Slip Op. 99 - 3

UNITED STATES COURT OF INTERNATIONAL TRADE

BEFORE: RICHARD W. GOLDBERG, JUDGE



 





SAMSUNG ELECTRONICS 


AMERICA, INC., 


 


Plaintiff, 





v. 
 Court No. 91-04-00288




UNITED STATES, 





Defendant. 










[Plaintiff’s motion for partial summary judgment is denied.

Defendant’s cross-motion for summary judgment is granted.

Judgment entered for defendant.]

Dated: January 6, 1999

Irving A. Mandel; Thomas J. Kovarcik and Jeffrey H.

Pfeffer, of counsel, for plaintiff.

Frank W. Hunger, Assistant Attorney General; Joseph I.

Liebman, Attorney-in-Charge, International Trade Field Office,

Commercial Litigation Branch, Civil Division, United States

Department of Justice; Bruce N. Stratvert, Commercial

Litigation Branch, Civil Division, United States Department of

Justice; Office of the Assistant Chief Counsel, International

Trade Litigation, United States Customs Service (Mark G.

Nackman), of counsel, for defendant.
Court No. 91-04-00288 Page 2

OPINION

GOLDBERG, Judge: This case comes before the Court on crossmotions for summary judgment following a decision by the

United States Court of Appeals for the Federal Circuit,

reversing and remanding this Court’s opinion in Samsung

Electronics America, Inc. v. United States, 19 CIT 1307, 904

F.Supp. 1403 (1996) ("Samsung I"). See Samsung Elecs. Am.,

Inc. v. United States, __ Fed. Cir. (T) __, 106 F.3d 376

(1997) ("Samsung II"). Plaintiff Samsung Electronics America

Inc. ("Samsung") challenges defendant the United States

Customs Service’s ("Customs") refusal to grant an allowance in

the appraised value of imported electronic equipment under 19

C.F.R. § 158.12. Specifically, Samsung asserts that because

the merchandise contained latent defects at the time of

importation, Customs should have granted Samsung an allowance

in value and refund of duties pursuant to section 158.12. 

Samsung claims an allowance in value of $1,938,451, the

alleged difference between the appraised value at the time of

importation and Samsung’s own post-importation appraisal of

the defective merchandise.

Because the Court concludes that Samsung cannot establish

either the existence of latent defects in the subject entries

with any specificity or the value of such claimed defects, it

grants summary judgment in favor of defendant. The Court

exercises jurisdiction in this matter under 28 U.S.C.
Court No. 91-04-00288 Page 3

§ 1581(a) (1994). 

I.

BACKGROUND

Plaintiff, among other business ventures, imports

substantial quantities of electronic goods manufactured by its

foreign parent company, Samsung Electronics Company, Ltd.

("SEC"). This case involves merchandise Samsung entered

between 1987 and 1990. The merchandise at issue is an array

of electronic equipment, including televisions, stereos, video

cassette recorders, and microwave ovens. According to

Samsung, the subject merchandise "comprise[s] virtually all of

the merchandise that [Samsung] imported for the period

December 1987 to October 1990." Pl.’s Statement of Undisputed

Facts Pursuant to USCIT R. 56.1, dated April 14, 1993 ("Pl.’s

Undisputed Facts I"), at ¶ 2. Upon entry, Customs appraised

the subject merchandise based on transaction value pursuant to

19 U.S.C. § 1401a (1988). See Samsung I, 19 CIT at 1308, 904

F. Supp. at 1404. After importation, Samsung sold the

merchandise to customers throughout the United States. And

periodically, customers would return the subject merchandise

to Samsung, claiming the goods were defective. 

On these general facts, Samsung filed a claim with

Customs seeking an allowance for latent defects, and

concomitant refund of duties, pursuant to 19 C.F.R. § 158.12. 

The cornerstone of its allowance claim is the fact that
Court No. 91-04-00288 Page 4

Samsung sold all the subject merchandise with a consumer

warranty that specifically covered latent defects. Under the

warranty, when Samsung confirmed that returned merchandise

contained a latent defect, the company repaired or replaced

the goods at no charge to the customer. Samsung’s warranty

was effective for a period ranging from ninety days to one

year from the date of sale to the customer, and longer

warranties were provided for isolated components of the

merchandise. See Pl.’s Undisputed Facts I, at ¶¶ 14-15. 

