United States v. Supreme Merchandise Company
Decision Date | 14 June 1962 |
Docket Number | A.R.D. 145. |
Citation | 48 Cust. Ct. 714 |
Parties | UNITED STATES <I>v.</I> SUPREME MERCHANDISE COMPANY. |
Court | U.S. Court of Customs and Patent Appeals (CCPA) |
Joseph D. Guilfoyle, Acting Assistant Attorney General (Samuel D. Spector, trial attorney), for the appellant.
Sharretts, Paley & Carter (Eugene F. Blauvelt and Howard Clare Carter of counsel) for the appellee.
Before LAWRENCE, RAO, and FORD, Judges
This is an application for a review of a decision and judgment (Reap. Dec. 10025) sustaining the values claimed by plaintiff below as the proper values of certain cigarette lighters, imported from Japan. The case embraces 17 appeals for reappraisement, which were consolidated for purposes of trial. In all, except reappraisements R58/22216, R58/22219, and R58/22222, the appraised values were expressed in terms of invoiced unit values, net, packed, plus items invoiced as shipping charges and commission. In the excepted reappraisements, supra, the appraised values were, in effect, f.o.b. port of exportation prices.
Appellee contends, and the trial court held, that the per se exfactory unit prices, as invoiced, properly represent the values of the subject lighters.
Both parties rely upon export value, as that value is defined in section 402(d) of the Tariff Act of 1930, and it is virtually agreed that such or similar merchandise was not offered for sale or sold for domestic consumption in Japan. The statutory definition of export value reads as follows:
The export value of imported merchandise shall be the market value or the price, at the time of exportation of such merchandise to the United States, at which such or similar merchandise is freely offered for sale to all purchasers in the principal markets of the country from which exported, in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States, plus, when not included in such price, the cost of all containers and coverings of whatever nature, and all other costs, charges, and expenses incident to placing the merchandise in condition, packed ready for shipment to the United States.
For reasons which will appear, infra, and under well-settled principles of law, it is clear that the determination of whether the claimed values or the assessed values should be held to constitute statutory export value depends, in the final analysis, upon the status of the foreign shipper of the involved merchandise. If, as contended by counsel for appellee, the shipper was a bona fide purchasing agent for the importer, and the merchandise was freely offered to all purchasers at ex-factory prices, exclusive of shipping charges and commission, then the claimed values were properly sustained by the trial court. If, however, the shipper was, in fact, a seller, or, alternatively, an agent for the seller, and the record does not show that such or similar merchandise was freely offered for sale to all purchasers for exportation to the United States, in the usual wholesale quantities and in the ordinary course of trade, at ex-factory prices, then the appraised values should have been affirmed.
The framework of legal principles within which the disposition of this case must be confined has been developed in a series of cases generally involving the issue of whether or not inland freight and other shipping charges form part of the export value of imported merchandise. An extensive review of this proposition in the cases of United States v. Paul A. Straub & Co., 41 C.C.P.A. (Customs) 209, C.A.D. 553, and Albert Mottola, etc. v. United States, 46 C.C.P.A. (Customs) 17, C.A.D. 689, led to the conclusion that where merchandise is offered for sale and sold on an f.o.b. port of exportation basis, and is never sold or offered for sale at ex-factory prices, the inland charges incurred in transporting merchandise from the factory to the f.o.b. point form an integral part of the value of such merchandise. Where, however, ex-factory sales are shown, and it is established that such or similar merchandise is freely offered for sale to all purchasers, in the usual wholesale quantities and in the ordinary course of trade, at ex-factory prices, freight and other charges subsequently accruing are not elements entering into the determination of export value. United States v. Gitkin Co., 46 Cust. Ct. 788, A.R.D. 132.
Moreover, the extent to which ex-factory sales need be proven depends upon the method employed to invoice the goods, and the way in which the appraiser makes his return of value. If ex-factory prices and other charges are separately stated on the invoices and the appraiser's finding of value is expressed in terms of the invoice unit prices, plus the questioned charges, the appraisement is deemed to be separable. United States v. Dan Brechner et al., 38 Cust. Ct. 719, A.R.D. 71; United States v. Gitkin Co., supra; Valley Knitting Co., Inc., et al. v. United States, 44 Cust. Ct. 599, Reap. Dec. 9627. Under the rule expressed in United States v. Fritzsche Bros., Inc., 35 C.C.P.A. (Customs) 60, C.A.D. 371, a party to a reappraisement proceeding may challenge one or more of the elements entering into an appraisement, while relying upon the presumption of correctness of the appraiser's return as to all other elements, whenever the challenged items do not disturb the effect of the remainder of the appraisement. Such is the case in the instance of an appraisement at ex-factory-pluscharges value, and the charges may be disputed without the necessity of proof that the ex-factory prices comply with the statutory definition of export value. United States v. Dan Brechner et al., supra.
It is further well established, as stated by the trial court However, the bona fides of a buying commission is a question of fact to be determined from the evidence adduced in any particular case. United States v. Nelson Bead Co., 42 C.C.P.A. (Customs) 175, C.A.D. 590.
Since, with respect to 14 of the 17 cases here involved, the appraisements were what we have termed separable, and subject to challenge with reference to the items of commission and shipping charges, the question arises whether the evidence suffices to show that the exporter of the merchandise at bar was a bona fide representative of the purchaser whose services included buying at ex-factory prices, and payment of charges for transporting the goods from the factory to the ship.
The circumstances surrounding the purchase of the instant merchandise and the relationship between exporter and importer were the subject of the testimony of Martin Cannon, a partner of the firm of Supreme Merchandise Company (hereinafter sometimes called Supreme), appellee herein. The evidence which he gave on direct examination tended to show the following: As buyer for his company, which was engaged in the business of importing smokers' articles during the period between 1955 and 1958, he made a trip to Japan in May 1955. There, he contacted "a few suppliers," one of whom he identified as Ichikawa. Ichikawa put him in touch with a manufacturer by the name of Toho, who quoted prices in...
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