Internal Advice (IA 3/91) Concerning Travelway Groupe International; Proper Price for Purposes of Transaction Value

HQ W544714 March 3, 1992 VAL CO:R:C:V W544714 VLB CATEGORY: Valuation District Director 909 First Avenue Room 2039 Seattle, WA 98174 RE: Internal Advice (IA 3/91) Concerning Travelway Groupe International; Proper Price for Purposes of Transaction Value Dear Sir: This is in response to your memorandum (APP 6- 08 SE:B:B:CO:D SG:slj) dated January 2, 1991, requesting internal advice on transactions involving Travelway Groupe International, Inc. ( hereinafter referred to as “Travelway”). FACTS: On October 3, 1990, Travelway, a Canadian corporation, filed an entry for 7,862 nylon duffle bags at Blaine, Washington. The importer did not submit a copy of a commercial invoice nor a bill of lading with the entry. However, the Entry summary and the Special Customs Invoice contained the following information: Country of Origin – China Importing Carrier – Westcoast Export Date - 7-23-90 Exporting Country - Hong Kong Seller - China National Light Industrial Products, Guangzhou, China Consignee - Oakley Company, Irvine, CA. Notify Party - Groupe International Travelway, Inc. Additional Transportation Information - Shipped to L.A. Via Westcost C/O Schenker Unit Price - $5.34 Entered Value - $41,983.08 It should also be noted that the Special Customs Invoice, which the National Import Specialist (“the NIS”) noted did not contain a number or a date, has the stamp and signature of an official from “Gem Fastival Limited” under the line for the signature of the seller/shipper (or agent). Gem Fastival Limited is located in Hong Kong. It is unclear from the file what involvement Gem Fastival Limited had in the transaction at issue. Travelway also submitted a Chinese Textile Export Licence/Commercial Invoice (“the export licence/ commercial invoice”) with the entry. The export licence/ commercial invoice which has an Export Licence stamp, indicates that the licence was issued on September 10, 1990, as well as the following information: Exporter - China National Light Industrial Products, Guangzhou, China Invoice No. - CMT-A4389 Consignee - Travelway Group Int'l Inc., InterMartime Forward Corp., Inglewood, California Place & Time of Shipment, Destination – From Guangdong China to Ingleweed California USA Via HongKong by Sea in Sep., 1990 Unit Price - USD 5.34 Amount - USD 41,983.08, F.O.B. Guangdong Date of Issuance - September 10, 1990 In response to a request for information to Oakley Co., Inc. you received two Oakley purchase orders to Travelway Group Int., dated 3-05-90 and 4-12-90 for a total of 7,862 nylon bags. The first purchase order was for 4,492 at $10.75 each. The second purchase order was for 3,370 bags at $10.30 per unit. The purchase orders indicate that the required delivery dates were 6-22-90 and 7-30-90 respectively. In addition, the purchase orders had cancellation dates of 7-31-90 and 8-17-90 respectively. In addition, Oakley provided copies of two Travelway invoices to Oakley, both dated 10/26/90. The invoices were for a total of 7,862 nylon bags at $10 .30 each. You state in your memorandum that the terms of sale between Travelway and Oakley were C&F with duty and brokerage fees included. The NIS indicates that in his conversations with personnel from Oakley he learned that the merchandise was to be delivered to the Oakley facility at Irvine, California, from Canada by truck. The file also contains a Bill of Lading from Schenker (H.K.) Ltd. that shows Gem Fastival Limited as the shipper for nylon duffle bags going from Hong Kong to California aboard the Ever Laurel in container 0031- 067E. The Bill of Lading is dated July 24, 1990. The NIS utilized the ACS and the AMS to verify the destination of container EMCU- 2153156, B/L VAN 0333131, Ever Laurel voyage 0031- 067E. As a result, the NIS had the following comments: Although the Schenker (HK) Ltd. document is identified as a Bill of Lading, it is not the actual Bill issued by the carrier, Evergreen Line. The ACS system revealed that the container was not manifested for Seattle which was the only United States port of call of voyage 067E. The container was not off-loaded at Seattle but rather it appears it was destined for Canada. The Prefix “VAN” shown on the Bill of Lading indicates Vancouver as the destination. Further, the file contains an invoice and a packing list from Gem Fastival Ltd. in Hong Kong both dated July 21, 1990. These documents indicate that the nylon bags were sold to Groupe Int'l Travelway Inc. located in St. Laurent, Canada. These documents also indicate that the merchandise was shipped aboard the Ever Laurent in container 0031-067E on July 24, 1990. Finally, there is a Canadian Export Declaration in the file dated October 3, 1990. This document indicates that nylon travel bags were exported from Canada by Travelway to Oakley Company in California. The document also shows that the nylon duffle bags were imported from Hong Kong on the vessel “Ever Laurel”. You have stated that based on the evidence that you have in this case, you have determined that the transaction value of the merchandise should be based on the transaction between the importer and Oakley. The NIS agrees with this conclusion. ISSUE: Whether the transaction value should be based on the sale between China National Light Industrial Products and Travelway or the sale between Travelway and Oakley. LAW AND ANALYSI S: As you know, the preferred method of appraisement is transaction value, which is defined in section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. 140la(b); TAA) as the “price actually paid or payable for the merchandise when sold for exportation to the United States (emphasis added).” In the present case there are two sales that we must examine to determine whether there was a sale for exportation to the U.S. From the documentation presented at the time of entry, it appears that the first sale was between China National Light Industrial Products (“China National”) and Travelway, although as previously discussed Gem Fastival Limited appears to have played some type of role in this transaction. The only “commercial invoice” available for the China National/Travelway sale is the Textile Export Licence/Commercial Invoice. This document, dated September 10, 1990, indicates that the merchandise was shipped “From Guangdong China to Inglewood, California via Hong Kong by Sea in Sep., 1990”. All of the other documents in the file indicate that the merchandise was shipped from Hong Kong on or about July 24, 1990. Moreover, based on the information contained in the shipping documents and the information the NIS obtained through ACS and AMS, we must conclude that the merchandise went from Hong Kong to Canada in July of 1990, not to the U.S. Therefore, the sale between China National and/or Gem Fastival Ltd. and Travelway was not a sale for exportation to the U.S. The second sale of the merchandise occurred between Travelway and Oakley. It appears from the documents in the file that Travelway exported the goods from Canada to Oakley in California on or about October 3, 1990. Oakley then received two invoices from Travelway, dated October 26, 1990, for 7,862 nylon duffle bags at $10.30 each for a total of $80,978.60. However, purchase orders for the bags indicate that the Oakley had agreed to pay $10.75 per unit for 4,492 bags and $10.30 per bag for the remaining 3,370 bags. We are unable to find an explanation in the file for the difference in the prices. Nevertheless, it appears that the goods were sold by Travelway to Oakley for exportation to the U.S. Therefore, this sale can serve as the basis of transaction value. Absent any Explanation concerning the difference in price between the purchase orders and the invoices, we must conclude that the “price actually paid or payable” for the goods was $10.75 each for 4,492 bags and $10.30 per unit for the other 3,370 bags. HOLDING: The sale for exportation to the U.S. for purposes of transaction value occurred between Travelway and Oakley. You have also asked about whether a violation of 19 U.S.C. 1592 has occurred. We will forward a copy of this ruling along with the file to the International Trade Compliance Division for a determination on the 19 U.S.C. 1592 issues. Sincerely, John Durant, Director Commercial Rulings Division