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HQ H017621

October 30, 2007

OT:RR:CTF:VS 017621 GG

Mr. Paul Vroman
DHL Global Forwarding
2660 20th Street
Port Huron, MI 48060

RE: Transaction value; sale for exportation

Dear Mr. Vroman:

This is in response to your ruling request, dated August 21, 2007, made on behalf of LightAir AB. Our analysis also takes into account the additional information you sent us on October 9, 2007.


LightAir AB of Solna, Sweden (LightAir), purchases various products, such as air purifiers, from an unrelated Chinese vendor, United Products Industrial Ltd. of Kowloon, Hong Kong (United Products). Products intended for the U.S. market are shipped directly from Hong Kong to the United States, where they are entered at several ports of entry and then placed in a DHL warehouse in Chicago. LightAir then sells the products to U.S. customers. No proceeds of these domestic sales accrue to United Products.

LightAir seeks advice on the correct method of appraising the imported merchandise. To this end, it has provided documents from a representative transaction involving air purifiers with its ruling request. These include:

An e-mail message from LightAir to United Products, initiated on February 3, 2007, confirming the placement of purchase orders for products going to various international destinations.

An attachment to the February 3 e-mail, identified as “purchase orders No. 004 and 005”, which indicate the quantities of different model numbers that will go into separate containers. A country code next to each quantity ordered specifies whether the accompanying product adaptors are made for use in Europe, the United States, the United Arab Emirates, the United Kingdom, or India. Purchase order No. 004 lists five 40 ft containers, three of which contain items with exclusively U.S. adaptors. None of the other containers listed on purchase order No. 004 or on purchase order No. 005 has items with U.S. adaptors. Prices are given in both U.S. dollars and Swedish kronor.

A spreadsheet, identified as a shipment schedule, indicating shipping dates of the items ordered under purchase orders No. 004 and 005. This schedule shows a shipment date of May 27, 2007, for the three containers loaded with air purifiers with the U.S. adaptors. That particular shipment is from Yantian to Chicago. The shipment schedule also lists the different departure dates and European and Middle Eastern destination ports for the remaining containers of items ordered in purchase orders No. 004 and 005.

A statement of account from United Products to LightAir, indicating that LightAir paid a 30% deposit when it placed its orders.

An invoice issued by United Products to LightAir, for the sale of one portion of the products ordered in purchase order No. 004. This shows FOB Yantian terms of sale; Yantian port of lading; Los Angeles port of discharge; and Chicago as the final destination. The invoice refers to purchase order No. 004.

A packing list for the items reflected on the foregoing invoice.

Debit notes from United Products to LightAir, requesting remittance of payment to a Hong Kong bank.


Whether the imported merchandise may be appraised under transaction value on the basis of the price paid by LightAir to United Products?


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) codified at 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 enumerated additions. 19 U.S.C. § 1401a(b)(1)(D)&(E).

To be appraised under transaction value, there must be a bona fide sale and the sale must be “for exportation to the United States.” For Customs purposes, the word "sale" has been defined as a transfer of ownership in property from one party to another for a consideration. J.L. Wood v. United States, 62 CCPA 25, 33; C.A.D.1139 (1974). While J.L. Wood was decided under the prior appraisement statute, Customs adheres to this definition under the TAA. The primary factors to consider in determining if there has been a transfer of property or ownership are whether the alleged buyer has acquired title and assumed the risk of loss. See, Headquarters Ruling Letter (HRL) 545416, dated December 10, 1993. In this regard, the submitted documentation shows that a “FOB Yantian” term of sale was used in the transactions between United Products and LightAir. An FOB port of export term of sale means that risk of loss transfers from the seller to the buyer upon lading on the outgoing carrier. In the absence of a written instruction to the contrary, it is commonly accepted that title passes simultaneously with assumption of risk of loss. In this case, LightAir would assume title and risk of loss from the point that the air purifiers were loaded on board the vessel in China. Finally, the statement of account and the debit notes indicate that payment, or consideration, was made or anticipated. The documentation supports the existence of a bona fide sale.

With regard to whether the air purifiers were sold for exportation to the United States, the fact that only those items with adaptors designed for use in the United States were ordered and placed in the U.S.-bound containers, supports a conclusion that a U.S. destination was intended. Goods designed and destined for other locations were ordered and placed in their own, separate containers.


The transactions between United Products and LightAir are sales for exportation to the United States within the meaning of 19 U.S.C. § 1401a(b)(1), permitting the use of transaction value.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction.


Monika R. Brenner
Chief, Valuation and Special Programs Branch

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