Transaction value; Additional fees/charges incurred by the vendor for services

HQ H303913 February 4, 2020 OT:RR:CTF:VS H303913 AP CATEGORY: Valuation Sherry Sampson Import Coordinator Bluestem Brands, Inc. 220 Hickory Street Warren, PA 16366 RE: Transaction value; Additional fees/charges incurred by the vendor for services Dear Ms. Sampson: This is in reply to your letter, dated May 2, 2019, requesting a ruling on behalf of Bluestem Brands, Inc. (“Bluestem”), on whether document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees incurred by the vendor for services should be included in the transaction value of the imported merchandise. FACTS: Bluestem, headquartered in Minneapolis, is a parent company to seven e-commerce retail brands. The company imports furniture from China. The Port of loading is Yantian, China and the place of delivery is St. Cloud, Minnesota. The transport is via ocean carrier and the terms of the sale on the purchase orders are “FOB: CN, GD, Yantian.” Bluestem’s On-Time Shipping Guidelines dated July 3, 2018, state, in part: … In order to be considered On-Time, a shipment must meet the CUT-OFF date as communicated by Global Transport … Upon your booking request, Global Transport will communicate a CUT-OFF date which will be within a window of 2 – 12 days prior to the “PO Req. Ship Date” and/or “ETD Origin Date”. Below are the operating guidelines: • FCL - To avoid delays, vendors should be prepared to deliver containers to the carrier’s terminal between 2 – 12 days prior to the “PO Req. Ship Date” and/or “ETD Origin Date” in accordance with the required cut-off date as communicated by Global Transport. • CFS - To avoid delays, vendors should be prepared to deliver the finished goods to the consolidator between 2 – 12 days prior to the “PO Req. Ship Date” and/or “ETD Origin Date” in accordance with the required cut-off date as communicated by Global Transport. Failure to meet the CUT-OFF date will result in a Late Shipment penalty …. The purchase orders are issued FOB and all costs until the goods are on board the vessel are included in the price actually paid or payable for the merchandise. You state that the shipper has kept the containers longer (for two, six, or seven days) than the allotted time to return for loading hoping to ship earlier. Each purchase order still met the date in which the purchase order must ship or would be considered late. The purchase orders were not late in shipping and no late penalty was received, but the delays in returning the loaded containers back to the Port for the originally intended vessel resulted in document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees. You explain that when the vendor incurs these additional costs, there is no change to the merchandise cost on the company’s purchase orders and the charges are paid by the vendor. The invoices from the freight forwarder to the vendor list the document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees. You have supplied purchase orders, commercial invoices and packing lists, and bills of lading. ISSUE: Whether the document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees incurred by the vendor may be considered 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. See id. 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). Transportation and insurance costs pertaining to the international movement of merchandise from the country of exportation, to the extent included in the price actually paid or payable, are to be excluded from the total payment made for imported merchandise appraised under transaction value. These costs are not the estimated costs, but the actual costs paid to the freight forwarder or transport company. See Treasury Decision (“T.D.”) 00-20. U.S. Customs and Border Protection (“CBP”) has previously determined that loading charges and terminal handling charges (HQ 547146, dated May 14, 1999) and fees typically assessed by freight forwarder (HQ 547074, dated Sept. 17, 1999) that are part of the total price actually paid or payable are excluded from it as costs incident to the international shipment of the merchandise. You confirmed that all purchase orders were issued FOB and all costs until the goods were on board the vessel were included in the price actually paid or payable for the merchandise. However, unlike in HQ 547146 and HQ 547074, the document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees incurred by the vendor were not included in the price actually paid or payable for the merchandise. When the vendor incurred the additional costs, there was no change to the merchandise cost on the company’s purchase orders. Since the document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees are not included in the price actually paid or payable, they may not be excluded as costs incident to the international shipment of the merchandise. HOLDING: Based on the information presented, the document amendment charges, detention charges, switched bill of lading fees, and change of vessel fees are not included in the price actually paid or payable for the merchandise and may not be excluded as costs incident to the international shipment of the 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 Customs Service 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.” A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation & Special Programs Branch