Typically, Samsung processed the defective merchandise

claims through two channels: (1) it sold the defective

merchandise "as is" to outside "jobbers" at a discount, who

then repaired the merchandise, removed the Samsung labels, and

resold the merchandise for their own accounts; or (2) Samsung

either performed in-house repairs or contracted with unrelated

service centers to repair defective merchandise, and then

returned the repaired goods to the customers. See Pl.’s

Undisputed Facts I, at ¶ 22; Pl.’s Statement of Undisputed

Material Facts Pursuant to USCIT R. 56(i), dated May 26, 1997

("Pl.’s Undisputed Facts II"), at ¶ 9. Importantly, the

consumer warranty at issue excluded coverage for all damage

caused by mishandling or consumer misuse. See Pl.’s

Undisputed Facts II, at ¶ 3; Pl.’s Br. in Supp. of Mot. for

Summ. J. ("Pl.’s Br."), at Ex. 1.

Samsung and SEC also entered service agreements related
Court No. 91-04-00288 Page 5

1 To compute its losses on discounted sales, Samsung

subtracted the discounted resale prices and any applicable

refurbishing costs from the original sale prices for defect-free

merchandise.

to the subject merchandise, whereby SEC reimbursed Samsung for

costs associated with defective merchandise purchased from

SEC. Under the service agreements, SEC limited potential

reimbursement to an amount equal to five percent of SEC’s

annual sales to Samsung. For the years in question, SEC

reimbursed Samsung for an amount equal, on average, to 4.7% of

total annual sales of subject merchandise. See Samsung II, __

Fed. Cir. (T) __, 106 F.3d at 378 (1997).

For purposes of this case, Samsung derived an allowance

figure from three separate accounting records that track

warranty costs and losses: (1) a combined record of total inhouse repair costs and costs paid to unrelated service centers

to repair merchandise; (2) a record of the cost of replacement

goods; and (3) a record of the discount prices at which

defective goods were sold. From this data, Samsung calculated

its total warranty costs and losses for the year.1

 Samsung

then used the total warranty costs and losses figure to

calculate the "Defective Merchandise Factor" ("DMF"), derived

"by dividing the total warranty costs and losses per year by

the total FOB value of merchandise for that year." Pl.’s

Undisputed Facts II, at ¶ 17. Samsung claims that the DMF is

an accurate measure of the value allowance it should receive
Court No. 91-04-00288 Page 6

2 The Court also rejected Samsung’s claim that the

repairs to the merchandise constituted post-importation

maintenance costs and, hence, should be deducted from the

appraised value of the goods pursuant to 19 U.S.C. §

1401a(b)(3)(A)(i) (1988). See 19 CIT at 1310-11, 904 F. Supp. at

1405-06. Although Samsung also appealed this aspect of

Samsung I, the Federal Circuit declined to address the argument

on appeal. See __ Fed. Cir. (T) at __, 106 F.3d at 378 n.1.

from Customs on the protested entries. It asserts that the

average DMF for the years 1987 through 1990 is 6.37%, and

using that DMF, it should be awarded an allowance, and

concomitant refund of duties, in the amount of $ 1,938,451. 

See Pl.’s Undisputed Facts II, at ¶ 21. 

On prior cross-motions for summary judgment, this Court

ruled that Samsung was not due a section 158.12 allowance. 

The Court held that when Samsung purchased the subject

merchandise from SEC, it contracted for merchandise that

contained latent defects and, hence, no allowance from

transaction value was appropriate.2

 See Samsung I, 19 CIT at

1309, 904 F. Supp. at 1405. The Federal Circuit reversed this

decision, concluding that Samsung had ordered defect-free

goods and therefore could maintain an allowance claim for

latent defects. See Samsung II, __ Fed. Cir. (T) at __, 106

F.3d at 379. The Federal Circuit, however, did not reach the

question of whether particular entries actually contained

defective merchandise and, if so, what the appropriate

allowance should be for the defects. Instead, the Federal

Circuit remanded the case for this Court to ascertain whether 
Court No. 91-04-00288 Page 7

"defects [were] in existence at the time of importation," id.

at __, 106 F.3d at 380 n.4, and "for a determination of the

'allowance [to be] made in value to the extent of the

damage.’" Id. at __, 106 F.3d at 380 (quoting 19 C.F.R.

§ 158.12).

