CIT Questions "Generra Presumption" That Transaction Value Must Include All Payments, Etc.
In Peerless Clothing International, Inc. v. U.S., the Court of International Trade denied Customs' motion for rehearing or reconsideration of the valuation of men's wool suits purchased through related party transactions, ruling that applying transaction value instead of computed value would not have changed the dutiable value.
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In its motion, Customs argued that transaction value should have been used and that the CIT erroneously relied upon KPMG Transfer Pricing Study to support its computed value conclusion.
Customs also asserted that certain warehousing and general administrative expenses in the intercompany allocation payments were properly part of the price actually paid or payable to establish the transaction value.
To support this assertion, Customs referred to the Generra presumption (named for Generra Sportswear Co. v. U.S.) in which transaction value is presumed to include all payments between a buyer and seller.
However, the CIT disagreed with Customs, stating that there is no language in the Generra case that supports the presumption. The Court stated that while Generra held that the quota charge payment was determined to be part of transaction value, and that transaction value should include all payments between the buyer and seller in that case, it does not necessarily follow that this would apply in all cases.
Further the CIT noted Customs, itself, by accepting Peerless' allocations for some expenses in their entirety or at a particular percentage, conceded that transaction value does not necessarily include all payments by Peerless USA to Peerless Canada.
On the issue as to whether the CIT erred in relying upon KPMG Study to establish that Peerless had no competitors in Canada and the use by the Court of Peerless' own profit and general expenses, the CIT could not find any support in the statute for Customs' contention that computed value calculations must be derived from an unrelated manufacturer or exporter. Further, the CIT stated that the computed value conclusion that was reached in the original decision was reached without the KPMG Study.
The CIT determined that the transaction value in this case was the same as computed value and therefore, denied the motion for Reconsideration.
(See ITT's Online Archives or 03/06/09 news, 09030635, for BP summary of Peerless I (Slip Op 09-04).)
Peerless Clothing International, Inc. v. U.S. Slip Op. 09-86 (dated 08/13/09) available at http://www.cit.uscourts.gov/slip_op/Slip_op09/09-86.pdf