Newly Released CBP HQ Rulings May 19
The Customs Rulings Online Search System (CROSS) was updated May 19 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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H296075: Internal Advice Request; Dutiability of E-Tailing Franchise Fees; Related Parties; Test Values; Circumstances of the Sale
| Ruling: No part of the e-tailing franchise fee payments that the Buyer makes to the Seller should be included in the price actually paid or payable for the merchandise or added as a statutory addition. However, because the Buyer has not established that transaction value is acceptable for the related party transactions, an alternate method of appraisement must be used to establish the customs value of the imported merchandise. |
| Issue: With respect to merchandise that the Buyer purchases from the Seller, whether any part of e-tailing franchise fee payments that the Buyer makes to the Seller should be included in the price actually paid or payable or added to the price as a statutory addition; and whether transaction value is an acceptable method of appraisement for the imported merchandise. |
| Facts: Dutiability of e-tailing franchise fees sought by unnamed online retailer of high-end apparel products to customers in the North American market. The online retailer is the buyer and the seller is its parent company. The Buyer was established to serve the North American market as a warehousing and resale operation that relies upon supplier relationships developed by the Seller. These goods are then resold to retail customers who place orders on the Buyer’s website, after which the goods are dispatched to the customer from its US warehouse. |
| Reason: If the customs value of imported merchandise cannot be determined under the methods set forth in the regulatory code, it may be determined on the basis of the “fallback” method. This method provides for appraisal on the basis of a value derived from one of the previous methods, reasonably adjusted to the extent necessary to arrive at a value. As the imported merchandise at issue appears to have been imported for resale to North American customers, such a flexible application of the deductive value method may be appropriate here. CBP noted, however, that certain limitations exist under the fallback method. For example, merchandise may not be appraised on the basis of the price in the domestic market of the country of export, the selling price in the United States of merchandise produced in the United States, minimum values, or arbitrary or fictitious values. |
| Ruling Date: March 6, 2025 |
H344349: Coastwise Transportation of Passengers; 46 U.S.C. §§ 55101 and 55103; 19 C.F.R. §§ 4.50(b) and 4.80a; sailing school; scientific voyage
| Ruling: The voyage of the STATSRAAD LEHMKUHL, as contemplated in the ruling, would not violate 46 U.S.C. § 55103. |
| Issue: Whether the voyage of the STATSRAAD LEHMKUHL, as contemplated above, would constitute a violation of 46 U.S.C. § 55103, which prohibits non-coastwise-qualified vessels from transporting passengers directly between U.S. ports. |
| Item: One Ocean Expedition of the Norwegian sail training vessel S/V STATSRAAD LEHMKUHL. |
| Reason: See ruling. |
| Ruling Date: May 1, 2025 |
H343362: Prospective ruling request; First Sale
| Ruling: Based on the information reviewed by CBP, “first sale” transaction value appraisement may not be utilized by the importer for the transaction described in the proceeding. |
| Issue: Whether the sale between the related manufacturer and the middleman is a sale for export to the United States that may be used for appraisement purposes under transaction value. |
| Item: An unnamed U.S. importer sought a prospective ruling regarding the use of “first sale” transaction value appraisement for merchandise it imports into the U.S. An unnamed Chinese manufacturer and distributor of metal, woodworking, and industrial tools sells to the U.S. importer [X] through a middleman [X] based in Hong Kong. All parties to the transaction are related entities and their parent company [X] is a holding company. |