On remand, Samsung filed a partial summary judgment

motion, requesting that the Court endorse the average DMF of

6.37% as the appropriate measure of allowance. Customs’ filed

a cross-motion for summary judgment, contending that,

notwithstanding Samsung II, plaintiff is still not entitled to

an allowance in value because (1) Samsung’s evidence fails to

demonstrate that subject entries actually contained latent

defects at the time of importation; and (2) the evidence fails

to establish the extent to which any defects that may have

been present decreased the value of the merchandise.

II.

STANDARD OF REVIEW

This test case is before the Court on cross-motions for

summary judgment. The court will grant summary judgment "if

the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of

law." USCIT R. 56(d); Anderson v. Liberty Lobby, Inc., 477

U.S. 242, 247 (1986). Summary judgment, however, is not 
Court No. 91-04-00288 Page 8

appropriate when a party presents "a dispute about a fact such

that a reasonable trier of fact could return a verdict against

the movant." Ugg Int’l, Inc. v. United States, 17 CIT 79, 83,

813 F. Supp. 848, 852 (1993) (citation omitted). And, a party

opposing summary judgment must "go beyond the pleadings and by

her own affidavits, or by the ‘depositions, answers to

interrogatories, and admissions to file’, designate ‘specific

facts showing that there is a genuine issue for trial.’" 

Celotex Corp. v. Caterett, 477 U.S. 317, 324 (1986) (citing

Fed. R. Civ. P. 56(e)). 

While it is true that Customs’ appraisal decisions are

entitled to a statutory presumption of correctness, see 28

U.S.C. § 2639(a)(1), when a question of law is before the

Court, the statutory presumption of correctness does not

apply. See, e.g., Universal Elecs., Inc. v. United States, __

Fed. Cir. (T) __, __, 112 F.3d 488, 492 (1997). There are no

genuine issues of material fact at issue in this case nor are

there factual elements of Customs’ decision at issue and,

hence, the statutory presumption of correctness is

inapplicable. Thus, the Court must consider whether Customs’

underlying appraisal decision here is correct as a matter of

law.

III.

DISCUSSION

Under 19 C.F.R. § 158.12, a protestant qualifies for an 
Court No. 91-04-00288 Page 9

allowance in dutiable value where (1) imported goods are

determined to be partially damaged at the time of importation,

and (2) the allowance sought is commensurate to the diminution

in the value of the merchandise caused by the defect. 

Specifically, section 158.12 provides as follows:

Merchandise partially damaged at time of

importation. (A) Allowance in value.

Merchandise which is subject to ad valorem or

compound duties and found by the district

director to be partially damaged at the time of

importation shall be appraised in its condition

as imported, with an allowance made in the value

to the extent of the damage.

19 C.F.R. § 158.12 (emphasis added). 

To qualify for an allowance, a protestant must also

satisfy both elements of the above provision by clear and

convincing evidence. The clear and convincing standard is not

provided for in 19 C.F.R. § 158.12. Rather, Customs has

interpreted the regulation as requiring clear and convincing

evidence. See C.S.D. 84-11, 18 Cust. B. & Dec. 849, 852

(1984) (requiring that "the importer must provide the

concerned Customs officer with clear and convincing evidence

to support a claim that merchandise purchased and appraised as

one quality was in fact of a lesser quality, thus warranting

an allowance in duties); see also HQ 546354 (July 19, 1996);

HQ 544986 (Feb. 28, 1994); HQ 545231 (Nov. 5, 1993). The

Federal Circuit also endorsed this evidentiary standard in

Samsung II. See __ Fed. Cir. (T) at ___, 106 F.3d at 378

(deferring to Customs’ interpretation of section 158.12). 
Court No. 91-04-00288 Page 10

Because the Court gives deference to Customs’ interpretation

of the evidentiary standard corresponding to section 158.12,

see Chevron U.S.A. Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837, 843 (1984), the Court reviews whether

Samsung’s proffered evidence satisfies both elements of the

allowance provision by clear and convincing evidence.

As the Federal Circuit cautioned in its remand

instructions, the amount of the allowance is limited to "those

defects in existence at the time of importation, and not for

instance, those caused by [Samsung’s] own mishandling or by

consumer misuse of the equipment." Samsung II, __ Fed.Cir.(T)

at __, 106 F.3d at 380 (emphasis added). After reviewing the

evidence, the Court grants Customs’ motion for summary

judgment. 

It is uncontested that some of the merchandise Samsung

entered between 1987 and 1990 contained latent defects. That

is, simply by virtue of the fact that all merchandise entered

between 1987 and 1990 was covered by the warranty and that

claims were made on this warranty between 1987 and 1990, it

follows that some of the merchandise contained in the subject

entries was defective. Yet, Samsung’s evidence fails to

establish with any specificity which of the subject entries

contained merchandise with latent defects at the time of

importation. 

