H322425

H322425 August 15, 2025 OT:RR:CTF:VS H322425 AMW CATEGORY: Valuation Center Director C/O Dakeisha D. Thomas Machinery Center for Excellence and Expertise U.S. Customs and Border Protection 2350 N Sam Houston Pkwy E Houston, TX 77032 RE: Protest and Application for Further Review of Protest No. 3901-21-124553; 19 U.S.C. § 1401a; First Sale; Multi-Tiered Transaction Dear Center Director: This is in response to the Application for Further Review (“AFR”) of Protest No. 3901-21- 124553, dated May 26, 2021, timely filed by CSB Energy Technology (Americas) Co., Ltd. (“CSB-AM” or the “Protestant”). FACTS: This protest relates to eight entries of rechargeable storage batteries imported by Hitachi Chemical Energy Technology (Americas) Co., Ltd. (“HC-AM”) between December 28, 2019, and January 9, 2020. The entries involve a multi-tiered transaction with three related parties: (1) HC-AM, a U.S. company that is the importer of record; (2) Hitachi Chemical Energy Technology Co., Ltd (“HCEN”), a Taiwanese entity serving as a middleman; and (3) Hitachi Chemical Energy Technology (Vietnam) Co., Ltd. (“HC-VN”), a Vietnam-based manufacturer. Hitachi Chemical was purchased by Showa Denko K.K. in March 2020, and protestant CSB Energy Technology is the successor entity. Many of the underlying documents reference either Hitachi or CSB entities interchangeably. As outlined in the protest and underlying documents, the subject transactions occurred in the following manner. First, HC-AM issued a purchase order to HCEN for merchandise to be shipped to the United States. Second, HCEN placed an order with HC-VN that mirrored the initial purchase order. Third, the subject merchandise was then shipped directly from HC-VN in Vietnam to the United States, either to HC-AM’s warehouse or directly to the final U.S. purchaser. Although HCEN functioned as the middleman, it never took physical possession of the subject merchandise. The Protestant claims that the imported merchandise should be appraised on the first-sale price between HC-VN as the manufacturer and HCEN as the middleman. In furtherance of the above, the documents provided by the Protestant show the following illustrative transaction. On August 31, 2019, HC-AM issued purchase order no. 3BP-190808002 to HCEN, ordering 17,280 battery units at a price of USD $7.55 per unit to be shipped directly to an unrelated purchaser in the United States. Also on August 31, 2019, HCEN issued to HC-VN a purchase order for the same amount of battery units at $6.86 per unit. On November 25, 2019, HCEN issued corresponding invoice 5BP-191125001 to HC-AM, specifying FOB term of delivery and a payment term of 120 days. Also on November 25, 2019, HC-VN issued to HCEN invoice no. 5BP-191125001 for the subject batteries at a unit price of $6.86, specifying the same FOB term of delivery and payment term of 120 days. On December 23, 2019, a bank statement provided by the Protestant indicates HCEN made a payment to HC-VN that included an amount for the relevant merchandise. On December 30, 2019, HC-AM entered the subject merchandise, declaring the transaction value between HC-AM and HCEN (i.e., the second sale) to be the applicable customs valuation. Finally, on June 8, 2020, a “wire transfer summary report” indicates HC-AM made a payment to HCEN that included a line-item associated with the illustrative transaction. The Protestant provided the following documentation in support of its claim: • CF-7501 Entry Summary documents for all eight of the protested entries; • Shipping documents (i.e., Packing List, Sea Freight Arrival Notice, and Bill of Lading) for illustrative transaction (the December 30, 2019, entry) showing shipment directly from HC-VN to ultimate purchaser in the United States; • Purchase orders from the importer, HC-AM, to the middleman, HCEN; • Purchase orders from HCEN, to the manufacturer, HC-VN; • Invoices from HC-VN to HCEN; • Invoices from HCEN to HC-AM; • Bank statements showing payments from HC-AM to HCEN and from HCEN to HC-VN; • Statements of Comprehensive Income related to CSB Energy Technology Co., Ltd. (also referenced as HCEN) for fiscal years 2019 and 2020; • Partial translation of HCEN Internal Memorandum discussing “Adjustment of transfer pricing of battery sale between HCEN, PH, VN and AM, EM, effective date 2018/07/01;” • Partial translation of HCEN Internal Report discussing “Adjustment of the transfer pricing between VN and HCEN as well as HCEN to EM, effective date 2019/12/01;” and • Duty refund estimates for the entries at issue. 