Court Opinion

ID: 8110825
Source: CourtListenerOpinion
Date Created: 2022-09-09 14:39:02.845134+00
Date Added: 2024-06-11T16:38:45.360188
License: Public Domain

CONCURRING OPINION
Johnson, Judge:
For the reasons stated below, I concur in the affirmance of the decision and judgment of the trial court in this case.
The issue is whether certain items may properly be included as part of the reasonable allowance for general expenses which is deductible in determining United States value under section 402(e) of the Tariff Act of 1930, as amended by the Customs Administrative Act of 1938. Said section provides that the United States value shall be the price at which such or similar imported merchandise is freely offered for sale for domestic consumption, packed ready for delivery, in the principal market of the United States, with allowances for the following:
(1) Duty.
(2) Cost of transportation and insurance, and other necessary expenses from the place of shipment to the place of delivery.
(3) A commission not exceeding 6 per centum, if any has been paid or contracted to he paid on goods secured otherwise than by purchase, or profits not to exceed 8 per centum, and
(4) A reasonable allowance for general expenses, not to exceed 8 per centum on purchased goods.
The disputed items in the instant case are the cost of inspecting the merchandise, seamless steel tubing, in Italy, by an independent agency, prior to shipment, and charges incurred for transporting the merchandise from the pier in this country to the warehouse, and the cost of handling and storage.
It is not claimed that said costs for transportation and storage are deductible under item (2), sufra, as “other necessary expenses from the place of shipment to the place of delivery,” but under item (4). *582supra, as general expenses. While there are cases holding that such costs are not deductible as “other necessary expenses from the place of shipment to the place of delivery” (Johnson Co. v. United States, 13 Ct. Cust. Appls. 373, T.D. 41318; Same v. Same, 13 id. 626, T.D. 41480; United States v. E. H. Corrigan, 36 Cust. Ct. 639, A.R.D. 67, and cases cited), there is nothing in the statute to preclude their inclusion as part of reasonable general expenses in a proper case.
The term “usual general expenses” used in connection with the items making up cost of production under section 402(f) has been defined in United States v. Alfred Dunhill of London, Inc., 32 C.C.P.A. (Customs) 187, C.A.D. 305, as follows (p. 189) :
In our opinion the “usual general expenses” of a business are the expenses of doing business. This would include in addition to the cost and manipulation of materials, all salaries, wages and commissions, traveling expenses, advertising, rents, taxes on buildings, stationery, stenographic, telephone and telegraph expenses, costs of delivery, depreciation on plant and equipment, and other actual outlays. These are the usual general expenses of business, and profit is calculated on the difference between such expenses and receipts.
Items such as those listed may properly be considered in determining what constitutes “general expenses” in connection with United States value. Such expenses are those incurred in dealing with the merchandise under appraisement, for which a reasonable allowance may be made. Alex Schechter Corp. v. United States, 2 Cust. Ct. 867, Reap. Dec. 4532; United States v. E. H. Corrigan, supra.
In the instant case, there is evidence that it was the established practice for purchasers of foreign-made seamless steel tubing to have it inspected by an independent agency prior to shipment to see that it met American Petroleum Institute standards. Thus, it appears that the cost of such inspection is an ordinary expense incurred in handling this type of merchandise. Such inspection is no doubt necessary and economical in order to assure the purchaser that he will receive merchandise meeting the required standards before he is subjected to the expense of shipment to this country.
The record also establishes that it was the general practice of the importer and others dealing in merchandise of this character to store it after arrival in this country and to sell from stock. The cost of transportation to warehouse and the cost of storage are, therefore, a part of the general expenses involved in dealing with this merchandise. A different question would arise were the merchandise handled ordinarily in some other way.
I ain, therefore, in accord with the finding of the trial court that these items, together with other undisputed items of general expense, amounting in toto to 7.60 per centum, constitute a reasonable allowance for general expenses in this case.