More importantly, even if Samsung were able to identify 
Court No. 91-04-00288 Page 11

those entries that contained defective merchandise at the time

of importation, its claim still fails because it offers no

measure of precision upon which an appropriate allowance in

value can be derived. That is, Samsung simply offers no

evidence to suggest that it can link diminution in the value

of specific merchandise to specific entries. Without some

evidence that the allowance claimed actually relates to the

specific entries at issue, a section 158.12 claim is lost. 

Consequently, Samsung’s motion for partial summary judgment

must fail, and defendant’s cross-motion for summary judgment

prevails.

A. Samsung Fails to Establish by Clear and Convincing

Evidence Which Entries Had Latent Defects at the

Time of Importation. 

In lieu of specific descriptions or samples to illustrate

damage at the time of importation, Samsung presents the

consumer warranty for the subject merchandise as its principle

evidence that entries contained defective merchandise at the

time of importation. In relevant part, the warranty at issue

states the "Samsung product is warranted by [Samsung] against

manufacturing defects in materials or workmanship." Pl.’s

Br., at Ex. 1. Samsung also offers an internal document to

show that it rejected warranty repair on certain returned

merchandise and, therefore, asserts this is proof that the

company only repaired latent defects under the relevant

warranty. Pl.’s Br., at Ex. 3. 
Court No. 91-04-00288 Page 12

The Court is unpersuaded that Samsung’s evidence

establishes by clear and convincing evidence which subject

entries had latent defects at the time of importation, as

required by section 158.12. As noted earlier, it is

uncontested that at least some of the merchandise contained

latent defects. The consumer warranty, and the corresponding

claim records, indeed amount to conclusive proof of this fact. 

Yet, the warranty, and the claim records, fail to demonstrate

with any particularity the precise entries that contained

defects. Because the warranty covers all merchandise

contained in all subject entries, it is impossible to accept

the warranty, standing alone, as evidence of which particular

entries had defects. And Samsung does not contend that all

entries contained defective merchandise at the time of

importation. Therefore, while establishing that some

merchandise was defective, the warranty, in and of itself,

does not establish which particular entries contained

defective merchandise. 

Moreover, the warranty indicates that the defects were

not detected in the subject merchandise until customers made

returns under warranty, quite some time after importation. 

Evidence provided in reappraisal cases, such as a 19 C.F.R.

§ 158.12 claim, is of greater weight when gathered

contemporaneous with importation, and less so when time has

passed between importation and protest. See Parmentier’s 
Court No. 91-04-00288 Page 13

Roses v. United States, 39 Cust. Ct. 170, 173, 1957 WL 9559,

at *3 (Cust. Ct. 1957) (noting that remoteness in time goes to

the weight of evidence presented in reappraisal cases). The

logic underpinning this rule is clear. Once Customs has

liquidated merchandise, it can be damaged through a number of

causes, including misuse or mishandling. This makes it

difficult, or in some cases impossible, to identify the root

cause of the damage or defect. Consequently, the more remote

that an inspection is to the time of importation, the less

persuasive that inspection is as evidence of the condition of

the merchandise at the time of importation. 

Here, the defects were only discovered when a customer

submitted a warranty claim. Given the term of the warranty,

this might be anywhere from ninety days to one year after the

merchandise was sold to the customer. It is true that

Samsung’s warranty only covers repairs for defective

merchandise, not merchandise damaged through misuse or

mishandling. See Pl.’s Br., at Ex. 1. A Samsung executive

also has stated that under the warranty, only merchandise with

latent defects was repaired or replaced. See Pl.’s Br.,

Affidavit of Kang Bae Park, Samsung Tax and Accounting

Manager, at ¶¶ 4-8. Although the Court has no reason to doubt

the veracity of Samsung’s assertions, without additional,

independent evidence to corroborate the assertions, the Court

cannot verify that the merchandise was actually defective at 
Court No. 91-04-00288 Page 14

the time of importation, as opposed to damaged later through

misuse or mishandling.

A warranty surely may be used as supplementary evidence

that a defect existed at the time of importation. Yet, to

prevail on a section 158.12 claim, more objective and

verifiable evidence with some semblance of specificity must

also be proffered. Indeed, to make a section 158.12 claim, a

claimant should provide specific descriptions of the damage or

defect alleged and, in some manner, relate that defective

merchandise to a particular entry. Such descriptions are

necessary because both the Court and Customs must

independently confirm the validity of an allowance claim. 

