H301048

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection 
 HQ H301048 May 26, 2021 OT:RR:CTF:VS CMR CATEGORY: Valuation Center Director Ann Marie Paul U. S. Customs and Border Protection Industrial and Manufacturing Materials Center of Excellence and Expertise 726 Exchange Street, Suite 400 Buffalo, NY 14201 RE: Request for Internal Advice Regarding Deductions from Entered Value of Softwood Lumber; Countervailing Duties; Anti-Dumping Duties Dear Ms. Paul: This is response to an internal advice request received by this office from the Industrial and Manufacturing Materials Center of Excellence and Expertise (“CEE”) posing various questions with regard to the deduction of countervailing duties (case C-122-858) and anti-dumping duties (case A-122-857) from entries of softwood lumber. The CEE has received hundreds of Post Summary Corrections (PSCs) for value changes for entries involving foreign importers of record who used Delivered Duty Paid (DDP) terms of sale. These PSCs involve either a claim that anti-dumping/counter- vailing duties (AD/CVD) were inadvertently not deducted from the entered value at the time of entry, or the type 03 entry had either anti-dumping duties (ADD) or countervailing duties (CVD) declared at time of entry, but was missing the other related case. The PSCs result in the submission of the ADD or CVD and a reduction in the entered value as a result of a deduction of these additional duties. FACTS: A representative entry was selected for examination. The entry at issue involves the filing of a PSC claiming that ADD was inadvertently omitted at the time of entry. CVD was declared at the time of entry and deducted from the invoice value. Your CEE requested documentation from the filer (the importer of record’s broker) to substantiate the deductions. Various documents were submitted to this office for our review involving this entry of softwood lumber (planed lumber). The invoice from the importer of record (Canadian seller) to the U.S. buyer, dated January 11, 2018, indicates under “Freight Terms/Mode d’expedition” that “Transport not included/TRANSP.NON INCLUS.” It described the softwood lumber being sold and indicates a price per thousand board feet (MBF) of $387.43, along with a total price for the lumber of $43,739.30. In addition, the invoice shows a freight charge of $8,192.86. The invoice total consists of the total price for the lumber plus the freight charge and totals $51,932.16. The invoice also indicates that if the invoice is paid on or before January 21, 2018, the buyer can deduct $218.70 as a discount. The invoice is void of any shipping terms or terms of sale, with the exception of payment terms which are “.5% 10 days net 11 days.” The seller’s “Sales Acknowledgement,” dated January 11, 2018, indicates terms as “.5% 10 days net 11 days.” As in the invoice, it indicates shipping terms as “Transport not included/TRANSP.NON INCLUS.” It indicates the transportation is by rail and is to be billed to a specific IRS number. The sales acknowledgement document reflects the same prices as the invoice, i.e., $387.43/MBF for a total of $43,739.30 for the lumber and $8,192.86 for the freight. By email, dated April 4, 2019, the importer explained that the reference to “Transport not included” on the invoice to the U.S. buyer “means that the freight charge itemized on the invoice must be added to (it is not already included) in the amount listed for the quantity of lumber purchased.” The importer stated that “[i]t is a reminder to us too that we should itemize the freight separately on our invoice. It does not mean that the customer pays the freight separately themselves.” In addition, the importer submitted documentation to show that the freight providers invoiced the importer and the importer paid for the freight. The documentation included invoices from the freight providers to the importer and proof of payment by the importer to the freight providers. The invoice that the Canadian seller provides to the broker for customs clearance provides not only the U.S. buyer’s name and address, but also the buyer’s IRS number, which matches the number on the sales acknowledgement document as the IRS number to which the freight is to be billed. The invoice provides the discount amount, the terms “.5% 10 days net 11 days,” and the same quantity of lumber as reflected on the invoice to the U.S. buyer and on the sales acknowledgement document. However, while the invoice reflects the same total invoice amount of $51,932.16, it indicates that the price per MBF is $460. There is a slight difference in the freight amount reflected on this document from the invoice to the U.S. buyer, with the freight reflected on this document as $8,193.27. Further, this invoice states on its face: The invoice total includes the following charges: Customs Brokerage, and whenever applicable, CVD and Anti-Dumping Duties. Cash