DECISIONS OF THE UNITED STATES Reappraisements (R.D. 11778) Ross GLOVE COMPANY v. UNITED STATES Leather gloves PHILIPPINE ARTICLES-VALUE OF FOREIGN MATERIALS-LACK OF PROBATIVE EVIDENCE Men's leather gloves manufactured in the Philippine Islands with rabbit fur linings of Belgian origin and exported to the United States, Held, not to be advisorily classifiable as "Philippine articles" where the sole evidence of value offered in accordance with applicable Philippine export value is derived from a "purchaser' of the linings in Belgium not shown to be a competent witness of the Belgian manufacturers' sales policies and practices, and the underlying contract of the "purchaser" does not provide for exportation of the merchandise to the Philippine Islands, but contemplates delivery in Belgium. Reappraisement No. R68/11664 Entered at Milwaukee, Wis. Entry No. 1499-S. (Decided on remand [A.R.D. 318] August 17, 1976) Mayer, Brown & Platt (Walter Treumann and J. Stanley Stroud of counsel); Barnes, Richardson & Colburn (Joseph Schwartz and Earl R. Lidstrom of counsel), associate counsel; for the plaintiff. Rex E. Lee, Assistant Attorney General (Brian S. Goldstein and Patrick D. Gill, trial attorneys), for the defendant. RICHARDSON, Judge: The merchandise in this appeal for reappraisement consists of 624 dozen pairs of fur-lined leather gloves which were exported from the Philippine Islands on August 31, 1962, and appraised upon entry at Milwaukee, Wisconsin, at U.S. $25.77 per dozen pairs, net, packed, on the basis of constructed value as defined in 19 U.S.C.A., section 1401a(d) (section 402 (d), Tariff Act of 1930, as amended by the Customs Simplification Act of 1956). The plaintiffimporter does not challenge the basis of value or the return of value made in the appraisement. Plaintiff contends that the value of the foreign materials used in the manufacture of the gloves in the Philippine Islands did not exceed 20 percent of the U.S. appraised value of the gloves, and as such, the gloves should have been advisorily classified by the appraiser as "Philippine articles" so as to be eligible [upon liquidation] for the reduced rate of duty accorded "Philippine articles" under the provisions of the Philippine Trade Agreement of 1946 as revised pursuant to the Philippine Trade Agreement Revision Act of 1955 (69 Stat. 413), which, in this case, amounts to 20 percent of the ordinary customs duty assessed on Philippine articles. The Government disputes plaintiff's contention, and under the law of the case, the court is required in this proceeding to determine if plaintiff has established the value of the foreign materials in the gloves in accordance with the customs laws of the Philippines. See Ross Glove Company v. United States, 71 Cust. Ct. 219, A.R.D. 318, 363 F. Supp. 1395 (1973), reversing and remanding Ross Glove Company v. United States, 68 Cust. Ct. 236, R.D. 11763, 337 F. Supp. 907 (1972). The applicable customs laws of the Republic of the Philippines were introduced into the record through the testimony of Jesus B. Bito, a Philippine Lawyer who specializes in customs and tax cases in that country. The text of these laws is contained in section 201 of the Tariff and Customs Code of the Philippines (Republic Act No. 1937) which reads: Sec. 201. Basis of Dutiable Value. -Whenever an imported article is subject to an ad valorem rate of duty, the duty shall be assessed upon the market value or price at which, at the time of exportation, the same, like or similar article is freely offered for sale in the principal markets of the exporting country for exportation to the Philippines, in the usual wholesale quantities and in the ordinary course of trade (excluding internal excise taxes to be remitted or rebated), plus ordinary expenses prior and incidental to the lading of such article on board the vessel or aircraft at the port of export (including taxes or duties, if any) and freight paid as well as insurance premium paid covering the transportation of such article to the port of entry in the Philippines. When the value of the article cannot be ascertained in accordance with the preceding paragraph, the value shall be the domestic wholesale market value or selling price of the same, like or similar imported article in the principal market of the Philippines on the date of exportation of the article under appraisement, in the usual wholesale quantities and in the ordinary course of trade, minus the import duty and other taxes as well as a commission not exceeding six per centum if any has been paid or contracted to be paid on goods secured otherwise than by purchase, and profits not to exceed eight per centum and a reasonable allowance for general expenses not to exceed eight per centum on purchased goods, and all other expenses incidental to the delivery from the port of importation to the principal market in the Philippines. As this statue indicates, dutiable value in the Philippines is predicated primarily upon an export value, and alternatively, upon domestic market value. In this case plaintiff apparently relies upon the export value provision, having introduced