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HQ 547842

May 7, 2002

RR:IT:VA 547842 MMC


Port Director
Port of New York
ATT: Chief, Residual Liquidation & Protest Branch 1 Pennsylvania Plaza
New York, New York 10119

RE: Protest 1001-99-104973; 19 U.S.C. §1514(c)(3); T.D. 86-56; inconsistencies between visaed and commercial invoices

Dear Port Director:

This is in reply to an application for further review of protest number 1001-99-104973, dated September 29, 1999, filed by Follick and Bessich (counsel) on behalf of American Bankers Insurance Company of Florida (protestant). The 26 entries in question were filed between May 11, 1998 and October 26, 1998, and liquidated between January 29, 1999 and April 30, 1999. The dates of the formal demand on surety for the entries varies, totaling four al1 together: April 27, 1999, May 11, 1999, June 16, 1999 and July 16, 1999. The Accounts Receivable staff of the Accounting Services Division verified these dates. Based on this report we have determined that this protest for further review was untimely filed for all but six of the 26 entries. In the case of these six entries the protest was filed within 90 days after the mailing of the initial demand for payment on July 16, 1999. As such, the scope of this ruling applies only to the identified six entries, as the protest for further review was timely filed for them pursuant to 19 U.S.C. §1514(c)(3).


The protest for further review concerns the appraised value of women's wearing apparel, made in the Russia by AO Kirovskij Shweinik (the "manufacturer"), purchased by Eska Internationale Mode (seller/middleman) and imported by Audrey Celine, Inc. (importer) pursuant to a three-tiered distribution system. According to the Entry Summary (CF 7501) the middleman and importer are not related.

According to counsel, in accordance with the agreed upon terms of payment the importer opened letters of credit in favor of the seller/middleman, enabling the seller/middleman to draw subsequently against it in amounts reflective of the prices shown on the commercial invoices. Counsel did not submit any written agreements between the importer and seller/middleman. Additionally counsel claims that the importer rendered payment on the basis of the commercial invoice. Counsel did not submit a corresponding proof of payment.

In addition to counsel's submissions, you submitted documents for our review. Those documents include:

The seller/middleman's invoice to the importer. It includes the indication "doc. Credit No. A-854197";

A bill of lading from the shipper to the seller/middleman for freight costs from Austria to the U.S.;

A packing list from the seller/middleman to the importer.;

Textile visaed invoices bearing the stamp of the Ministry for Foreign Economic Relations for the Russian Federation. Notable on the visaed invoices are a visa account number, a bank account number, a "contract delivery date", and an invoice number that does not correspond to the seller's invoice number.; and

Textile declarations to the importer from the seller's Moscow office.

According to the commercial invoice and bill of lading, the terms of sale governing the importer/seller sale were FOB Bremerhaven, Germany transport from Bremerhaven to Port Elizabeth payment at sight. The visaed invoice indicates that the goods were shipped by truck from the manufacturer to the seller/middleman.

There are discrepancies between the prices stated on the commercial invoices and those reflected on the visaed invoices. The prices on the visaed invoices are significantly higher than those on the seller/middleman's commercial invoices. Due to this discrepancy, Customs liquidated the entries in question with ad valorem duties assessed on the basis of the greater amounts shown on the visaed invoices.

Protestant contends that the imported merchandise should be appraised on the basis of the price paid on the commercial invoices by the importer. Your office has expressed concern that the information submitted by the protestant is insufficient to establish that the declared price between the importer and seller/middleman is the correct basis of appraisement. Accordingly, you requested that the protestant provide copies of documents to explain the discrepancy. Protestant maintains that these documents are not necessary to determine whether the sale between the importer and seller/middleman is the correct basis of appraisement. Accordingly, the protestant has not furnished these documents.


Whether Customs properly appraised the imported merchandise based on the price contained in the visaed invoice.