Discount to be Deducted. The document indicates that the price includes the customs duty, brokerage, and freight. A separate piece of paper with a breakout of the components of the invoice price was received with the customs clearance invoice. That document lists material (wood), discount, freight, broker’s fee, ADD, CVD and the amount of each to total the invoice price including freight. The original entry summary, filed on January 26, 2018, and signed by the customs broker on January 24, 2018, indicates an invoice value of $51,932.16 from which the following were deducted: Cash Discount, $218.69; Freight Charge, $8,193.27; Brokerage fee, $126; and Government Charge (CVD), $5,392.49. After deductions, the entered value on the Customs and Border Protection Form (CF) 7501 was $38,001.71, rounded to $38,002. The revised entry summary, submitted as a PSC, and signed by the customs broker on July 12, 2018, reflects the same invoice value of $51,932.16 from which the following were deducted: Cash Discount, $218.69; Freight Charge, $8,193.27; Brokerage fee, $92; and Government Charge, $7,307.27 (ADD, $2,181.71; and, CVD, $5125.57). After deductions, the entered value on the CF 7501 was $36,120.93, rounded to $36,121. CBP also received documents provided to the broker by the seller including a “Pre-Alert Invoice for the Railroad,” a “Softwood Lumber FAX Cover Sheet,” a “Softwood Lumber Export Permit Cover Sheet,” a copy of the “Plant and Plant Product Declaration Form” (APHIS form); and a copy of the “Softwood Lumber Export Permit” issued by the Canadian government. The total value for the lumber indicated on the softwood lumber permit is $43,487.00 (USD). The export price, if the product has undergone only primary processing, is “the value that would be determined FOB at the facility where the product underwent its last primary processing before export.” The “Pre-Alert Invoice for the Railroad” indicates the lumber value at $43,487.19. The “Softwood Lumber FAX Cover Sheet,” prepared by a representative of the seller, shows the “export price” of the lumber as $43,487.19 and contains a definition of “export price” on the document. “Export price” is defined as: The export price is the price of product at the last foreign based plant, typically FOB plant. The export price is currently required on the SWL permit. The “Softwood Lumber Export Permit Cover Sheet” shows a value for permit purposes of $43,487.19, and indicates that transportation will be by rail. Finally, the APHIS form requires the entered value of the imported article, in this case, the softwood lumber. The entered value on the APHIS form is $43,487.19. The documents reviewed by CBP do not contain any terms of sale or freight terms, other than the payment terms referenced above. Via email, dated November 2, 2018, the seller has explained that there is no purchase order to provide and no contract. Sales are made by telephone and the seller confirms sales via the issuance of a “Sales Acknowledgement” document. The seller has explained that because the C

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; 19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as the “price actually paid or payable for the merchandise when sold for exportation to the United States” plus certain statutory additions. 19 U.S.C. § 1401a(b)(1). In this case, the seller uses transaction value as the basis of appraisement and claims the sale is a delivered duty paid (DDP) sale. DDP is described in Incoterms® 2010, ICC Rules for the use of domestic and international trade terms, published by the International Chamber of Commerce (2010), at 69, as follows:“Delivered Duty Paid” means that the seller delivers the goods when the goods are placed at the disposal of the buyer, cleared for import on the arriving means of transport ready for unloading at the named place of destination. The seller bears all the costs and risks involved in bringing the goods to the place of destination and has an obligation to clear the goods not only for export but also for import, to pay any duty for both export and import and to carry out all customs formalities.Under DDP sales, the seller must contract, at its own expense, for the transportation of the goods to the named place of destination. See supra at 70. In addition, the seller pays the duties, fees, taxes and other charges payable upon export and import of the goods. See supra at 72. In determining the transaction value of merchandise, it is necessary to determine what the “price actually paid or payable for the merchandise when sold for exportation to the United States” actually is. At 19 U.S.C. § 1401a(b)(4), the statute provides: For purposes of this subsection – The term “price actually paid or payable” means the total payment (whether direct or indirect, and exclusive of any costs, charges, or expenses incurred for transportation, insurance, and rel