2 ISSUE: Whether the transactions at issue may be appraised using the first-sale transaction value between the middleman (HCEN) and manufacturer (HC-VN) as a bona fide sale for export to the United States. 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. See 19 U.S.C. § 1401a(b)(1). When transaction value cannot be applied, then the appraised value is determined based on the other valuation methods in the order specified in 19 U.S.C. § 1401a(a). In Nissho Iwai American Corp. v. United States, 982 F. 2d 505 (Fed. Cir. 1992), the Court of Appeals for the Federal Circuit reviewed the standard for determining transaction value when there is more than one sale which may be considered as being a sale for exportation to the United States. The case involved a foreign manufacturer, a middleman, and a U.S. purchaser. The court held that the price paid by the middleman/importer to the manufacturer was the proper basis for transaction value. The court further stated that for a transaction to be viable under the valuation statute, it must be a sale negotiated at arm’s length, free from any non-market influences, and involving goods clearly destined for the United States. See also Synergy Sport International, Ltd. v. United States, 17 C.I.T. 18 (1993). In accordance with Nissho Iwai and our own precedent, we presume that transaction value is based on the price paid by the importer. In further keeping with the court’s holding, we note that an importer may request appraisement based on the price paid by the middleman to the foreign manufacturer in situations where the middleman is not the importer. However, it is the importer’s responsibility to show that the “first sale” price is acceptable under the standard set forth in Nissho Iwai. That is, the importer must present sufficient evidence that the alleged sale was a bona fide “arm’s length sale,” and that it was “a sale for export to the United States” within the meaning of 19 U.S.C. § 1401a. In Treasury Decision (T.D.) 96-87, dated January 2, 1997, the Customs Service (now U.S. Customs and Border Protection (“CBP”)) advised that the importer must provide a description of the roles of the parties involved and must supply relevant documentation addressing each transaction that was involved in the exportation of the merchandise to the United States. The documents may include, but are not limited to purchase orders, invoices, proof of payments, contracts, and any additional documents (e.g. correspondences) that establishes how the parties deal with one another. The objective is to provide CBP with “a complete paper trail of the imported merchandise showing the structure of the entire transaction.” T.D. 96-87 further 3 provides that the importer must also inform CBP of any statutory additions and their amounts. If unable to do so, the sale between the middleman and the manufacturer cannot form the basis of transaction value. First, we must determine if indeed a bona fide sale occurred betwee

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. See 19 U.S.C. § 1401a(b)(1). When transaction value cannot be applied, then the appraised value is determined based on the other valuation methods in the order specified in 19 U.S.C. § 1401a(a). In Nissho Iwai American Corp. v. United States, 982 F. 2d 505 (Fed. Cir. 1992), the Court of Appeals for the Federal Circuit reviewed the standard for determining transaction value when there is more than one sale which may be considered as being a sale for exportation to the United States. The case involved a foreign manufacturer, a middleman, and a U.S. purchaser. The court held that the price paid by the middleman/importer to the manufacturer was the proper basis for transaction value. The court further stated that for a transaction to be viable under the valuation statute, it must be a sale negotiated at arm’s length, free from any non-market influences, and involving goods clearly destined for the United States. See also Synergy Sport International, Ltd. v. United States, 17 C.I.T. 18 (1993). In accordance with Nissho Iwai and our own precedent, we presume that transaction value is based on the price paid by the importer. In further keeping with the court’s holding, we note that an importer may request appraisement based on the price paid by the middleman to the foreign manufacturer in situations where the middleman is not the importer. However, it is the importer’s responsibility to show that the “first sale” price is acceptable under the standard set forth in Nissho Iwai.