Merchandise imported into the United States is appraised in accordance with section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979 (19 U.S.C. § 1401a; TAA). The primary method of appraisement is transaction value, defined as “the price actually paid or payable for the merchandise when sold for exportation to the United States” plus the value of certain statutorily enumerated additions thereto. 19 U.S.C. § 1401a(b)(1).

Under section 500 of the Tariff Act of 1930, as amended, which sets forth Customs’ general appraisement authority, the appraising officer may:
fix the final appraisement of merchandise by ascertaining or estimating the value thereof, under section 1401a of this title, by all reasonable ways and means in his power, any statement of cost or costs of production in any invoice, affidavit, declaration, other document to the contrary notwithstanding.... 19 U.S.C. § 1500(a)

In this regard, the Statement of Administrative Action (SAA), which forms part of the legislative history of the TAA, provides in pertinent part:

Section 500 allows Customs to consider the best evidence available in appraising merchandise....[It] authorize (sic) the appraising officer to weigh the nature of the evidence before him in appraising the imported merchandise. This could be the invoice, the contract between the parties, or even the record keeping of either of the parties to the contract.

Statement of Administrative Action, H.R. Doc. No. 153, 96 Cong., 1st Sess., pt 2, reprinted in, Department of the Treasury, Customs Valuation under the Trade Agreements Act of 1979 (October 1981), at 67.

Under Treasury Decision, (T.D.) 86-56, 20 Cust. B. & Dec. 175, differences or discrepancies contained in invoices and other entry documentation presented to Customs in connection with imported merchandise raise the presumption that the documents contain false or erroneous information. In addition, T.D. 86-56 provides:

Section 484(a), Tariff Act of 1930, as amended (19 U.S.C. 1484(a)), requires that importers file with Customs documentation which, among other things, allows Customs "to assess properly the duties on the merchandise, [and] collect accurate statistics with respect to the merchandise * * *." Clearly, an invoice that sets forth a false purchase price does not satisfy this requirement. Equally clearly, such an invoice fails the requirement imposed by 19 U.S.C. 1481(a)(5), that each invoice of imported merchandise set forth "[t]he purchase price of each item * * *." 20 Cust. B. & Dec. 176. T.D. 86-56 provides further that such documentation will not be accepted and must be returned to the importer for correction. Nevertheless, pursuant to the field instructions implementing T.D. 86-56, dated May 1, 1986, Customs may accept an entry so long as there is an acceptable explanation for any differences in the price or value information contained in the entry documentation.

In accordance with T.D. 86-56, the discrepancies between the commercial and visaed invoices raise the presumption that either or both of the documents contain false or erroneous information in regard to appraisement. As this presumption has been raised, the protestant must establish to the satisfaction of the Customs officer that the price stated on the invoice was, in fact, the price actually paid by the importer.

Protestant asserts that their written explanation absent supporting evidence is sufficient to fulfill the field instruction requirements of an acceptable explanation for the discrepancy. In other words protestant asserts that all it must do is state that the importer paid the seller/middleman the commercial invoice price. We disagree.

By merely stating that the importer paid the commercial invoice price the protestant has not overcome the presumption of correctness attached to your liquidation of the entry. To overcome the presumption protestant needed to provide documentation that supported its claimed value and an explanation of the discrepancy between the commercial invoice and the visaed invoice. Such documentation would have included but not been limited to a written agreement between the importer and seller/middleman, a purchaser order between the two and/or most importantly proof of payment between the two parties. Absent such documentation, the protestant has not overcome the presumption that the imported merchandise was properly appraised.


The protest should be DENIED. The protestant has not overcome the presumption that he imported merchandise was properly appraised.

In accordance with section 3A(11)(b), Customs Directive 099 3550-065, dated August 4, 1993, this decision should be mailed by your office to the protestant no later than sixty days from the date of this letter.

Any reliquidation of the entry in accordance with this decision must be accomplished prior to the mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS, and to the public via the Diskette Subscription Service, the Freedom of Information Act and other public access channels.


Virginia L. Brown, Chief
Value Branch

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