Protest No. 1001-01-101188 and Application for Further Review; Bona Fide Buying Commissions

 HQ W548206 November 15, 2002 RR:IT:VA W548206 EM CATEGORY: VALUATION Area Director clo Chief, Liquidation & Protest Branch Building 77 JFK International Airport Area Jamaica, New York 11430  RE: Protest No. 1001-01-101188 and Application for Further Review; Bona Fide Buying Commissions Dear Area Director: This letter is in response to Protest 1001-01-101188 and application for further review, dated March 22, 2001, timely filed by Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, on behalf of One Step Up, Ltd. The protest concerns the merchandise imported under Entry No. 109- 0443590-5. The Protestant objects to the liquidation of these entries on the ground that Customs incorrectly appraised the merchandise. FACTS: The imported merchandise consists of ladies knit capri pants, imported from Egypt. Sun Tay Lon Co., Ltd. (hereinafter, the "Seller"), a Taiwanese business involved in the wholesale and manufacture of apparel, appears to have purchased the subject merchandise from an Egyptian factory. The invoice indicates that the goods were shipped, F.O.B. from Egypt, by the Seller for the account and risk of One Step Up, Ltd. (hereinafter, the "Importer"), a New York-based garment import-export company. One Step Up, Ltd. is the importer of record and the ultimate consignee for the merchandise.   You indicate that the appraised value was based upon the price between the Importer and the Seller. The Seller's invoice indicates that the price included a 5% "commission." The visaed invoice indicates the same amount as the total on the Seller's invoice. Counsel claims that the "commission" was a buying commission. \  2 On May 1, 2001, you issued, by facsimile, a Request for Information (CF-28). In the C-28 you asked, in pertinent part, that the Importer, through its Counsel, provide you with documentation to support the its claim that the commission paid was a buying commission. Counsel did not provide any additional documentation in support of the Importer's claim. Without submitting any documents including a buying agency agreement, Counsel argues that the merchandise should be appraised based on the price paid for the imported merchandise, excluding the 5% "commission." You contend that Importer failed to provide supporting documentation to justify its claim. Accordingly, you appraised the merchandise based on the total amount paid by the Importer to the Seller. ISSUE: Whether the "commission" broken out on the Seller's invoice was properly included in the appraised value of the imported girls' knitted trousers. LAW AND ANALYSIS: The preferred method of appraising merchandise imported into the United States is transaction value pursuant to §402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 ("TAA"), codified at 19 U.S.C. §1401a. §402(b)(1) of the TAA provides, in pertinent part, that the transaction value of imported merchandise is the "price actually paid or payable for the merchandise when sold for exportation to the Uni ted States" plus certain enumerated statutory additions, including: (8) any selling commission incurred by the buyer with respect to the imported merchandise, The term "price actually paid or payable" is defined in §402(b)(4)(A) of the TAA 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...) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller. Counsel claims that buying commissions should have been excluded from the price paid by the Importer. Bona fide buying commissions are not part of the price actually paid or payable in determining transaction value pursuant to §402(b)(1)(B) of the TAA. Buying commissions are fees paid by an importer to his agent for the service of representing him abroad in the purchase of the goods being apprised. In addition, bona fide, buying commissions are not added to the price actually paid or payable. Pier 1 lmports, Inc. v. United States, 708 F.Supp. 351, 13 CIT 161, 164 (1989) (Pier 1 Imports,lnc); Rosenthal-Netter, Inc. v. United States, 679 F. Supp. 21, 23, 12 CIT 77, 78, aff'd 861 F.2d 261 (Fed. Cir. 1988) (Rosenthal-Netter, Inc); Jay-Arr Slimwear , Inc. v. United States, 681 F. Supp. 875,878, 12 CIT 133, 136 (1988).  3 The importer has the burden of proving that a bona fide agency relationship exists and that payments to the agent constitute bona fide buying commissions. Rosenthal-Netter, Inc., supra, New Trends, Inc. v. United States, 10 CIT 637, 645 F. Supp. 957 (1986); Pier 1 Imports, Inc, supra. In the instant case, the Importer has failed to substantiate its prima facie claim of a buying agency. The only documentation for the commission is the commercial invoice between the Seller and the Importer. The documentation submitted does not satisfy the Importer's burden of demonstrating that an agency relationship exists between the Importer and the Seller. The documents do not demonstrate that the Seller actually performed the typical services of a buying agent. As such, the transaction value for the merchandise includes the total payments made by the Importer to the Seller. The protest is DENIED. There is insufficient evidence to demonstrate that the Seller actually performed the typical services of a buying agent. Therefore, the fees paid to the seller do not constitute bona fide buying commissions. The port was correct in appraising the goods based on the total price paid by the Importer. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August , 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on customs Home Page on the World Wide Web at www.customs.gov , by means of the Freedom of Information Act, and other methods of public distribution. Sincerely, Virginia L. Brown, Chief Value Branch