| Reason: The submitted documents show that the Incoterms between the manufacturer and middleman are FOB port of shipment and the Incoterms between the middleman and importer are DDP. The purchasing and distribution agreements indicate that the middleman has risk of loss/title to the goods when the merchandise is loaded on the ship at the port in China and the risk of loss/title transfers to the importer when the goods are delivered in the United States. The goods are clearly destined to the U.S. and the importer and middleman pay for the goods. However, despite the extended payment terms (120 days pursuant to the purchase order from the middleman), the middleman submits payment to the manufacturer 146 or 156 days after the invoices are issued. The payments do not include interest even though the payment is made more than 120 days from the receipt of the invoice. This shows that the middleman as a related party receives favorable payment terms that it would not have received if it were an unrelated party. Therefore, the sale transaction between the manufacturer and the middleman as presented does not constitute a bona fide sale because it is not between an independent seller and buyer. |
| Ruling Date: May 6, 2025 |
H334880: Tariff Classification and Eligibility for Preferential Tariff Treatment under the Dominican Republic-Central America-United States Free Trade Agreement (“DR-CAFTA”) of Rubber Boots
| Ruling: By application of GRI 1 and 6, the subject women’s waterproof rubber boots (Style XWAB102) are classified under heading 6401, and specifically, in 6401.92.90, which provides for “Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: Other footwear: Covering the ankle but not covering the knee: Other: Other.” CBP also determined that the subject waterproof rubber boots for women qualify as originating goods under DR-CAFTA. |
| Issue: (1) What is the tariff classification of the subject waterproof rubber boots? (2) Are the subject waterproof rubber boots eligible for preferential tariff treatment under the DR-CAFTA? |
| Facts: DJM Footwear seeks the tariff classification of one style of women’s rubber boots (Style XWAB102) and the eligibility of the product for preferential tariff treatment under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA). |
| Reason: The manufacturing process, which includes vulcanization, occurs in the Dominican Republic. Non-CAFTA-DR neoprene fabric is cut to shape and sewn to create a sock lining. Footwear obtained by “bonding and vulcanising” can be classifiable as “waterproof footwear” in heading 6401 and subheading 6401.92.90. To claim preferential tariff treatment, an imported good of chapter 64 must meet conditions set forth in general note 11, 17, 25, 26 or 28 of the tariff schedule. The regional value content requirement must also be satisfied. The RVC of this good is 83.73%, which is above the 55% RVC required for subheading 6401.92.90 6401.92.90. As such, CBP determined that the subject waterproof rubber boots for women qualify as originating goods under DR-CAFTA. |
| Ruling Date: May 8, 2025 |
H334879: Tariff Classification and Eligibility for Preferential Tariff Treatment under the Dominican Republic-Central America-United States Free Trade Agreement (“DR-CAFTA”) of Two Styles of Dipped Neoprene Rubber Boots Incorporating a Protective Metal Toe-Cap
| Ruling: By application of GRI 1 and 6, the subject waterproof rubber boots incorporating a protective metal toe-cap (Servus 15’’ Dipped Neoprene Rubber Boot, Steel Toe, stock #22214, and the Servus 12’’ Dipped Neoprene Rubber Boot, Steel Toe, stock # 22114) are classified under heading 6401, and specifically, in 6401.10.00, which provides for “Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: Footwear incorporating a protective metal toe-cap.” Furthermore, the regional value content for both styles of boots is above the 55% RVC required for subheading 6401.10.00, in the tariff shift rule set forth in GN 29(n). As such, we determine the subject waterproof rubber boots for women qualify as originating goods under DR-CAFTA. |
| Issue: (1) What is the tariff classification of the subject waterproof rubber boots that incorporate a protective metal toe-cap? (2) Are the subject boots eligible for preferential tariff treatment under the DR-CAFTA? |
| Item: Two styles of Servus-brand dipped neoprene rubber boots (Stock Nos. 22214 and 22114) that incorporate a protective metal toe-cap. |
| Reason: The manufacturing process, which includes vulcanization, occurs in the Dominican Republic. Non-CAFTA-DR neoprene fabric is cut to shape and sewn to create a sock lining. Footwear obtained by “bonding and vulcanising” can be classifiable as “waterproof footwear” in heading 6401 and subheading 6400.01.10. Furthermore, for the Servus 12”, the RVC is 83.54%, which is above the required 55% requirement provided for in GN 29(n) for goods classified under subheading 6401.10.00. For the Servus 15”, the RVC is 83.80%, which is above the required 55% requirement. |
