CBP Bulletin Proposes to Revoke Flower Consignment "Average" Valuation Method
In the August 3, 2011 issue of the U.S. Customs and Border Protection Bulletin (Vol. 45, No. 32), CBP published one notice that proposes to revoke a “treatment” that involves the use of “average price” to value cut flowers imported under consignment that were eligible for duty-free treatment under the ATPA.
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(The average price, supplied by a flower association, is derived from prices from the previous four weeks (per flower and grade) of imported flowers, less a percentage for gross margin and international transportation. This average price is made available only to participating flower association members who use it for valuation of flowers they import under consignment.)
Comments on Proposed Ruling Action due September 2
CBP states that any party who has received a ruling or decision on the merchandise that is subject to the proposed revocation, or any party involved with a substantially identical transaction, should advise CBP by September 2, 2011, the date that written comments on the proposed treatment revocation are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agents for importations subsequent to the effective date of the final decision in this notice.
Proposed Revocation
CBP is proposing to revoke the treatment below, and any rulings on these products that may exist but have not been specifically identified. CBP is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.
Value of Consigned Flowers Based on “Average Price”
| Issue: CBP Miami request for advice on valuing cut flowers entered under consignment |
| Current: After the Andean Trade Preference Act (ATPA) expired on February 12, 2011, fresh cut flowers from Columbia, Ecuador and Peru were no longer eligible for duty-free treatment and became dutiable. In connection with this change, representatives of a flower association discussed with port officials the method of valuation for flowers entered under consignment. Under this method, flowers are valued based on an average of the prices of flowers from the previous four weeks (per flower and grade) of imported flowers, less a percentage for gross margin and international transportation. |
| Proposed: CBP states that despite their free entry under the ATPA, the valuation of cut flowers entered under consignment using an average price is the “fallback” method, the last of four possible methods to use, and thus is not the proper method for valuation purposes. |
| Reason: The methods of valuation are set forth in 19 USC 1401a, in the following order of usage: (i) the transaction value of identical merchandise or similar merchandise; (ii) deductive value if a value for identical or similar entries of cut flowers cannot be ascertained; (iii) by computed value if unable to ascertain a value upon which to base appraisement; and (iv) the "fallback" value. CBP states that it sees no reason to reach the fallback method, as the value should be ascertainable by one of the previous methods. In addition, according to the statute, the lowest value should be used when more than one alternative value exists for valuation purposes. Therefore, that averaging of values conflicts with this principle of the statute. |
| Proposed new ruling: HQ H165361 |