January 11, 2006 CBP Bulletin Notice on Portion of Valuation Ruling Relating to Management Fees and Expenses
In the January 11, 2006 issue of the U.S. Customs and Border Protection Bulletin (CBPBulletin) (Vol. 40, No. 3), CBP issued a notice proposing to modify one portion of a valuation ruling relating to management fees and expenses. CBP states that it is also proposing to revoke any treatment it has previously accorded to substantially identical transactions paid by the buyer of imported merchandise to a related company who was not the seller of the merchandise.
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CBP states that any party who has received a contrary ruling or decision on the merchandise that is subject to the proposed ruling, or any party involved with a substantially identical transaction, should advise CBP by February 10, 2006, the date that written comments on the proposed ruling are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.
In addition, CBP states that this notice covers any rulings on the subject merchandise that may exist but have not been specifically identified.
Proposed Modification of One Portion of a Valuation Ruling
CBP is proposing to issue HQ 548547 in order to modify HQ 548316, which addressed five issues concerning the determination of transaction value, including the dutiability of certain management fees paid by the buyer to a related company that was not the seller of the imported merchandise.
In HQ 548316, the management fees were to be paid for specific services relating to the importer's sales. CBP held that the payments were not assists and, as such, were not additions to the price actually paid or payable. CBP now states that while that holding was technically correct, it did not address the more germane issue of whether the payments are included in transaction value as part of the price actually paid or payable for the imported merchandise.
CBP states that HQ 548316 needs to be modified to incorporate a price actually paid or payable analysis of the management fees. Under such an analysis, the modified ruling will reflect that the management fees were not properly included in the price actually paid or payable for the imported merchandise, because they were not paid to, or for the benefit of, the seller and did not relate to the imported merchandise.
In modifying HQ 548316, CBP would also remove any references to HQ 543512 and HQ 542122. In deference to certain court cases which would demand a different analysis and possibly a difference result, CBP states that it no longer accords any weight to HQ 543512, which involved the payment of management fees by the buyer to the seller of imported merchandise. Among other things, CBP states that HQ 542122 has limited precedential value with respect to HQ 548316 because it does not address the question of whether the payments were included in the price actually paid or payable.
It is CBP's position that the payments should not have been included in the transaction value as part of the price actually paid or payable, because the payments were not made to the seller and there was no evidence that they benefited the seller in any way. In addition, there was no evidence that the payments were made for the imported merchandise.
January 11, 2006 CBP Bulletin (Vol. 40, No. 3) available at http://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2006/vol40_01112006_no3/