Independent Cordage Co. v. United States (302 F. Supp. 1335, 1969)

LANDIS, Judge:

This case comes up on application to review, 28 U.S.C., section 2636, the decision below valuing sisal twine exported from Mexico in November, 1963. Independent Cordage Co., Inc. v. United States, 59 Cust.Ct. 718, R.D. 11380 (1967). Two reappraisement appeals, consolidated for trial, are involved.

Export value, as defined in section 402(b) of the Tariff Act of 1930, as amended by the Customs Simplification Act of 1956, T.D. 54165, is conceded to be the correct basis for valuation of the sisal twine. That adjudged export value basis is not before us for review.

The substantive question raised by the various errors recited in appellant’s application is whether export value, as defined in section 402(b), as amended, is the price at which the sisal twine was freely sold to all purchasers at wholesale, or, that price “subject to a per pound discount to all purchasers in the U. S. A. whose purchases of wrapping [sisal] twine exceeded 500,000 pounds per year on a calendar year basis.” (Exhibit 1.) The decision below sustained the appraised valuations at the selling price to all purchasers without the discount. Appellant alleges that the trial judge erred in disallowing the discount, and asks that we address ourselves to the question whether, as a matter of law, export value, as defined in section 402(b), “permits dutiable values to be based upon a cumulative quantity discount” in a calendar year. (Appellant’s brief, page 4a.)

Section 402(b) defines export value as follows:

EXPORT VALUE. — For the purposes of this section, the export value of imported merchandise shall be the price, at the time of exportation to the United States of the merchandise undergoing appraisement, at which such or similar merchandise is freely sold or, in the absence of sales, offered for sale in the principal markets of the country of exportation, 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 expenses incidental to placing the merchandise in condition, packed ready for shipment to the United States.

The terms used in the export value definition are additionally defined in section 402(f) which states, in pertinent part, that for the purposes of section 402:

(1) The term “freely sold or, in the absence of sales, offered for sale” means sold or, in the absence of sales, offered—

(A) to all purchasers at wholesale, or

(B) in the ordinary course of trade to one or more selected purchasers at wholesale at a price which fairly reflects the market value of the merchandise,

without restrictions as to the disposition or use of the merchandise by the purchaser, except restrictions as to such disposition or use which (i) are imposed or required by law, (ii) limit the price at which or the territory in which the merchandise may be resold, or (iii) do not substantially affect the value of the merchandise to usual purchasers at wholesale.

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(5) The term “usual wholesale quantities”, in any case in which the merchandise in respect of which value is being determined is sold in the market under consideration at different prices for different quantities, means the quantities in which such merchandise is there sold at the price or prices for one quantity in an aggregate volume which is greater than the aggregate volume sold at the price or prices for any other quantity.

We must apply the above stated law to the facts. The only evidence of the exporter’s prices to the United States is the affidavit of Mixel J. Jacobo (exhibit 1), sales manager of Cordemex, S. A. de C. V. Merida, Yucatan, Mexico (hereinafter Cordemex), the exporter. Attached to it are various sub-exibits “A”, “B”, “C”, and “D” referred to in the affidavit. According to Mr. Jacobo:

4. In the October-November period in 1963' Cordemex had a firm sales policy in connection with wrapping twine sold to all wholesale buyers in the U. S. A. The sales prices and terms of sales were governed by attached Price List No. 64/1, marked Exhibit A, effective as to all sales on or after August 20, 1963. These prices were offered to all U. S. A. wholesale buyers of cordage who usually bought in carload lots of 30,000 pounds or more. By wholesale buyers I mean both purchasers who usually bought in wholesale quantities (30,000 pounds or more) for industrial use or for resale otherwise than at retail. * * *

5. The prices quoted in the áttached Exhibit A were subject to a Y&$ Per pound discount to all purchasers in the U. S. A. whose purchases of wrapping twine exceeded 500,000 pounds per year on a calendar year basis. (Those purchasers of wrapping twine who also purchased smaller quantities of rope were allowed to include total purchases). Thus, if the quantity of wrapping twine ordered by a U. S. A. buyer through April, 1963, exceeded 500,000 pounds he would receive this per pound discount on all purchases he made that year, including those made during the said January-April period. All U. S. A. purchasers of such wrapping twine were entitled to this per pound discount off of the prices shown in Exhibit A if during the year 1963 their purchases exceeded 500,000 pounds. The practice of granting this Y&