Application for Further Review of Protest No. 460125138797; Jade Apparel; “First Sale” Appraisement; Multi-Tiered Transaction

H354209 May 5, 2026 OT:RR:CTF:VS HQ H354209 AMW CATEGORY: Valuation Center Director Apparel, Footwear and Textile CEE U.S. Customs and Border Protection 1100 Raymond Blvd Newark, NJ 07102 Attn: Goachim Mele, Import Specialist RE: Application for Further Review of Protest No. 460125138797; Jade Apparel; “First Sale” Appraisement; Multi-Tiered Transaction Dear Center Director, This is in reference to the Application for Further Review (“AFR”) of Protest No. 460125138797, timely filed on September 2, 2025, on behalf of Jade Apparel Ltd. (“Jade” or “the Protestant”), concerning the appraisement of certain imported men’s blue jeans. FACTS: The protest at issue involves one entry of 1,973 pairs of men’s blue jeans from Vietnam, which were rate advanced using the transaction value paid by the ultimate U.S. purchaser. Jade is a U.S. company specializing in apparel sourcing and design.1 In the present matter, Jade is the importer of record of the subject blue jeans, which were purchased and sold for retail by State and Liberty Clothing Company (“State and Liberty”). Jade purchased the imported jeans from Invest Wisdom Co., Ltd (“Invest Wisdom”), a foreign intermediary based in Hong Kong, China. Invest Wisdom, in turn, purchased the subject jeans from the manufacturer, Cheng Rui (Vietnam) International (“Cheng Rui”). After entry, U.S. Customs and Border Protection (“CBP”) reappraised the merchandise based on the purchase price paid by State and Liberty. Jade has protested CBP’s reappraisal, arguing that the customs valuation should be based on the purchase price paid by Invest Wisdom to Cheng Rui or, in the alternative, the price paid by Jade to Invest Wisdom. Jade also asserts that all the parties to the transaction are unrelated. 1 See Jade Apparel Ltd., “About Us,” available at https://www.jadeapparelltd.net/about-jade (accessed April 6, 2026). 2 As provided in the Protest and the underlying documents, the subject transaction was initiated on March 7, 2024, when State and Liberty issued purchase order no. ED 2169. The purchase order is for 6,000 pairs of men’s denim jeans and bears State and Liberty’s name and lists the company as the “ship to” party but does not specify which party it is addressed to. The purchase order, further, provides for Landed Duty Paid (“LDP”) shipping terms. On June 3, 2024, Invest Wisdom issued a purchase order for 6,000 pairs of men’s jeans to Cheng Rui, a clothing manufacturer based in Vietnam, and provides free on board (“FOB”) shipping terms. This document references State and Liberty’s purchase order number and lists the destination as the United States and the “ship to” location as Ann Arbor, Michigan, which is where State and Liberty is located. On October 7, 2024, Cheng Rui issued invoice no 24GYCR-1007SL-SEA to Invest Wisdom for 1,973 pairs of men’s jeans. The invoice references purchase order ED 2169, and represents a partial fulfilment of State and Liberty’s initial order for 6,000 jeans. The invoice lists State and Liberty as the “ship to” party and Invest Wisdom as the consignee. Also, on October 7, 2024, Invest Wisdom issued an invoice to Jade. This invoice is in the same format as that issued by Cheng Rui to Invest Wisdom, has the same invoice number (24GYCR-1007SL-SEA), and again lists State and Liberty as the “ship to” party. On October 10, 2024, Jade issued an invoice (no. 6915) to State and Liberty for the same 1,973 pairs of jeans; the document references purchase order ED 2169 and lists LDP shipping terms. The available documentation indicates the subject jeans were exported from Vietnam on or around October 14, 2024. A bill of lading issued on October 14, 2024, lists Cheng Rui as the shipper and Jade Apparel as the consignee; the document specifically relates to the ocean shipment of the merchandise between Vung Tau, Vietnam and New York, New York, United States, which is listed as the place of delivery. Subsequently, Jade’s customs broker entered the merchandise on December 6, 2024. Jade has also provided documentation that it purports to substantiate payment between the parties, including a screenshot of a banking website showing a transaction between Invest Wisdom and Cheng Rui dated September 27, 2024; an undated screenshot showing a transfer of funds from Jade to Invest Wisdom; and a final screenshot from an unspecified source purporting to show a payment from State and Liberty to Jade on December 12, 2024. On December 20, 2024, CBP’s Apparel, Footwear and Textile Center for Excellence and Expertise (“CEE”) sent a CF-28 Request for Information to Jade regarding the subject transaction. In so doing, the CEE asked Jade to provide, in relevant part, the following: a description of the relationship and roles of all parties involved in the transaction; original purchase orders and contracts between all parties; cost breakdowns for the underlying garments; resale invoices and contracts between all buyers and sellers; a master bill of lading for the shipment; and proof of all payment transactions relating to the shipment. Following Jade’s response, on February 11, 2025, CBP issued a CF-29 Notice of Action to Jade that it had appraised the customs valuation of the subject jeans based on the transaction value as reflected in the LDP price paid by State and Liberty. All told, Jade