H322091

H322091 May 28, 2025 OT:RR:CTF:VS H322091 RMC CATEGORY: Valuation Center Director Apparel, Footwear and Textiles CEE U.S. Customs and Border Protection 555 Battery Street, Room 401 San Francisco, CA 94111 Attn.: Grace Carmichael, CBP Senior Import Specialist RE: Application for Further Review of Protest No. 2704-21-156119; Valuation; Pajamas; Jackets Dear Center Director: This is in response to the Application for Further Review (“AFR”) of Protest No. 2704-21- 156119, filed on behalf of i5 Inc. (“importer” and “buyer”), concerning the valuation of imported pajamas and jackets. FACTS: On October 10, 2020, the importer/buyer entered 636 dozen pajamas under subheading 6107.21.00, Harmonized Tariff Schedule of the United States, and 788 dozen jackets under subheading 6201.93.60, HTSUS, at the Port of Los Angeles/Long Beach. According to the invoice provided with the entry documentation, the merchandise was purchased from Xiao Xian Longyuan Garment Co., Ltd., located in Xinzhuang, China, at prices of $19.90 per dozen and $51.00 per dozen, respectively. The purchase order for the pajamas was issued on March 17, 2020. It lists 7,200 pieces of Style MFPJ53 “MENS FLANNEL PJ BOTTOM” with a total price of $11,880. The purchase order for the ladies’ jackets was issued on the same date. It lists 3,300 pieces of Style L904 “LADIES HOODED BUBBLE W/GO” with a total price of $14,025. The purchase order includes instructions to ship the merchandise to the buyer in Los Angeles. 1 A September 27, 2020 commercial invoice that allegedly ties to the above entry lists the port of loading as Shanghai, China; the final destination as Los Angeles, California; and totals of 7,627 units of Style MFPJ53 (for a total of $12,584.55) and 1,834 units of Style L904 (for a total of $7,794.50). A corresponding packing list, also dated September 27, 2020, contains the same information on styles and quantities. A bank wire transfer statement from the buyer to Xiao Xian Longyuan is dated January 8, 2021, in the amount of $20,000. The wire transfer contains no reference to an invoice. U.S. Customs and Border Protection (“CBP”) issued a CBP Form 28 (Request for Information) related to the entry on November 19, 2020, seeking information on the customs value of the imported merchandise. On December 16, 2020, the importer requested an extension. Although CBP agreed to extend the deadline for the importer’s response until January 8, 2021, the importer never provided the information requested in the CBP Form 28. CBP issued a Form 29 (Notice of Action – Proposed) on January 13, 2021 and a Form 29 (Notice of Action – Taken) on February 4, 2021, in which the importer was informed the entry had been value advanced. CBP determined the value in accordance with the 2020 aggregate value of goods of the same class or kind from China. On February 19, 2021, the importer contacted CBP to ask how the final determination had been made and to inform CBP that a “clerical error” had been made with respect to the quantity of ladies jackets reported on the entry. According to the importer, the broker mistakenly listed 788 dozen units, instead of 153 dozen. Following this conversation, the importer timely protested, challenging CBP’s rejection of the declared transaction values and seeking a correction to the quantity listed on the entry documents. On July 14, 2021, CBP issued Informed Compliance Notices notifying the importer and its customs broker that the submitted invoice failed to provide a detailed description of the merchandise, the country of origin, and the entity performing the origin-conferring operations as required under 19 C.F.R. §§ 141.86(3) and (10) and 19 C.F.R. § 102.23(a), and that filing of inaccurate information was a material false statement or omission, which could result in 19 U.S.C. §§ 1641 and 1592 penalties. ISSUES: I. Whether transaction value is the proper method of appraisement in the import transactions in question. II. Whether the documentary evidence is sufficient to support a determination that the importer overpaid duties as a result of a clerical error in reporting the quantity on the entry. 