H305053

 U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H305053 October 6, 2021 OT:RR:CTF:VS H305053 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 in response to an internal advice request dated May 22, 2019, by Pennington P.A., on behalf of their client, Phoenix Forest Products Inc. (“Phoenix”), regarding the proper appraisement of their client’s product, Canadian softwood lumber, and the correctness of their client’s invoicing method. FACTS: Phoenix is a Canadian exporter of lumber products to the United States and acts as the importer of record. Phoenix sells its lumber to U.S. customers on a delivered duty paid (DDP) basis. The lumber is subject to antidumping duties (ADD) and countervailing duties (CVD). Phoenix uses its customs broker’s Lumber Portal to generate an export permit and customs invoice. The customs invoice shows that the total price includes the customs brokerage charges, ADD/CVD and freight, including the amount of the freight charge. Phoenix’s customs broker uses the export permit, customs invoice, and Plant and Plant Product Declaration, to produce the Customs and Border Protection (CBP) Form 7501 and to produce an ADD/CVD calculation sheet. The broker uses the customs invoice and calculation sheet to file the entry. The carrier presents the customs invoice and eManifest to CBP at the border crossing. The customer invoice issued by Phoenix to its customers indicates that the terms of sale are DDP and contains the following statement: “Prices include freight, brokerage and applicable antidumping and countervailing duties.” The customer invoice total price matches the total price on the customs invoice, but the customer invoice does not break out the various charges. The customs invoice indicates that customs brokerage fees, freight and CVD/ADD are included in the price, but only identifies separately the amount for freight. Counsel submitted an export permit, customs invoice, Plant and Product Declaration (APHIS form), CBP Form 7501, and an ADD/CVD calculation sheet for an entry at issue. In addition, counsel submitted a sample customer invoice. In addition, in counsel’s response to a CBP Form 29, dated May 3, 2019, counsel submitted declarations by Phoenix’s U.S. customers stating the customers understood that the prices they paid included the applicable ADD/CVD; sample invoices to the same customers reflecting prices before and after the issuance of preliminary results of the countervailing duty investigation; a spreadsheet showing prices before and after the issuance of the preliminary result of the countervailing duty investigation; sample invoices to the same customers immediately before and after the issuance of the preliminary result of the antidumping duty investigation; a spreadsheet showing prices before and after the issuance of the preliminary results of the antidumping duty investigation; sample invoices to the same customers before and after the issuance of both of the preliminary results of the countervailing duty investigation and of the antidumping duty investigation; and, a spreadsheet showing the price increase due to the combined effects of ADD and CVD. ISSUE: Whether the correct appraisement of the imported Canadian lumber is the total invoice price minus freight, customs brokerage and applicable ADD/CVD. Whether the invoicing method used by Phoenix satisfies Customs’ statutory and regulatory requirements concerning invoices. LAW AND ANALYSIS: 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 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 related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller. Any rebate of, or other decrease in, the price actually paid or payable that is made or otherwise effected between the buyer and seller after the date of the importation of the merchandise into the United States shall be disregarded in determining the transaction value under paragraph (1). Furthermore, at 19 U.S.C. § 1401a(b)(3), the statute provides, in relevant part: The transaction value of imported merchandise does not include any of the following, if identified separately from the price actually paid or payable and from any cost or other item referred to in paragraph (1): * * * (B) The customs duties and other Federal taxes currently payable on the imported merchandise by reason of its importation, and any Federal excise tax on, or measured by the value of, such merchandise for which vendors in the United States are ordinarily liable. Reading 19 U.S.C. § 1401a(b)(3) and (b)(4) together, it appears that while § 1401a(b)(4) defines “price actually paid or payable” in a manner that includes customs duties and other Federal taxes within the phrase, § 1401a(b)(3) clarifies that customs duties and other Federal taxes currently payable may be deducted from the price actually paid or payable if these charges are identified separately. However, if they are not identified separately, they are not deductible. CBP has previously held that ADD/CVD fall within the phrase “customs duties and other Federal taxes currently payable” in 19 U.S.C. § 1401a(b)(3). See Headquarters Ruling Letter (HQ) 545304, dated January 4, 1994; HQ 546191, dated April 12, 1999. Therefore, if the ADD/CVD are identified separately from the price actually paid or payable for the merchandise, these charges may be deducted from the transaction value of the merchandise, that is, the invoiced amount paid by the buyer. In a DDP transaction, as noted above, the seller pays the duties, fees, taxes and other charges payable upon export and import of the goods, 

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 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 related services incident