| Ruling Date: May 8, 2025 |
H333417: Tariff Classification and Eligibility for Preferential Tariff Treatment under the Dominican Republic-Central America-United States Free Trade Agreement (“DRCAFTA”) of Waterproof Rubber Boots for Women
| Ruling: By application of GRI 1 and 6, the subject waterproof rubber boots for women (Hunter Original Tall WFT1000RMA) are classified under heading 6401, specifically, in6401.92.90, which provides for “Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: Other footwear: Covering the ankle but not covering the knee: Other: Other.” Furthermore, the waterproof rubber boots for women will qualify as originating goods under DR-CAFTA. |
| Issue: (1) What is the tariff classification of the subject waterproof rubber boots? (2) Are the subject waterproof rubber boots eligible for preferential tariff treatment under the DR-CAFTA? |
| Item: Hunter Boots USA's waterproof rubber boots for women |
| Reason: The boot has a rubber, not a metal, toe-cap, and therefore, the boot is not classifiable in subheading 6401.10.00, which provides for footwear incorporating a protective metal toe-cap. Moreover, while the footwear covers the ankle but not the knee, we note that the footwear is not akin to ski-boots or snowboard boots and do not have soles and uppers of which over 90 percent of the external surface area are poly(vinyl chloride). The footwear is therefore not classifiable in subheadings 6401.92.30 or 6401.92.60. Accordingly, the subject merchandise is classified in subheading 6401.92.90, which provides for “Waterproof footwear with outer soles and uppers of rubber or plastics, the uppers of which are neither fixed to the sole nor assembled by stitching, riveting, nailing, screwing, plugging or similar processes: Other footwear: Covering the ankle but not covering the knee: Other: Other.” Furthermore, the RVC of the subject merchandise is 72.65%, which is above the required 55% requirement provided for in GN 29(n) for goods classified under subheading 6401.92.90. As such, we determine the subject waterproof rubber boots for women qualify as originating goods under DR-CAFTA. |
| Ruling Date: May 8, 2025 |
H330207: Method of appraisement for intracompany transfers of company-owned material
| Ruling: CBP found that appraising the imported COMAT under the fallback method, using the modified transaction value of identical or similar merchandise as calculated by the proposed average unit price, is not an acceptable method of valuation pursuant to 19 U.S.C. § 1401a. Nevertheless, appraisal of COMAT under the fallback application of the transaction value of identical or similar merchandise may be appropriate if the Carrier makes reasonable adjustments to consider the valuation of merchandise exported at or about the same time as the subject COMAT. |
| Issue: Whether the Carrier’s proposed use of a system average unit price is an acceptable method of appraisal for imports of company-owned material. |
| Facts: An unnamed company sought to import “company-owned materials” (“COMAT”). The subject COMAT may include the following product types: aircraft parts; engine parts; interior aircraft parts, such as flight computers, communication units and panels, and navigational displays; ground support equipment; calibration apparatuses; shop consumables; and tools for aircraft maintenance. In addition, the COMAT will be imported in one of two ways: (1) intracompany transfers from one of the airline’s international facilities to a U.S.-based facility, or (2) items repaired abroad and returned to the United States. In both instances, the COMAT are incorporated into the Carrier’s aircraft or are otherwise dedicated to the airline’s internal use. |
| Reason: The Carrier’s proposed average unit price is likely to undervalue imported COMAT and is not a reasonable or flexible application of 19 U.S.C. § 1401a(c), which provides that importers may utilize the transaction value of identical or similar merchandise exported “at or about the same time” as the merchandise being valued. The Carrier might consider narrowing its COMAT appraisal to a weighted average that incorporates all products of a given class purchased within the prior two years. Alternatively, should the Carrier prefer to incorporate into its COMAT average those items in its inventory that are older than two years, it might consider calculating the current fair market value for such items and utilizing a rolling average for future valuation calculations. |
| Ruling Date: May 16, 2025 |