has provided the following documentation related to the subject entry (either as part of its CF-28 response to the CEE or in its subsequent protest submission): 3 • CBP CF-29 Notice of Action dated February 11, 2025; • CBP Entry Summary dated December 6, 2024; • State and Liberty Purchase Order ED2169 to an unspecified party, dated March 7, 2024, for 6,000 pairs of denim jeans at a cost of $165,600 LDP; • Invest Wisdom Purchase Order issued to Cheng Rui, dated June 3, 2024, for 6,000 pairs of men’s blue jeans at a cost of $95,700 FOB Ho Chi Minh City; • Invoice No 24GYCR-1007SL-SEA issued by Cheng Rui to Invest Wisdom, dated October 7, 2024, for 1,973 pairs of blue jeans at a cost of $31,469.35 FOB Ho Chi Minh City; • Screenshot from Standard Chartered Bank, dated September 27, 2024, indicating transfer of funds from Invest Wisdom to Cheng Rui in the amount of $289,715.04; • Invoice issued by Invest Wisdom to Jade, dated October 7, 2024, for 1,973 pairs of jeans at a total cost of $33,047.75 FOB Ho Chi Minh City; • Undated screenshot from unspecified bank purporting to show transfer of funds from Jade to Invest Wisdom in the amount of $413,522.00; • Invoice issued by Jade to State and Liberty, dated October 10, 2024, for 1,973 pairs of jeans at a total cost of $54,738.85 LDP; • Screenshot from unspecified bank, dated December 12, 2024, purporting to show transfer of funds from State and Liberty to Jade in the amount of $54,738.58; • Bill of lading dated October 14, 2024, showing the shipper as Cheng Rui and Jade as the consignee and notify party; • Invoice, dated December 13, 2024, issued by Jade’s customs broker for fees related to the shipment and payment of duties of the subject jeans; • An undated contract between Cheng Rui, Invest Wisdom, and Jade relating to “Title, Risk of Loss and Local Inland Freight;” • Packing list created by Cheng Rui and dated October 7, 2024. The document lists State and Liberty as the recipient of the shipment; • “ISF Information Sheet,” dated October 14, 2024, prepared by the freight handling agent and listing Cheng Rui as the manufacturer and shipper, Jade as the buyer, and State and Liberty as the ship to party. Based on the above, Jade asserts that CBP erred in assessing the customs valuation on the transaction price paid by State and Liberty. In so doing, Jade asserts that the transaction value appraisement should be based on the purchase between Invest Wisdom and Cheng Rui or, in the alternative, between itself and Invest Wisdom, both of which, Jade argues, represent a bona fide sale for export to the United States. ISSUE: Whether the transaction at issue may be appraised using the transaction value between the foreign manufacturer and the foreign intermediary as a bona fide sale for export to the United States. 4 LAW AND ANALYSIS: Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(1) as a decision on the value of merchandise. The protest was timely filed, within 180 days of liquidation. See 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 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. 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 primary 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). When transaction value cannot be applied, the appraised value is determined based on the other valuation methods in the order specified in 19 U.S.C. § 1401a(a). In Nissho Iwai American Corp. v. United States, 16 C.I.T. 86, 786 F. Supp. 1002, reversed in part, 982 F. 2d 505 (Fed. Cir. 1992), and Synergy Sport International, Ltd. v. United States, Slip Op. 93-5 (CIT Jan 12, 1993), the Court of Appeals for the Federal Circuit and the Court of International Trade, respectively, reviewed the standard for determining transaction value when there is more than one sale which may be considered as being for exportation to the United States. Both cases involved a foreign manufacturer, a middleman, and a U.S. purchaser. In each case, the court held that the price paid by the middleman/importer to the manufacturer was the proper basis for transaction value. Each court further stated that for a transaction to be viable under the valuation statute, it must be a sale negotiated at arm’s length, free from any nonmarket influences, and involving goods clearly destined for the United States. In accordance with Nissho Iwai and Synergy as well as prior CBP rulings, we presume that transaction value is based on the price paid by the importer. However, it will be the importer’s responsibility to show that the “first sale” price is acceptable under the standard set forth in Nissho Iwai and Synergy. That is, the importer must present sufficient evidence that the alleged sale was a bona fide “arm’s length sale,” and that it was “a sale for export to the United States,” within the meaning of 19 U.S.C. § 1401a. 