HQ H023812

April 4, 2008

OT:RR:CTF:VS H023812 GG

CATEGORY: Valuation

Port Director

U.S. Customs and Border Protection

3150 Tchulahoma Road, Suite 1

Memphis, TN 38118

RE: Protest No. 2006-08-100003; transaction value; international
transportation costs

Dear Port Director:

This is in response to the application for further review of the protest
referenced above.

FACTS:

FHBC America, Inc. ("FHBC") purchased ball bearings from FAG Bearings
Korea Corp. of Seoul, South Korea ("FAG"). In the "Remarks" box of the
commercial invoice, separate line items list, in descending order, a DDP
value, a freight charge, an insurance charge, a loading cost, a customs
entry fee, an amount for duty and tax, and finally, an FOB value. A box
at the bottom of the first page of the invoice gives a total invoice
price in U.S. dollars that is identical to the stated DDP value. The
term of sale "DDP Detroit USA" is displayed on the second page of the
invoice. A "grand invoice total" equal to the stated DDP value also
appears on that page.

The merchandise was entered on September 18, 2006. The invoiced value
reflected on the CBP Form 7501 matched the DDP amount shown on the
invoice. The total freight charges displayed in Column 33 of the CBP
Form 7501 Entry Summary were \$2,700.00. The entry was liquidated on
August 3, 2007. In a protest filed on December 20, 2007, FHBC explains
that the CBP Form 7501 understates the actual international freight
charges, which it asserts were in fact \$32,528.00. It presented a rated
bill of lading from the Yang Ming Marine Transport Corporation as
evidence of the actual freight charges. This sea waybill, which reflects
that 293 cartons were shipped in 11 containers, shows a total freight
prepaid cost of \$32,528.00. The number of cartons -- 293 -- corresponds
to the number shown on the packing list prepared by FAG, which in turn
cross references the invoice described above. The sea waybill does not
make reference to either FAG or FHBC but instead lists the freight
forwarder/broker as the shipper, consignee and notify party. In addition
to the sea waybill, the protestant has presented a copy of an invoice
issued by Yang Ming Marine Transport Corporation that reflects total
charges of \$32,528.00. It cross references the sea waybill number.
Aside from the name of the transportation company, all other information
on the invoice is in Chinese, with no English translation provided.

As a result of the understatement of the actual freight charges, FHBC
claims that it overpaid duties. It is protesting the appraisement and
liquidation of the entry and is requesting a refund of the amount
overpaid.

ISSUE:

Whether the protestant may deduct the claimed international freight
charges from the price actually paid or payable for the imported ball
bearings.

LAW AND ANALYSIS:

The preferred method of appraisement is transaction value which is
defined by section 402(b)(1) of the TAA (19 U.S.C. § 1401a(b)) as \"the
price actually paid or payable for the merchandise when sold for
exportation to the United States\...\" plus certain additions specified
in section 402(b)(1) (A) through (E). The term

\"price actually paid or payable\" is defined in section 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 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.

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, transport company, etc.
*See* Treasury Decision ("T.D.") 00-20.

T.D. 00-20 provides the following with respect to evidence of actual
freight costs:

> Customs considers actual costs to constitute those amounts ultimately
> paid to the international carrier, freight forwarder, insurance
> company or other appropriate provider of such services. Commercial
> documents to and from the service provider such as an invoice or
> written contract separately listing freight/insurance costs, a
> freight/insurance bill, a through bill of lading or proof of payment
> of the freight/insurance charges (i.e., letters of credit, checks,
> bank statements) are **examples** of some documents which typically
> serve as proof of such actual costs. Other types of evidence may be
> acceptable.

FHBC has submitted the sea waybill and the international carrier's
invoice as evidence of actual freight costs. While these two documents
list freight charges of \$32,528.00, they do not enable us to ascertain
the party that paid the freight costs. The sea waybill does indicate
that freight was prepaid, which typically means payment by the shipper.
The waybill, however, identifies the freight forwarder as the shipper,
and makes no reference to FAG. The freight invoice is in Chinese, so we
are unable to determine to whom it was issued. Efforts to obtain proof
of payment of the freight charges, and to verify that FHBC did pay a DDP
price, were unsuccessful. Without this information we are unable to
verify that the transaction in question was made pursuant to DDP terms,
with international freight charges included in the price for the goods.
Accordingly, the importer may not make a deduction for international
freight costs, and the protest must be DENIED.

HOLDING:

The protestant has not provided sufficient evidence to show that the
international freight costs were included in the price paid by the buyer
to the seller of the imported ball bearings. Accordingly, no deduction
may be made for international freight costs.

In accordance with the Protest/Petition Processing Handbook (CIS HB,
January 2002, pp. 18 and 21), 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 in accordance
with the decision must be accomplished prior to mailing of the decision.
Sixty days from the date of the decision the Office of Regulations and
Rulings will make the decision available to 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,

Myles B. Harmon

Director

Commercial and Trade Facilitation Division