no evidence directed toward the establishment of a domestic market value. On the matter of Philippine export value Carl Ross, plaintiff's president and a stockholder, testified that he is in charge of plaintiff's sales, its major purchasing and also handles the importation of gloves. He stated that he is familiar with the 624 dozen pairs of fur-lined gloves covered by the invoice at bar, having seen them at the time of their arrival at plaintiff's factory in Sheboygan, Wisconsin. He testified that the only material in the imported gloves that came from a country other than the Philippines or the United States is the cut rabbitskin lining and that the linings were imported into the Philippines under customs bond from Belgium by Carla Trading Corporation, Ltd. a Bahamian corporation in which he is a stockholder and an officer, and there sold to plaintiff who caused the linings to be processed into the imported gloves by Ross Glove Manufacturing, a Philippine division of Carla Trading Corporation, Ltd. consisting of a team of laborers assembled in the Philippines for that purpose by the parent corporation. The 624 dozen pairs of linings involved in the imported gloves in issue are said by the witness Ross to be part of a shipment of 1,016 dozen pairs of linings shown by documentation in the record as going from Antwerp, Belgium in April, 1962 and arriving in Manila, Philippine Islands in June, 1962 (Import Entry - collective exhibit 3), and leaving the Philippine Islands in three exporting vessels between August 20 and September 15, 1962 (Application for Bond Cancellation exhibit 2). His testimony in this regard is based upon records given to him by the manager of Ross Glove Manufacturing and certified by the customs storekeeper in the Philippines. Mr. Ross testified that the 1,016 dozen pairs of linings were purchased by Carla Trading Corp. acting through plaintiff, under contract dated January 22, 1962 with Peausserie de Destelbergen, a Belgian company located near Ghent, Belgium, covering 4,564 dozen pairs of precut rabbitskin linings at a price of U.S. $4.82 per dozen pairs f.o.b. Antwerp, plus packing of U.S. $30 per delivery. The contract received in evidence as exhibit 5 reads in part: 3) The 4,564 dozen shall be delivered in six monthly deliveries, namely five deliveries of 600 dozen men's and 144 dozen children's; the sixth delivery of 700 dozen men's and 144 dozen children's, subject to unforeseen contingencies or acts of God. The first shipment is intended for March 1962. 4) The invoices shall be drawn up and sent to the name of CARLA TRADING CORPORATION, Nassau, Bahamas. Copy will be sent to the Ross Glove Company. The merchandise will be turned over to the forwarder, the firm of J. P. Best & Co. of Antwerp, at the disposition of Ross Glove Company, Sheboygan. Mr. Ross also identified other documents connected with this transaction, namely, a bill of lading, dated April 17, 1962, and signed by the forwarder John P. Best & Co. of Antwerp, Belgium, covering 10 bales of rabbitskins, to which is attached a packing slip and an invoice from Destelbergen (collective exhibit 4), and a freight bill for 10 bales of rabbitskins from the forwarder John P. Best & Co. to plaintiff stamped paid under date of May 10, 1962 (exhibit 6). On the documents generated by the forwarder, namely, the bill of lading and the freight bill, the destination MANILA by way of M/S CEYLON appears. The witness also testified that on the basis of experience he acquired in his travels to and dealings in Belgium that the market for this merchandise was centered in and around Ghent, Belgium and that it evolved around three suppliers of precut rabbitskin linings of the same quality, namely, Destelbergen and Scaldis of Ghent, and Ed. Block of Merelbeke which is near Ghent. According to the witness, plaintiff has done business with the Block establishment involving the shipment of precut rabbitskin linings in March and April of 1962 from Belgium to Manila in the same format as characterized its dealings with Destelbergen. Mr. Ross stated that all costs to make the shipment and deliver it to Antwerp, Belgium were included in the purchase price except the packing which was extra, and that on the basis of his experience in buying linings from Belgium, the purchase price did not depend upon quantity, and that the purchases were made in the ordinary course of trade and were not unusual transactions between companies which were not related to the suppliers. Rudolph Frenville, a partner in the firm of M. Frenville & Co., New York importers of pickled skins and fur linings, testified that his firm has purchased precut fur linings from Scaldis and Block and that he has heard of Destelbergen but has not done business with that company. He stated that in February of 1962, his firm purchased 3,000 dozen pairs of precut men's fur linings from Scaldis at a price of $4.80 f.o.b. Antwerp, plus packing under an exclusive arrangement with the supplier to buy its entire output and these linings were resold by Frenville to plaintiff for shipment to Manila at the price of $5.30, c.i.f. Manila. |