United States v. Dan Brechner
Decision Date | 24 April 1957 |
Docket Number | A. R. D. 71. |
Citation | 38 Cust. Ct. 719 |
Court | U.S. Court of Customs and Patent Appeals (CCPA) |
Parties | UNITED STATES <I>v.</I> DAN BRECHNER, JACOB BRECHNER, JOSEPH BRECHNER, HERBERT BRECHNER, A CO-PARTNERSHIP DOING BUSINESS UNDER THE NAME AND STYLE OF DAN BRECHNER & CO. |
George Cochran Doub, Assistant Attorney General (Samuel D. Spector and Daniel I. Auster, trial attorneys), for the appellant.
Jordan & Klingaman (Jacob L. Klingaman of counsel) for the appellees.
Before LAWRENCE, RAO, and FORD, Judges
This is an application for review of a decision and judgment of a single judge sitting in reappraisement, dated June 22, 1956 . Eight appeals for reappraisement, consolidated for the purposes of trial, are here involved. They relate to a variety of articles shipped from Yokohama, Japan, during the months of June, July, and August 1950.
The parties agree, and the trial judge so held, that export value, as defined in section 402 (d) of the Tariff Act of 1930, is the proper basis of value for the merchandise covered by these appeals. They are at issue over the question of whether certain so-called export charges, listed as inland freight, storage, hauling and lighterage, insurance premiums, petties, and commissions, any or all of them, as invoiced, are part of that value.
It appears that these items, when and as they are shown on the invoices, except for the item of commission, were added to the total so-called first cost or ex-factory prices specified on the invoices, to make entered value, because of advances by the appraiser in similar cases then pending, and that duress certificates were filed in compliance with the provisions of section 503 (b) of the Tariff Act of 1930, which reads as follows:
(b) ENTRIES PENDING REAPPRAISEMENT. — If the importer certifies at the time of entry that he has entered the merchandise at a value higher than the value as defined in this Act because of advances by the appraiser in similar cases then pending on appeal for reappraisement or re-reappraisement, and if the importer's contention in such pending cases shall subsequently be sustained, wholly or in part, by a final decision on reappraisement or re-reappraisement, and if it shall appear that such action of the importer on entry was taken in good faith, the collector shall liquidate the entry in accordance with the final appraisement. [In force and effect at the time of these importations but subsequently repealed.]
As is evidenced by the check mark appearing in the column headed "APPRAISED" on the "SUMMARY OF ENTERED VALUES," customs Form 6417, and the explanation thereof, all of the involved merchandise was appraised, as entered, under duress. Although, in connection with certain of the entries, the examiner made the notation that —
The amounts of the FOB charges duressed appear excessive and should not exceed three percent of the FOB seaport prices —
no adjustment to reflect said statement in the appraised values was made.
In the course of certain pretrial hearings and at the trial itself, counsel for the respective parties limited the issues in the case to the site of the principal market or markets and, subject to attack by appellant on the ground of excessiveness, the question of whether the various additions either made by the appraiser, or by the importer under duress, were properly a part of the value of the merchandise.
The only witness in the case was Jacob Brechner, one of the plaintiffs, who testified that, in making purchases in Japan, it was the usual practice of his firm to call upon the various manufacturers of the articles they desired to buy, in the company of their Japanese agent, or to have the manufacturers call at the agent's place of business. With the agent acting as interpreter, negotiations were conducted toward a satisfactory price agreement between the manufacturers and appellees. This price, quoted in yen, was the manufacturer's ex-factory price and included only the manufacturer's profit. The agent would convert the yen quotation into United States currency, add thereto what he considered the shipping charges and his commission of 5 per centum, and then give Brechner & Co. "what is called an f. o. b. price." In addition, the agent checked the quality of the merchandise, consolidated shipments from various manufacturers, prepared consolidated invoices, and arranged for the exportation of the merchandise.
