H324885

HQ H324885 August 11, 2023 OT:RR:CTF:VS H324885 EE CATEGORY: Valuation Center Director Electronics Center of Excellence and Expertise U.S. Customs and Border Protection 7501 Esters Blvd, Suite 160 Irving, TX 75063 RE: Application for Further Review of Protest No. 4197-22-106050; Transaction Value Dear Center Director: This is in reference to the Application for Further Review (“AFR”) of Protest No. 4197-22-106050, timely filed on December 20, 2022, on behalf of the importer, [X] (hereinafter, the “protestant”), concerning the valuation of certain electronics goods. The protestant asked that certain information submitted in connection with this ruling request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets and all attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this decision. FACTS: The protestant, as a distributor of electronic components, enters into pricing adjustment policies with its unrelated suppliers. In 2021, the protestant imported into the United States various integrated circuits that were purchased from its unrelated supplier [X]. The protestant filed post-summary corrections to amend the valuation of the entries to account for the discounts received from the supplier. CBP initially liquidated the entries reflecting the amended valuation and accordingly noted a “change decrease”. Subsequently, on June 24, 2022, CBP re-liquidated the entries noting a change increase, denying the post-summary correction. The protestant protests CBP’s appraisement of the entries at reliquidation and requests that CBP reliquidate the entries at the original post-summary correction values. The protestant provided the following documents: -A copy of the Distribution Agreement dated December 19, 2012. -Invoice no. 8907361890, dated June 17, 2021, issued from the supplier, shipped to the protestant for [X] pieces of LEDs for $[X]. The price per item is $[X]. The terms of delivery are EXW shipper origin. The terms of payment are “within 30 days after date of invoice” and “up to 7/17/2021 without deduction”. The invoice references purchase order no. CCAW8S, which was not provided to our office. -A packing list, dated June 16, 2021, from [X] c/o [X] in Guangdong, China, to the protestant. The packing list indicates [X] pieces of items. -A waybill, dated June 18, 2021, listing the shipper as [X] located in Hong Kong and the receiver as the protestant. The weight listed is 144 kg and the quantity listed is 26 pieces. -A screen-print from the supplier’s order system of the Ship and Debit request and approval, dated May 27, 2021, to reduce the price of the entered merchandise to $[X] per piece. The item number on the screen-print corresponds to the item number listed on invoice no. 8907361890 and the packing list. The screen-print lists quote number as Q-00102930, quote name as [X], indicating opportunity name as “non-DR special price request”. Status listed is “approved”. Approve/reject date is listed as May 27, 2021. Special cost listed is $[X] per piece which is a total of $[X] for the line item at issue ($4,125.00 less than the invoice price). -A credit memo, dated July 16, 2021, from the supplier billed to the protestant’s parent and shipped to the protestant, providing a credit of $[X]/1000 pieces for a total of $4,125.00 for the specific line item at issue. The final total amount listed on the credit memo which includes other credits is $[X]. The terms of payment are “within 30 days after date of invoice” and “up to 8/15/2021 without deduction”. The credit memo refers to invoice no. 8907361890. The customer material number and item type number listed on the credit memo correspond to the numbers listed on invoice no. 8907361890. -Debit note no. MC7367, dated July 22, 2021, from the protestant to the supplier for a total of $[X]. -A printout of a payment overview indicating payment from the protestant to the supplier, dated July 23, 2021, in the amount of $[X]. The printout lists invoice no. 8907361890 for the amount of $[X]. -A spreadsheet that documents the payment detail for the payment of $[X]. Row 231 includes the original invoice amount $[X]. Row 2 of the spreadsheet includes the debit note no. MC7367 for $[X]. The line item detail for $[X] is included in the credit memo which is the credit for $4,125.00 for [X] pieces of LEDs. -A spreadsheet listing wire transfers to the supplier. Row 136 of the spreadsheet includes the wire transfer for $[X] on July 23, 2021. ISSUE: Whether the imported merchandise may be appraised under transaction value based on the discounted price. LAW AND ANALYSIS: 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 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). The term “price actually paid or payable” is more specifically defined in 19 U.S.C. § 1401a(b)(4)(A) as 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 …) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller.” The CBP Regulations further provide that in determining transaction value, the price actually paid or payable “will be considered without regard to its method of derivation. It may be the result of discounts, increases, or negotiations, or may be arrived at by the application of a formula . . .” 19 C.F.R. § 152.103(a)(1). The CBP Regulations further cite the following example: A seller offers merchandise at $100, less a two percent discount for cash. A buyer remits $98 cash, taking advantage of the cash discount. The transaction value is $98, the price actually paid or payable. 19 C.F.R. § 152.103(a)(1), Example 5. Furthermore, the word “payable” refers to a situation in which the price has been agreed, but actual payment has not been made at the time of importation. On the other hand, the Statement of Administrative Action states that changes in the price actually paid or payable which are arrived at subsequent to the time of importation shall not be taken into account in determining transaction value. This would apply to renegotiation, deferred quantity discounts, or rebates. Moreover, 19 U.S.C. § 1401a(b)(4)(B) states that “any rebate, or other decrease in, the price actually paid or payable that is made or otherwise affected between the buyer and the seller after the date of the importation of the merchandise into the United States shall be disregarded in determining the transaction value.” The protestant claims that the Distribution Agreement, which sets forth the terms and conditions of discounted pricing offered to the protestant through the supplier’s Ship from Stock and Debit (“SSD”) and Market Price Program (“MPP”) discounted programs, establishes that the discounted pricing received by the protestant was agreed to and effected prior to importation. The Distributor Agreement provides in Schedule (G), Section II that: Where a Product is designated as being subject to SSD pricing, it is priced and sold to Distributor with the understanding that Distributor may find it necessary to sell the Product at a lower price to be competitive in the market. The SSD procedure allows [the supplier] to make adjustments to the Distributor's purchase price after resale by way of 

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 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). The term “price actually paid or payable” is more specifically defined in 19 U.S.C. § 1401a(b)(4)(A) as 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 …) made, or to be made, for the imported merchandise by the buyer to, or for the benefit of, the seller.” The CBP Regulations further provide that in determining transaction value, the price actually paid or payable “will be considered without regard to its method of derivation. It may be the result of discounts, increases, or negotiations, or may be arrived at by the application of a formula . . .” 19 C.F.R. § 152.103(a)(1). The CBP Regulations further cite the following example:A seller offers merchandise at $100, less a two percent discount for cash. A buyer remits $98 cash, taking advantage of the cash discount. The transaction value is $98, the price actually paid or payable. 19 C.F.R. § 152.103(a)(1), Example 5.Furthermore, the word “payable” refers to a situation in which the price has been agreed, but actual payment has not been made at the time of importation.On the other hand, the Statement of Administrative Action states that changes in the price actually paid or payable which are arrived at subsequent to the time of importation shall not be taken into account in determining transaction value. This