And, descriptions or samples provide a reasonably objective

basis upon which to assess such a claim. For example,

descriptions can be reviewed by the Court and by independent

experts to confirm that the alleged damage existed at the time

of importation, or that the damage is recognizable as a true

manufacturing defect. An undocumented assertion that damage

existed, such as a warranty, cannot amount to clear and

convincing evidence that defects existed at the time of

importation. See Esformes Packing Corp. v. United States, 61

Cust. Ct. 355, 1968 WL 11584, at *2 (Cust. Ct. 1968) (denying

protests because it was impossible to deduce from the record

evidence the existence of damage at the time of importation);

see also HQ 546354 (July 19, 1996) (denying protests because 
Court No. 91-04-00288 Page 15

alleged defects in imported yarn and alkathene powder,

respectively, were undetected in samples submitted to Customs,

and claimants failed to submit any other independent testing).

For these reasons, the Court concludes that while it is

uncontested that some of the subject entries had latent

defects at the time of importation, Samsung fails to identify

those particular entries that had latent defects at the time

of importation. Accordingly, the Court grants defendant’s

summary judgment motion on this issue.

B. Samsung Fails to Show by Clear and Convincing

Evidence That an Appropriate Allowance in Value Can

be Calculated for the Alleged Defects in the Subject

Entries. 

Even assuming arguendo that Samsung has proved by clear

and convincing evidence that defects existed in all entries at

the time of importation, its section 158.12 claim still fails

because Samsung cannot demonstrate with any precision what the

claimed allowance in value should be for the defective

merchandise. Here, Samsung argues that its total warranty

cost and loss data provide an accurate measure from which an

appropriate allowance for defective merchandise can be

derived. The Court concludes that it does not.

As evidence of the post-importation appraised value of

the subject merchandise, Samsung offers its total warranty

costs and losses for the year. This data, however, fails to

illuminate the extent of damage to merchandise contained in 
Court No. 91-04-00288 Page 16

subject entries for a number of reasons. Samsung’s repair

records are not detailed enough to ascertain whether the costs

incurred actually relate to the subject entries. Most

importantly, it is not apparent from Samsung’s records that

repair costs for the subject merchandise are segregated from

repair costs for merchandise contained in other, non-subject

entries. That is, the total warranty cost and loss figure

does not appear to segregate the costs and losses related to

the subject merchandise from the costs and losses associated

with other Samsung merchandise, whether by model or by year of

sale. For example, Samsung claims that its total warranty

costs associated with 1987 claims is $4,243,033.16. See Pl.’s

Br., at Ex. 4. Yet, Samsung claims an allowance on entries

made between December 1987 and October 1990. See Pl.’s

Undisputed Facts I, at ¶ 2. Samsung has not made it clear

what portion, if any, of the warranty costs for the whole of

1987 corresponds to the entries made in December 1987. 

Moreover, Samsung includes warranty costs for the years

1987 to 1990 in its DMF factor calculation. As Samsung itself

acknowledges, the warranty typically lasts for between ninety

days to one year after the date of sale. See Pl.’s Undisputed

Facts I, at ¶¶ 14-15. It is theoretically possible, though

not likely, that all of the subject merchandise was sold out

of inventory by the end of 1990. Yet, the Court cannot

envision how warranty claims for this same merchandise could 
Court No. 91-04-00288 Page 17

also have been made before the close of 1990, in which case

the warranty costs and losses for 1990 do not correlate to all

of the subject entries. In other words, it is most likely

that merchandise contained in a 1990 entry was actually sold

in 1991 or even later, and warranty claims were actually made

in 1992 or even later. As such, the warranty cost and loss

data for 1990 bear no direct relationship to the entries made

in 1990. And, Samsung offers no evidence, or any indication

that it could, to correlate the warranty claims to the date of

sale and, in turn, to the subject entries. Without some more

concrete temporal connection between the subject entries, and

the submitted warranty costs, only vague assumptions can be

made about the appropriate allowance for the defects in

subject entries.

If the Court were to accept otherwise, it runs the risk

of illegally assigning to the protested entries value

allowances for merchandise in non-protested entries and, in so

doing, would contravene the rule from Alyeska Pipeline Serv.

