Opinion ID: 597241
Heading Depth: 2
Heading Rank: 2

Heading: The Government's Counterclaim

Text: 32 Having concluded that the transaction value of the imported vehicles at issue is properly based on the price paid by NIC to KHI, we now address the issue whether the trial court erred in granting the government's counterclaim. In granting summary judgment in favor of the government on the reliquidation claim, the trial court granted the government's counterclaim alleging that certain amounts, viz., a commission paid by NIC to NIAC, financing costs, and insurance costs, were improperly deducted from the dutiable value of the imported vehicles. On appeal, NIAC only contests the dutiability of the commission it received from NIC as compensation for NIAC's services in procuring U.S.-made components entitled to duty exemption under item 807.00, TSUS. 33 Pursuant to an agreement between NIC and NIAC dated March 17, 1982, NIC agreed to pay NIAC a commission of 2.5% of the delivered cost to NIAC as reflected in the purchase order ... of all American made fabricated components purchased by NIAC for sale to NIC, which were furnished free of charge to KHI for incorporation into the R-62 cars. Under this agreement, NIAC received $2,356,294.78 from NIC as compensation for the cost of shipping the U.S.-made components to Japan. Upon liquidation, Customs deducted $6,568.87 per car from the dutiable value to reflect the deductible buying commission. 34 At trial, the government argued that the commission deduction was improper. The trial court agreed, relying on Rosenthal-Netter, Inc. v. United States, 12 C.I.T. 77, 679 F.Supp. 21 (1988), aff'd, adopted, 861 F.2d 261 (Fed.Cir.1988). It concluded that in order to qualify for a deductible buying commission, there must be an agency relationship and that no such agency relationship existed between NIC and NIAC. The trial court based its finding that NIAC was not a bona fide buying agent of NIC on the March 17, 1982 agreement between NIC and NIAC. Article 12 of that agreement, entitled Independence, provided in pertinent part that NIAC is and shall be at all times an independent contractor and shall not be deemed to be an agent or employee of NIC for any purpose whatsoever. Accordingly, the trial court held that [b]ecause NIAC was not NIC's agent, the commissions are not entitled to be deducted from dutiable value. 786 F.Supp. at 1010. 35 On appeal, NIAC argues that the government failed to overcome the presumption that the deductions from dutiable value allowed by Customs at the time of liquidation are correct. Moreover, NIAC claims that under long-standing policy of the Customs Service, all payments directly allocable to American-made components must be deducted from appraised value, regardless whether NIAC was NIC's buying agent or an independent contractor. We are unpersuaded by NIAC's arguments in view of the binding authority of Rosenthal-Netter. 36 This court adopted the opinion of the Court of International Trade in Rosenthal-Netter, which holds that in order to establish that a buying commission is deductible from dutiable value, the [importer] has the burden of proving the existence of a bona fide agency relationship and that the charges paid were, in fact, bona fide buying commissions. 679 F.Supp. at 21. Upon examination of the record, we agree with the trial court's finding that a bona fide agency relationship did not exist between NIC and NIAC. Thus, we conclude that NIAC's buying commission is not entitled to be deducted from the dutiable value of the imported vehicles and that the trial court did not err in granting the government's counterclaim.