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HQ 545297

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May 31, 1994

VAL CO:R:C:V 545297 CRS

CATEGORY: VALUATION

District Director
U.S. Customs Service
Federal Building
511 N.W. Broadway
Portland, OR 97209

RE: Mold charge/assist disclosure - AVIA Group International

This is in reply to your memorandum of April 6, 1993, under cover of which you forwarded an internal advice request submitted by Ross & Hardies on behalf of AVIA Group International (the "buyer"), on February 22, 1993. No written submission was made by your office in regard to this matter; however, members of my staff met with counsel on May 3, 1994, to discuss this issue. We regret the delay in responding.

FACTS:

The buyer provides certain "prototype" or "model" lasts free of charge to unrelated foreign manufacturers (the "sellers") for use in the production of imported shoes. The lasts provided by the buyer are used to make "production" lasts which are used directly in the manufacturing process. The prototype lasts are made from materials such as rubber or plastic, and are in the shape of a shoe sole. In contrast, the production lasts, while resembling a shoe sole, are built up around the edges in order that they might function as molds and are constructed of different materials.

ISSUE:

The issue presented is whether lasts provided by the buyer to the seller of imported shoes are similar to tools, dies and molds such that the value of the lasts would be added to the price actually paid or payable for the shoes.

LAW AND ANALYSIS:

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 (TAA; 19 U.S.C. § 1401a). The preferred method of appraisement under the TAA is transaction value, defined as the price actually paid or payable for the merchandise when sold for exportation to the United States, plus certain statutorily enumerated additions, including the value, apportioned as appropriate, of any assists. 19 U.S.C. § 1401a(b)(1).

The term "assist" is defined by section 402(h)(1)(A) of the TAA as including, inter alia, tools, dies, molds and similar items used in the production of imported merchandise, to the extent that the items are supplied directly or indirectly, and free of charge or at a reduced cost, by the buyer of the imported merchandise. 19 U.S.C. § 1401a(b)(1)(A).

However, the instant lasts are not used in the production of the imported shoes. Instead, they are used to make production lasts which are used actually to produce the imported merchandise. Accordingly, it is our position that the prototype lasts are not similar to tools, dies or molds. Instead, they are in the nature of U.S. design work and, therefore, are not assists within the meaning of section 402(h)(1)(A) of the TAA. E.g., Headquarters Ruling Letter (HRL) 542220 dated December 24, 1980 (TAA No. 15); HRL 542324 dated June 22, 1981 (TAA No. 33); HRL 542396 dated November 12, 1982.

HOLDING:

The prototype lasts supplied by the buyer to the seller of the imported shoes do not constitute an assist within the meaning of 19 U.S.C. § 1401a(h)(1)(A)(ii).

This decision should be mailed by your office to the internal advice requester no later than sixty days from the date of this letter. On that date 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, Lexis®, Freedom of Information Act, and other public access channels.

Sincerely,


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