H312640

HQ H312640 October 27, 2020 OT:RR:CTF:VS H312640 EE CATEGORY: Classification Shannon Dillinger UWL, Inc 1340 Depot St. Ste. 200 Rocky River, OH 44116 RE: Transaction value; charges incident to the international shipment of the merchandise; foreign inland freight Dear Ms. Dillinger: This is in response to your correspondence, dated July 20, 2020, in which you request a ruling whether certain charges for services by a global logistics provider should be included in the transaction value of the imported merchandise. FACTS: This is in reply to your letter, dated July 20, 2020, requesting a ruling on behalf of your client, Cracker Barrel Old Country Store, Inc. (“CBOCS”), an importer, on whether certain charges for services provided by Damco Customs Services Inc. (“Damco”), a global logistics provider, should be included in the transaction value of the imported merchandise. CBOCS sources products from various sellers around the world and utilizes the services of Damco to assist with the origin coordination, supplier/vendor communication, cargo handling, and a variety of other origin related services. You state that the fees for the services offered encompass the following as examples: -Fee charged by the carrier’s booking agent for booking services; -Bill of lading charge by the carrier for issuing the bill of lading; -Container Freight Station (“CFS”) fee for receiving, unloading, storing and packing cargo into containers; -Foreign customs clearance fee; -Container Yard (“CY”) monitoring fee; -Foreign inland freight costs in the country of export; -Equipment management fee charged by the local career to move a container from the factory/loading facility to the port of export; -Fee for handling Less than Container Load (“LCL”) cargo; -Port construction fee; -Port security charge; -Supply chain security fee; -Wharfage charge; -10+2 filing fee; -Terminal fee charged by the carrier for entering the terminal; -Documentation fee for issuing the Freight Cargo Receipt (“FCR”); -Container seal fee charged by the freight forwarder for issuing a container seal. -Telex release fee by the freight forwarder to inform the destination port that the bill of lading has been released -Origin VAT (6%) charge imposed by the Chinese government on the freight services of an international freight forwarder performed at the port of export. -Warehousing fee for handling goods into or out of the warehouse including receiving, storing and loading the goods into shipping containers to be exported. -Brokerage Fee -AMS/Electronic Manifest Fee -Gate fee / Late Gate fee -Fuel surcharge -Freight Forwarder handling fee -Terminal Handling Charge You provided documentation from a sample transaction for illustrative purposes. The documentation consists of two purchase orders from the importer to the seller, a commercial invoice, and a packing list from the seller to the importer for certain decorative articles. The commercial invoice lists the merchandise, quantity, unit price, and total price. You claim that the charges for the services above are included in the invoice as part of the price of the merchandise. The term of sale listed on the purchase orders, which correspond to the commercial invoice and packing list, is “FOB Ningbo.” You also submitted a waybill issued by the carrier and a freight and transportation summary statement issued by Damco. All of these documents reference the information on the purchase orders, invoice, and packing list. The freight and transportation summary statement references the waybill and lists the breakdown of services and fees charged by Damco per bill of lading. You claim that the dutiable value should be based upon the foreign seller’s invoice value less the charges assessed by Damco, on the basis that those charges are incident to the international shipment of the merchandise. ISSUE: Whether certain charges that are included in the invoice price for the imported merchandise may be properly excluded from transaction value as costs incident to the international shipment of the merchandise. 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 primary 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 amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. 19 U.S.C. § 1401a(b)(1). If, for any reason, sufficient information is not available with respect to the additions to the price actually paid or payable, the transaction value of the imported merchandise is treated as one that cannot be determined. 19 U.S.C. § 1401a(b)(1). The term “price actually paid or payable” is defined as: [T]he 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. 19 U.S.C. § 1401a(b)(4)(A). In Treasury Decision (“T.D.”) 00-20, CBP reiterated its longstanding position that with regard to freight, insurance and other costs incident to international shipment, including foreign inland freight, the importer of record must deduct the actual costs for these charges from the price actually paid or payable in determining transaction value, if these costs are included in the price actually paid or payable. The notice advised that CBP considers actual costs to constitute those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freight/insurance costs, a freight/insurance bill, a through bill of lading or proof of payment of the freight/insurance charges (i.e., letters of credit, checks, bank statements) are examples of some documents which typically serve as proof of such actual costs. Other types of evidence may be acceptable. CBP has previously determined that the 10+2 management fee, carrier agent booking fee, carrier bill of lading, CFS receiving, customs clearance, CY monitoring, documentation fee, equipment management fee, FCR/HBL issuance, LCL handling, port construction charge, port security charge, supply chain security fee, terminal handling charge, and wharfage fees are charges incident to the international shipment of the merchandise. See Headquarters Ruling Letter (“HQ”) H092560, dated April 7, 2010; see also HQ H119858, dated September 9, 2010; and HQ H119857, dated September 9, 2010. CBP has also held that the Automated Manifest System (“AMS”) fee is a charge incident to the international shipment of the merchandise. See HQ H148715, dated November 16, 2011. Additionally, CBP has held that the container seal fee is a charge incident to the international shipment of the merchandise. See HQ H219516, dated July 30, 2012. As stated in T.D. 00-20, deductions for transportation, insurance, and related services incident to the international shipment of the merchandise is appropriate only to the extent they are included in the price actually paid or payable. In the instant case, the freight and transportation summary statement issued by Damco to the seller of the merchandise itemize various charges. Although the seller’s invoice to the importer do not provide a similar itemization, the use of the “FOB” term of sale on the invoice indicates that the price for the decorative articles includes all costs relating to the goods until they are on board the vessel at the named port of shipment. Further, we note that

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 primary 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 amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. 19 U.S.C. § 1401a(b)(1). If, for any reason, sufficient information is not available with respect to the additions to the price actually paid or payable, the transaction value of the imported merchandise is treated as one that cannot be determined. 19 U.S.C. § 1401a(b)(1). The term “price actually paid or payable” is defined as:[T]he 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. 19 U.S.C. § 1401a(b)(4)(A). In Treasury Decision (“T.D.”) 00-20, CBP reiterated its longstanding position that with regard to freight, insurance and other costs incident to international shipment, including foreign inland freight, the importer of record must deduct the actual costs for these charges from the price actually paid or payable in determining transaction value, if these costs are included in the price actually paid or payable. The notice advised that CBP considers actual costs to constitute those amounts ultimately paid to the international carrier, freight forwarder, insurance company or other appropriate provider of such services. Commercial documents to and from the service provider such as an invoice or written contract separately listing freig