The consolidated invoices, of which that in reappraisement 200311-A, in evidence as defendant's collective exhibit A, is fairly typical, appear to corroborate this portion of the witness' testimony. This exhibit shows five orders from five different Japanese manufacturers, the dates of acceptance of said orders, the first cost or ex-factory price per gross, in United States dollars, and the total first cost or ex-factory price, including case and packing charges. Added to said total are the following items, listed as "EXPORT CHARGES": Inland freight from Tokyo to Yokohama; storage; hauling and lighterage; a commission on the total first cost or ex-factory price; and the consular fee.
We deem it appropriate here to observe that, if the manufacturers' prices were f. o. b. port of shipment prices, as here claimed by appellant, export charges for each manufacturer's wares should be expected to be separately invoiced so as to reveal a separate f. o. b. price for each quotation. The lump-sum statement of charges for freight, et cetera, for orders placed with different manufacturers tends to support the witness' testimony to the effect that the manufacturers' quotations were ex-factory, and there is no evidence of record to show otherwise.
Brechner further stated that, after the authority of the Supreme Command Allied Powers, known as SCAP, and of the Japanese Board of Trade, called Boeki-Cho, over exportations from Japan expired on December 1, 1949, letters of credit were issued directly to his company's agents, who, in turn, paid the manufacturers. He testified that the places where the factories were located in the environs of Tokyo were the places where this type of merchandise could be purchased and that "Tokyo was the principal place, mainly in the outskirts of Tokyo."
In connection with the methods of arriving at agreed prices for merchandise purchased in Japan, the witness testified as follows, in response to questioning by the court:
* * * * * * *
Q. I am getting at this: If you got a price from one manufacturer and there were 3 or 4 other manufacturers manufacturing the same article did you have to know anything about what that first manufacturer's competitors were charging? — A. Well, we would see all the manufacturers. We would say, let's say somebody made, we will just refer to this alligator. We would see several people who made rubber articles, and either ask them to have the specific item or what it would cost to make this same item. In that way we would arrive at what we would consider competitive price.
Q. Were you then familiar with the market prices of other manufacturers who sold competitive articles to those that you purchased? — A. Yes, we were familiar with it.
Q. And how did you acquire that familiarity? — A. By being in the market, checking with various manufacturers.
Q. What do you mean by checking? — A. Well, going, let's say for example, one item might have been made by 4 or 5 people, or they made similar items, we would have a sample, and we would go to this one manufacturer, get his price from the original manufacturer, and then we would go to see others who were making similar, or could make the same item, and inquire from them what their price would be for this article.
Q. Well, now, did this, we will say selling practice or procedure, in the purchase of this merchandise in the various Japanese markets, was this a general practice or did it vary from, we will say, an American purchaser to American purchaser; in other words, was this competent or usual practice, the one that you adopted in these cases? — A. That was the usual — usual common practice, your Honor. It is the same practice that we adopted from the inception of our purchases in Japan.
Q. Well, I am not talking so much about what you did, but I am talking about what your practice was, that one that was generally adopted and had by other American buyers in those Japanese markets. — A. Yes, I would say so, because they would all do the same thing as we did, call at various manufacturers.
Q. Did your buying agent represent any other American buyer? — A. Some of them do; some of them don't. In the main just this specific one, Matsuzaki & Co., only had us as their American customer.
Q. But was it — do you know of any situations where the buying agent represented a number of American, different American firms? — A. Yes, your Honor.
Q. Is that a common situation? — A. Yes, that is even today a common situation.
* * * * * * *
At a subsequent hearing, upon an order setting aside the submission, witness Brechner, recalled, testified that generally the practices of buying adopted by his firm were the same for other importers in the United States and that it was customary for "importers of our standing" to employ and have similar relationships with Japanese agents.
In its opinion, the trial court held that it could properly consider the question of whether or not the commissions paid to the Japanese agents were or were not a part of the value of the merchandise covered by these reappraisements, even though said items were originally included as dutiable and not added back to make entered value, for the reason that the issue before the court in entries, filed pursuant to the provisions of section 503 (b), supra, is the value of the merchandise in said duressed entries and not the value of the merchandise in the so-called test cases. Citing House Joint...
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