Co. v. United States, 10 CIT 510, 643 F. Supp. 1128 (1986),

reh’g granted, 11 CIT 931 (1987), vacated as moot on other

grounds, unpublished order (May 19, 1988). In Alyeska

Pipeline, Customs had advanced the value of merchandise in a

single entry to cover value advances (i.e., reappraisements)

relating to twenty four additional entries of identical

merchandise, including two of which were not before the court. 
Court No. 91-04-00288 Page 18

3 Samsung argues against the entry-by-entry approach,

noting that the value statue allows Customs to allocate the costs

of assists over as many entries as are impacted by the assist

and, hence, Customs should also be allowed to allocate an

allowance in value for defective merchandise over more than one

entry. See Pl.’s Br. in Opp’n to Def.’s Mot. for Summ. J., at

14-15 ("Assists" are defined, inter alia, as materials,

components, parts, tools, or artwork supplied free of charge by

the buyer of the imported merchandise. See 19 U.S.C. §

1401a(h)(1)(A)). Yet, Samsung neglects to note that while the

value statute expressly provides for the apportionment of

assists, the statute is silent with respect to apportionment of

value allowances for defective merchandise. See 19 U.S.C. §

1401a(b)(1)(C) ("The transaction value of imported merchandise is

the price actually paid or payable for the merchandise when sold

for exportation to the United States, plus amounts equal to . . .

the value, apportioned as appropriate, of any assist."). In this

case, it is impossible for Samsung to tie the extent of damage

due to the defects to the subject entries with any particularity. 

Yet, in those cases where it is possible to show that the amount

of damage claimed actually relates to a particular set of

entries, the Court takes no position on whether it is ever

permissible for Customs to calculate an allowance for defective 

See 10 CIT at 515, 643 F. Supp. at 1132. The court rejected

this action, finding that "[t]he law does not permit the

Customs Service to assign one entry the values of merchandise

in other entries or the duties owing to them." Id. at 516,

643 F. Supp. at 1132. The court went on to conclude that "a

value adjustment to imported merchandise may be reflected only

on the entry or entries which cover the imported merchandise. 

It follows that the only proper value increase for the entry

in question would be one reflecting the value of the

merchandise covered by that entry and no other merchandise." 

Id. at 516, 643 F. Supp. at 1133. Similarly, it also follows

here that a value allowance must relate to the merchandise

entered under a specific entry(ies).3 Instead, Samsung
Court No. 91-04-00288 Page 19

merchandise using an allocation methodology.

requests that a value allowance be granted to cover allegedly

defective merchandise contained in a slew of entries,

regardless of the fact that it cannot show which particular

entries contained defective merchandise, which contained more

or less defective merchandise, and which contained no

defective merchandise. The Court cannot grant a blanket

allowance when the extent of damage claimed does not actually

correspond to the merchandise contained in a particular entry

or set of entries. 

In addition, the total warranty cost and loss data

include the discounted sales made to outside jobbers. The

value of discounted sales Samsung made to repurchasers of

damaged and refurbished merchandise bears, at best, a remote

relation to the difference in value resulting from the

defects. Samsung fails to demonstrate that the discounted

price is an accurate measure of the extent of damage. To

establish an appraisal by clear and convincing evidence, there

must be some way to segregate the diminution in value

attributable to the damage to the merchandise, from that

attributable to other discounts, e.g., volume discounts. See

HQ 545534 (May 15, 1995) (rejecting an allowance for defective

merchandise under section 158.12 based on the difference

between the original sale price and the resale price because

there was no evidence to suggest that the discount bore any 
Court No. 91-04-00288 Page 20

relation to the extent of damage). 

In sum, Samsung fails to show that it is possible to link

the diminution in value due to defects in specific merchandise

to any particular entry(ies). Hence, it is impossible to

calculate an appropriate allowance in value for the defective

merchandise. Accordingly, even if the Court were to accept

that Samsung has established which entries contained defective

merchandise at the time of importation, the Court still would

grant summary judgment to defendant because Samsung cannot

establish an appropriate allowance by clear and convincing

evidence.

V.

CONCLUSION

For the foregoing reasons, Customs’ decision not to grant

plaintiff an allowance for defective merchandise is sustained,

and summary judgment is granted in favor of defendant. 

Judgment will be entered accordingly.

________________________________

 Richard W. Goldberg 

JUDGE 

Date: January 6, 1999

New York, New York.
Court No. 91-04-00288 Page 21