Opinion ID: 512988
Heading Depth: 3
Heading Rank: 3

Heading: Pails and Drums.

Text: 30 The ITA, in calculating the constructed value of the red raspberries for the packers, excluded Canadian packing costs because these costs [were] not part of the cost of the merchandise sold to the United States. Instead, the ITA, determining that these costs were incidental to the cost of the red raspberries, added the cost in accordance with 19 U.S.C. Sec. 1677b(e)(1)(C). The Court of International Trade reversed, concluding that when the merchandise is delicate fruit inherently incapable of commercial survival, standing alone, and its intended movement in trade is in its natural form, then the cost of primary containers used is not 'incidental' within the meaning of subparagraph (C) of 19 U.S.C. Sec. 1677b(e)(1). Rather, the Court of International Trade determined, the pails and drums containing the raspberries were primary containers and an integral part of the merchandise. On that basis, the Court of International Trade concluded that the pails and drums were materials within the meaning of section 1677b(e)(1)(A). We agree. 31 Materials, pursuant to subsection (A), include those materials required to permit the production of that particular merchandise in the ordinary course of business. Here, the merchandise in question are red raspberries in their natural form. The red raspberries could not exist in their natural form but-for the pails and drums. As recognized by the Court of International Trade, without these primary containers, the raspberries would become raspberry juice, or compote, at least. Accordingly, because without the pails and drums the raspberries could not exist in their natural form, the costs of the pails and drums must be included under subsection (A). 32 The Government, apparently equating drums and pails with packing costs, cites numerous ITA decisions as supporting its argument that the ITA consistently has treated packing costs as costs of containers and coverings under subsection (C) rather than as materials under subsection (A). On this basis, the Government would have us reverse the Court of International Trade's decision on this issue. We are not persuaded. 33 We cannot hold, as the Government would have us, that any time a product is held in a container, the cost of that container must be characterized either as a packing cost or as an expense incidental to placing that product into commerce and included under subsection (C). Rather, when a product cannot exist in its natural form but-for the container, that container's cost may be included under subsection (A).