December 19, 2007 CBP Bulletin Notice on Valuation of Children's Dress-Up Products
In the December 19, 2007 issue of the U.S. Customs and Border Protection Bulletin(Vol. 41, No. 52), CBP published a notice proposing to modify a ruling and revoke treatment as follows:
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Proposed modification of ruling; proposed revocation of treatment. CBP is proposing to modify and correct a ruling on the valuation of children's dress-up products shipped from Canada. CBP is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.
CBP states that any party who has received a contrary written ruling or decision on the merchandise that is subject to the proposed ruling modification, or any party involved with a substantially identical transaction, should advise CBP by January 18, 2007, 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.
Children's dress-up products destined for U.S. market to be stored in Canada. A Canadian company, "CEC," purchases merchandise from an unrelated manufacturer in Sri Lanka, "DSL," for resale in Canada and the United States. CEC will store all of its merchandise at its warehouse in Toronto, with part of the warehouse designated as a bonded facility in order to segregate and store the U.S. portion of the shipments.
Under this system, CEC will issue separate purchase orders to DSL for the U.S. destined products. These purchase orders are based on past and projected sales to U.S. customers, not on actual orders already placed. This is done to ensure that there will be sufficient stock to handle the orders when they come in, usually during the Halloween through Christmas seasons.
The terms of sale for the DSL merchandise purchased by CEC will be FOB Columbo, Sri Lanka regardless of whether the merchandise is destined for the U.S. or Canadian market. CEC would like to declare the price it pays to DSL upon eventual entry into the U.S. as the transaction value.
CBP is proposing to issue HQ H009727 in order to modify HQ 563551 to state that transaction value based on the sale between CEC and the U.S. customer should be used.
CBP explains that although the sales between CEC and DSL are bona fide, they are not "for exportation to the United States," as at the time of purchase there are no U.S. customers or arrangements to physically send the goods to the U.S., and the ultimate disposition of the merchandise is unknown.
(In HQ 563551, CBP held that the price paid to DSL could not be used under the transaction value method, and that an alternative method of appraisement should be used.)
proposed: transaction value based on sale to U.S. customer; current: an alternative methods of appraisement in the valuation hierarchy.
December 19, 2007 CBP Bulletin (Vol. 41, No. 52) available athttp://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2007/