Newly Released CBP HQ Rulings on Oct. 3
The Customs Rulings Online Search System (CROSS) was updated Oct. 3 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H292054: Eligibility of unsold merchandise, returned by a retailer to the importer, for substitution unused merchandise drawback; 19 U.S.C. § 1313(j)(2)
| Ruling: For purposes of claiming drawback pursuant to 19 U.S.C. § 1313(j)(2), we find that the Company’s unsold jewelry is both unused and within the Company’s possession prior to exportation. |
| Issue: Is the Company’s unsold jewelry unused for drawback purposes? Is the unsold jewelry within the Company’s possession prior to exportation? |
| Item: Jewelry imported by the anonymous Company shipped to various retail locations for sale to its end customers. The retailers never hold legal title, and only pay the Company for jewelry that is ultimately sold to end customers. While in the retailer’s inventory the jewelry is displayed for potential customers and possibly tried on. |
| Reason: The jewelry has not been used for its intended purpose of adornment of the purchaser, and instead was worn only to test fit as part of an offer for sale. The Company holds title to the jewelry throughout the transaction, and has physical possession of the jewelry prior to exportation. |
| Ruling Date: Sept. 26, 2022 |
H326633: Request for Reconsideration of HQ H314296; Related Parties; Unrelated final customer; Transaction Value
| Ruling: The merchandise should be appraised using transaction value at the price of the sale to the final U.S. customer. |
| Issue: In HQ H314296, CBP concluded that the merchandise should be appraised using transaction value based on the price paid or payable by the final U.S. customer. The importer disagrees and asserts that the merchandise should be appraised under transaction value based on the price paid or payable by the U.S. importer or under the computed or fallback appraisement method. |
| Item: Merchandise sold by the manufacturer to a middleman, then to a U.S. importer, and then to the final U.S. customer. The terms of sale on the invoices between the middleman and manufacturer and the importer and middleman say risk of loss transfers once payment is received. The terms of conditions of the sale from the importer to the final customer says risk of loss transfers once the goods are with the carrier. The merchandise was delivered to the end U.S. customer on Oct. 15, 2015, with final payment having been submitted the day earlier. The importer paid the middleman on Dec. 18, 2015. The middleman completed payment to the manufacturer on Feb. 19, 2016. |
| Reason: The related manufacturer, middleman and U.S. importer were not functioning as bona fide buyers and sellers because the middleman had no title to the merchandise when it was shipped to the importer and delivered to the final customer. Title to the merchandise transferred directly from the manufacturer to the final customer and the relationship between the related parties (manufacturer, middleman and importer) affected the price. |
| Ruling Date: Sept. 20, 2022 |