Internal Advice – Raw Bulk Sugar

HQ W548562 AUG 19 2005 RR:IT:VA W548562 CC CATEGORY: Valuation Port Director Customs and Border Protection Port of Newark, New York c/o Residual Liquidation Section 1100 Raymond Blvd. Suite 402 Newark, NJ 07102 RE: Internal Advice – Raw Bulk Sugar Dear Sir or Madam: This is in response to your internal advice request of June 22, 2004, concerning the valuation of raw bulk sugar. FACTS: Bulk sugar is subject to a specific rate of duty. This specific rate of duty is based on the weight of the sugar and its polarization. To obtain these figures the imported sugar must be tested and a lab report is issued. You have submitted relevant documentation, including a lab report, for a representative entry of bulk sugar. That entry was classified under subheading 1701.11.2000 of the Harmonized Tariff Schedule of the United States (HTSUS), but was not subject to duty because it was eligible for duty-free treatment under the General System of Preferences (GSP). You state that often bulk sugar is not subject to duty because it is eligible for duty-free treatment under the GSP. Your inquiry concerns what the declared value of raw bulk sugar should be. You state that prior to September 2001, the declared value was based on the weight of the sugar from the lab report and the price paid per kilogram from the invoice. You inquire, however, whether the declared value should be the 2 transaction value of the merchandise under 19 U.S.C.§ 1401a. How the merchandise is appraised affects the amounts due for the merchandise processing fee (MPF) and the harbor maintenance fee (HMF). ISSUE: How should the raw bulk sugar be appraised. LAW AND ANALYSIS: Imported merchandise is appraised in accordance with section 402(b) of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (TAA: 19 U.S.C. § 1401a), and the preferred method of appraisement is transaction valuation. Transaction value is the “price actually paid or payable for merchandise when sold for exportation to the United States,” plus five statutorily enumerated additions. The term “price actually paid or payable” is defined 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.” As you are aware, most customs duties are calculated on an ad valorem basis, that is, based on a percentage of the value of the merchandise. The raw bulk sugar, however, is subject to a specific rate, based on its weight and polarization. Although the results contained in the lad report are necessary for calculating the amount of duties due, they are not helpful in declaring value on the CF 7501. According to the Instructions for Preparation of CF 7501, Customs Directive 099 3550-061, dated September 18, 1992, the entered value should be recorded in accordance with 19 U.S.C. § 1401a. In addition, MPF is calculated based on the value in accordance with 19 U.S.C. § 1401a. Concerning the MPF, 19 U.S.C. § 58c(a)(9)(A) provides for an ad valorem fee for the processing of merchandise that is formally entered or released. 19 U.S.C. §58c(b)(8)(D)(ii) provides that the MPF, with certain exceptions, be based on the value of the merchandise as determined under 19 U.S.C. § 1401a. See also, Headquarters Ruling Letter (HRL) 545017, dated August 19, 1994. The HMF is also an ad valorem fee that would be based on the entered value for imported merchandise, like the MPF. HOLDING: The raw bulk sugar should be appraised in accordance with 19 U.S.C. § 1401a. 3 You are to mail this decision to the internal advice applicant no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to Customs and Border Protection (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, Virginia L. Brown Chief, Value Branch