H322092

 HQ H322092 August 17, 2022 OT:RR:CTF:VS H322092 AP 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. 2704-21-156590; Men’s Jackets; Valuation under 19 U.S.C. § 1401a Dear Center Director: This is in response to an Application for Further Review (“AFR”) of Protest No. 2704-21-156590, timely filed on behalf of I5 Inc. (“importer” and “buyer”), concerning the appraisement of certain men’s jackets under 19 U.S.C. § 1401a. FACTS: On January 6, 2021, the importer/buyer entered 220 dozen men’s jackets under subheading 6101.30.2020, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”) purchased from manufacturer Quanzhou Zhongruan Trading Co. Ltd. (“Quanzhou”) in China. The declared value was $7,642. A November 4, 2019 purchase order from the importer/buyer to the “vendor Mr. Rao,” which allegedly ties to the above entry, lists 6000 pieces of men’s jackets style no. 4394MX with a “FOB price” $2.90 each for a total of $17,400. The merchandise is described as “fleece w/dyed sherpa line.” The purchase order instructs to ship the merchandise to the importer. A November 16, 2020 commercial invoice to the importer/buyer that allegedly ties to the above entry indicates that Fujian Haoxin Scm Co., Ltd. (“Fujian”) in China is the vendor; the port of loading is Xiamen, China; the final port of destination is Los Angeles; the terms of the sale are “FOB” Xiamen China; and a total of 2635 men’s jackets style no. 4394MX are priced at $7,641.50 ($2.90 each). The bank wire transfer statement from the importer to the beneficiary “Quanzhou Zhongruan Trading Co. Ltd. – Mr. Rao” reveals that on February 4, 2021, the importer wired $15,000 to Quanzhou/Mr. Rao as a “repetitive wire transfer – international.” U.S. Customs and Border Protection (“CBP”) appraised the current shipment at $41,864 ($190.29 per dozen and 548% undervalued). The February 26, 2021 Notice of Action (CBP Form 29) notified the importer that, “No argument was received for the proposed CF29 issued on 02/04/2021 with a due date of 02/24/2021. This entry has been value advanced out to the aggregate 2020 value for same class or kind of merchandise from China of $190.29 per dozen. A future invoice for approximately $12,377.83 for additional duties will be forthcoming.” 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. ISSUE: What is the proper method of appraisement for the subject men’s jackets? LAW AND ANALYSIS: We note that the matter protested is protestable under 19 U.S.C. § 1514(a)(1) as a decision on the value of merchandise. The protest was timely filed on June 25, 2021, within 180 days of liquidation for the entry on March 5, 2021. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii)-(iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). 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. 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). Title 19, U.S.C. § 1401a(b)(1) states, in relevant part: … If sufficient information is not available, for any reason, with respect to any amount referred to in the preceding sentence [price actually paid or payable plus amounts for the five statutory additions], the transaction value of the imported merchandise concerned shall be treated, for purposes of this section, as one that cannot be determined. Title 19 U.S.C. § 1401a(h)(5)(A)(i) states: The term “sufficient information”, when required under this section for determining — (A) any amount— (i) added under subsection (b)(1) to the price actually paid or payable … means information that establishes the accuracy of such amount, difference, or adjustment. In order to use transaction value, there must be a bona fide sale for exportation to the United States. In VWP of Am., Inc. v. United States, 175 F.3d 1327, 1139 (Fed. Cir. 1999) (citing J.L. Wood v. United States, 62 C.C.P.A. 25, 33, 505 F.2d 1400, 1406 (1974)), the court found that the term “sold,” for purposes of 19 U.S.C. § 1401a(b)(1), means “a transfer of title from one party to another for consideration.” Several factors are relied on to determine whether a bona fide sale exists and no single factor is decisive. See Headquarters Ruling Letter (“HQ”) 546067, dated Oct. 31, 1996; HQ 548239, dated June 5, 2003. CBP considers whether the purported buyer assumed the risk of loss for, and acquired title to, the imported merchandise. CBP also considers whether the buyer paid for the goods, and whether, in general, the roles of the parties and the circumstances of the transaction indicate that the parties are functioning as buyer and seller. See HQ H005222, dated June 13, 2007. Evidence to establish that consideration has passed includes payment by check, bank transfer, or payment by any other commercially acceptable means. Payment must be made for the imported merchandise at issue. A general transfer of money from one corporate entity to another, which cannot be linked to a specific import transaction, does not demonstrate passage of consideration. See HQ 545705, dated Jan. 27, 1995. The invoice from the seller Fujian to the importer indicates that the sale terms between the parties were FOB port of shipment in China. There is no mention regarding passage of title and, as title must pass for there to be a sale, title will pass with the risk of loss based on the Incoterms. See HQ H268741, dated Feb. 27, 2018. Thus, title and risk of loss transferred from the Chinese seller Fujian to the importer at the port of loading when the merchandise passed the ships rail in Xiamen, China. In order to have a transfer of ownership, financial consideration must be offered by the buyer to the seller, and the buyer’s payment must be linked to the imported merchandise. The February 4, 2021 wire transfer of $15,000 from the importer/buyer to the Chinese manufacturer “Quanzhou Zhongruan Trading Co. Ltd. – Mr. Rao,” cannot be linked to the men’s jackets imported on January 6, 2021. Further, we have no information regarding the relationship between the manufacturer Quanzhou, the seller Fujian and Mr. Rao (i.e., whether they are related parties and the transaction between them was at arm’s length). The Apparel, Footwear and Textiles Center of Excellence and Expertise (“CEE”) was unable to obtain sufficient proof of payment from the importer. Consequently, the transaction value method of appraisement would be inappropriate. Further, the CEE was correct in not using transaction value to appraise the imported merchandise because there was insufficient information to verify the accuracy of the invoiced values pursuant to 19 U.S.C. § 1401a(b)(1) and (h)(5)(A)(i). When imported merchandise cannot be appraised on the basis of transaction val

We note that the matter protested is protestable under 19 U.S.C. § 1514(a)(1) as a decision on the value of merchandise. The protest was timely filed on June 25, 2021, within 180 days of liquidation for the entry on March 5, 2021. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii)-(iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). 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.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).Title 19, U.S.C. § 1401a(b)(1) states, in relevant part:… If sufficient information is not available, for any reason, with respect to any amount referred to in the preceding sentence [price actually paid or payable plus amounts for the five statutory additions], the transaction value of the imported merchandise concerned shall be treated, for purposes of this section, as one that cannot be determined. Title 19 U.S.C. § 1401a(h)(5)(A)(i) states:The term “sufficient information”, when required under this section for determining — (A) any amount— (i) added under subsection (b)(1) to the price actually paid or payable … means information that establishes the accuracy of such amount, difference, or adjustment.In order to use transaction value, there must be a bona fide sale for exportation to the United States. In VWP of Am., Inc. v. United States, 175