2 LAW AND ANALYSIS: CBP’s valuation determination is protestable under 19 U.S.C. § 1514(a)(1). Regarding the second issue presented and the importer’s claim that a clerical error occurred in reporting the quantity on the entry, which affected the amount of duties chargeable, we noted in Headquarters Ruling (“HQ”) H286298, dated October 13, 2017, “[t]he Miscellaneous Trade and Technical Corrections Act of 2004 repealed 19 U.S.C. § 1520(c) and amended 19 U.S.C. § 1514(a) to include ‘any clerical error, mistake of fact, or other inadvertence’ that occurs in an ‘entry, liquidation, or reliquidation’ as protestable events. See Pub. L. 108-429, Title II, § 2015, Dec. 3, 2004, 118 Stat. 2598.” Accordingly, the second issue presented is protestable as well. The protest was timely filed within 180 days of liquidation for the entry. See 19 U.S.C. § 1514(c)(3). Further review of this protest is properly accorded to the importer pursuant to 19 C.F.R. § 174.24(b) because the issues protested involve questions of law or fact, which have not been ruled upon. I. Method of Appraisement Merchandise imported into the United States is appraised for customs purposes 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 amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. See 19 U.S.C. § 1401a(b)(1). 19 U.S.C. § 1401a(b)(2) states, in relevant part: (A) The transaction value of imported merchandise determined under paragraph (1) shall be the appraised value of that merchandise for the purposes of this chapter only if – (i) there are no restrictions on the disposition or use of the imported merchandise by the buyer other than restrictions that – (I) are imposed or required by law. (II) limit the geographical area in which the merchandise may be resold, or (III) do not substantially affect the value of the merchandise; (ii) the sale of, or the price actually paid or payable for, the imported merchandise is not subject to any condition or consideration for which a value cannot be determined with respect to the imported merchandise; (iii) no part of the proceeds of any subsequent resale, disposal, or use of the imported merchandise by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment therefor can be made under paragraph (1)(E); and 3 (iv) the buyer and seller are not related, or the buyer and seller are related but the transaction value is acceptable, for purposes of this subsection, under subparagraph (B). Here, counsel for the importer argues that CBP erred in departing from the declared transaction value because none of the four circumstances in 19 U.S.C. § 1401a(b)(2) exist. Regarding the difference between the amount of the wire transfer ($20,000) and the invoice amount, counsel states that “the paid amount was slightly lower than the commercial invoice amount because of quality issues with certain items.” However, no evidence of communications with the seller about alleged quality issues was provided. In HQ H322092, dated August 17, 2022, CBP held that transaction value did not apply to i5’s importations of apparel and that the Apparel, Footwear and Textiles Center of Excellence and Expertise (“Center”) properly appraised the merchandise based on the aggregate value of similar merchandise under the fallback method. In that case, we noted that the buyer’s payment could not be linked to the imported merchandise. Therefore, the Center was unable to obtain sufficient proof of payment from the importer. That is also the case here, as the 

CBP’s valuation determination is protestable under 19 U.S.C. § 1514(a)(1). Regarding the second issue presented and the importer’s claim that a clerical error occurred in reporting the quantity on the entry, which affected the amount of duties chargeable, we noted in Headquarters Ruling (“HQ”) H286298, dated October 13, 2017, “[t]he Miscellaneous Trade and Technical Corrections Act of 2004 repealed 19 U.S.C. § 1520(c) and amended 19 U.S.C. § 1514(a) to include ‘any clerical error, mistake of fact, or other inadvertence’ that occurs in an ‘entry, liquidation, or reliquidation’ as protestable events. See Pub. L. 108-429, Title II, § 2015, Dec. 3, 2004, 118 Stat. 2598.” Accordingly, the second issue presented is protestable as well. The protest was timely filed within 180 days of liquidation for the entry. See 19 U.S.C. § 1514(c)(3). Further review of this protest is properly accorded to the importer pursuant to 19 C.F.R. § 174.24(b) because the issues protested involve questions of law or fact, which have not been ruled upon. I. Method of Appraisement Merchandise imported into the United States is appraised for customs purposes 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 amounts for certain statutorily enumerated additions to the extent not otherwise included in the price actually paid or payable. See 19 U.S.C. § 1401a(b)(1). 19 U.S.C. § 1401a(b)(2) states, in relevant part: (A) The transaction value of imported merchandise determined under paragraph (1) shall be the appraised value of that merchandise for the purposes of this chapter only if – (i) there are no restrictions on the disposition or use of the imported merchandise by the buyer other than restrictions that – (I) are imposed or required