of 19 U.S.C. § 1401a(b)(1) means a transfer of property from one party to another for consideration, citing J.L. Wood v. United States, 62 C.C.P.A. 25, 33, C.A.D. 1139, 505 F.2d 1400, 1406 (1974). No single factor is decisive in determining whether a bona fide sale has occurred. CBP makes each determination on a case-by-case basis and will consider such factors as whether the purported buyer assumed the risk of loss and acquired title to the imported merchandise. An additional factor to consider is whether a price has been agreed upon between the parties and when payment for the goods will be made, if not already paid. Although the methodology for arriving at the price is not of concern, i.e., “it may be the result of discounts, increases, or negotiations, or may be arrived at by the application of a formula,” an agreed upon price is an element of a bona fide sale. 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. According to Protestant, the foreign supplier explained that the intercompany invoice erroneously reflected an intercompany sale to the supplier’s U.S. affiliate, rather than the actual direct sale to the Protestant. Protestant asserts that this supports their position due to the fact that the intercompany invoice incorrectly identifies the buyer as the U.S. affiliate whereas the “corrected” invoice accurately identifies the buyer as Protestant. Protestant also asserts that the initial error in the entered value is evidenced by wire transfers indicating that it paid $132,400.86 (the amount shown on the “corrected” invoice) to the U.S. affiliate on June 27, 2008. We do not agree that the intercompany invoice should be replaced by the “corrected” invoice as to the value of the merchandise. Initially we note that the various documents presented contain contradictory information. First, we note that while the intercompany invoice does list the buyer as the U.S. affiliate, the merchandise was, in fact, designated for shipment to the Protestant in the U.S. Second, we note the shipping date on the intercompany invoice is May 13, 2008, which is consistent with the entry date of this merchandise on May 20, 2008. Although the intercompany invoice indicates shipment on the Sealand Pride, whereas an air waybill was presented, the dates on the intercompany invoice still better correspond to the entry date. The “corrected” invoice has a later shipping date of June 2, 2008, making the shipping date of the merchandise later than the date the merchandise was entered. Furthermore, the “corrected” invoice contains problematic information in that it indicates the merchandise was loaded at the foreign port on May 16, 2008, but it did not ship until June 2, almost three weeks later. Third, the purchase order is between the Protestant and the U.S. affiliate so an intercompany invoice from the foreign supplier to the U.S. affiliate as the buyer would be expected. No invoice from the U.S. affiliate to the Protestant was provided. The purchase order from the Protestant is for 48,502 pounds (which equals 22,046 kilograms). The intercompany invoice and the “corrected” invoices both indicate delivery of 18,144 kilograms. Therefore, the quantity listed on both invoices do not help resolve which invoice is valid for the entry at issue, but it does not support using the “corrected” invoice. Finally, we note that the wire transfer document is for invoice 90932715. This is perhaps a typographical error, but in conjunction with the different shipping dates, quantity ordered, and the fact that the purchase order is between the Protestant and the U.S. affiliate, we do not agree that the “corrected” invoice should replace the invoice originally submitted for the goods. In view of the foregoing, we find that the subject merchandise was correctly valued by the port pursuant to the entered value of $178,812 as set forth in the original invoice and affirm your decision to liquidate the merchandise according to the entered value of this merchandise. HOLDING: You are instructed to DENY the protest. The subject merchandise is properly valued in the amount of $178,812 as set forth in the original invoice. In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (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 the decision must be accomplished prior to mailing 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