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 title 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. See HQ 548239, dated June 5, 2003. CBP will consider such factors as to whether the purported buyer assumed the risk of loss for, and acquired title to, the imported merchandise. Evidence to establish that consideration has passed includes payment by check, bank transfer, or payment by any other 5 commercially acceptable means. Payment must be made for the imported merchandise at issue; a general transfer of money from one corporate entity to another, which cannot be linked to a specific import transaction, does not demonstrate passage of consideration. See HQ 545705, dated January 27, 1995. In addition, CBP may examine whether the purported buyer paid for the goods, and whether, in general, the roles of the parties and the circumstances of the transaction indicate that the parties are functioning as buyer and seller. See HQ 547197, dated August 22, 2000; and HQ 546602, dated January 29, 1997. In Treasury Decision (T.D.) 96-87, dated January 2, 1997, Customs advised that the importer must provide a description of the roles of the parties involved and must supply relevant documentation addressing each transaction that was involved in the exportation of the merchandise to the United States. The documents may include, but are not limited to purchase orders, invoices, proof of payment, contracts, and any additional documents (e.g., correspondence) that establishes how the parties deal with one another. The objective is to provide CBP with “a complete paper trail of the imported merchandise showing the structure of the entire transaction.” T.D. 96-87 further provides that the importer must also inform CBP of any statutory additions and their amounts. If unable to do so, the sale between the middleman and the manufacturer cannot form the basis of transaction value. In the present matter, Jade has not presented CBP with a complete paper trail to substantiate each level of the transaction, nor has it demonstrated that a bona fide sale occurred at either of the transaction levels at which it seeks to base appraisal. To begin with, Jade has failed to provide purchase orders and invoices related to each step of the transaction. The document that is claimed to be State and Liberty’s purchase order to Jade contains no vendor or supplier information whatsoever; it makes no reference to Jade, Invest Wisdom, or Cheng Rui. Next, Jade has provided no corresponding purchase order between itself and Invest Wisdom. Jade claims that no such purchase order exists because, “as is Jade’s long term business practice with Invest Wisdom, Jade…forwarded State [and] Liberty’s purchase order to Invest Wisdom, who in turn, place[d] its own purchase order to the factory….” Nevertheless, Jade provided no supporting communications or other documentation to establish the existence of this practice. Furthermore, CBP notes that many of the documents ostensibly issued by unrelated parties bear the same formatting and/or document numbers. The unaddressed purchase order issued by State and Liberty and the invoice issued by Jade to State and Liberty, for instance, are in the exact same format. Similarly, the commercial invoices issued by Invest Wisdom to Jade and by Cheng Rui to Invest Wisdom are in the same format and bear the same invoice number. These similarities raise additional questions about when and by whom these documents were prepared. Next, Jade has not provided clear evidence regarding whether and how consideration passed between the parties. In relevant part, the payment documentation provided is not uniform nor is it clearly connected to the underlying transaction. The documentation related to the payment by Jade to Invest Wisdom, for instance, is comprised of an undated screenshot from an unspecified bank in an amount not matching that represented on the invoice between the parties. Jade provided alongside this screenshot a self-prepared breakdown of the transfer 6 which purports to show the amount associated with the subject entry alongside the other costs associated with the transfer; however, no information is provided to contextualize the document nor explain where it was prepared. In addition, the bank transfer screenshot associated with the payment by State and Liberty to Jade similarly lacks context to which bank or financial institution is associated with the transaction. Finally, Jade has failed to provide additional evidence regarding when and how title and risk of loss might have passed between the parties. Significantly, Jade did not provide any documentation in response to the CEE’s request regarding which parties insured the merchandise during transit. Instead, the Protestant asserted that none of the parties to the transaction insured the merchandise during transit to the United States. Further, in support of its contention that title and risk of loss passed between Cheng Rui and Invest Wisdom, Jade provided CBP a “Title, Risk of Loss and Local Inland Freight Agreement” between Cheng Rui, Invest Wisdom, and Jade. However, this agreement is undated, and it is not clear whether the agreement was in force during the underlying transaction. Based on the foregoing, we find that Jade has failed to submit evidence of a complete paper trail showing the structure of the entire transaction, including the roles of the parties, evidence of the passage of consideration, title, or risk of loss between the parties. We therefore agree with the CEE that insufficient evidence has been presented to support valuation based upon a sale between either Jade and Invest Wisdom or Invest Wisdom and Cheng Rui. HOLDING This protest should be DENIED. Specifically, we determine that appraisement of the merchandise should be based upon the price paid by State and Liberty. Protest No. 460125138797 is referred back to your Center for appropriate action. 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 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 Trade and Facilitation