Century Importers, Inc. v. United States
2000 U.S. App. LEXIS 3248, 21 I.T.R.D. (BNA) 1993, 205 F.3d 1308 (2000)
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Rule of Law:
Under 19 U.S.C. § 1401a, the 'transaction value' for customs appraisal is the price stated on the invoice at the time of importation. A post-importation reimbursement of customs duties by the seller to the buyer is considered a rebate that must be disregarded unless the arrangement was separately identified on import documents at the time of entry.
Facts:
- Miller Brewing Company and Canadian brewer Molson Breweries entered into a 'Beer Agreement' for the importation and sale of Molson beer in the U.S.
- Initially, the import duty was a low, volume-based rate.
- During negotiations, a trade dispute caused the U.S. to impose a new, 50% ad valorem (value-based) duty on beer imported from Ontario, Canada.
- In a separate side letter to the main agreement, Molson agreed to 'pay or reimburse' Miller and its affiliate, Century Importers, Inc., for the cost of these new duties.
- Century imported Molson beer, and the invoices reflected a 'transfer price' for the beer but did not mention the separate agreement for Molson to reimburse the duties.
- Century paid the 50% duty to U.S. Customs based on the full invoice price.
- After the beer was imported and the duty was paid, Miller billed Molson for the duties, and Molson reimbursed Miller and Century for the amount.
Procedural Posture:
- The U.S. Customs Service assessed an ad valorem duty on beer imported by Century Importers, Inc., based on the full invoice price.
- Century Importers, Inc. paid the duties and subsequently filed an action in the U.S. Court of International Trade, a trial-level court, seeking a refund.
- Both Century and the United States filed cross-motions for summary judgment.
- The Court of International Trade granted summary judgment in favor of Century Importers, Inc.
- The United States, as the appellant, appealed the decision to the U.S. Court of Appeals for the Federal Circuit.
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Issue:
Does the 'transaction value' for calculating customs duties include the full invoice price when the foreign exporter has a separate, undisclosed agreement to reimburse the importer for those duties after importation?
Opinions:
Majority - Rader, J.
Yes. The statutory 'transaction value' is the price actually paid or payable at the time of importation, which was the full invoice price. The law requires that any customs duties to be excluded from this value must be 'identified separately' on the import documents, which was not done here. The subsequent payment from Molson to Century was a post-importation rebate, which the statute explicitly directs Customs to disregard. The court reasoned that 19 U.S.C. § 1401a(b)(3)(B) is clear: to deduct duties from the transaction value, they must be identified separately. Because they were not, the dutiable value is the total invoice price. Furthermore, the court held that Molson's later reimbursement was a 'rebate' that occurred after importation, which § 1401a(b)(4)(B) requires be disregarded. The court also rejected the argument that the failure to identify the duty arrangement was a correctable 'inadvertence' under § 1520(c)(1), finding that Century's repeated failure to properly document the imports over several months constituted negligent inaction or a misunderstanding of the law, not a simple clerical error.
Dissenting - Newman, J.
No. The failure to note the 'duty paid' nature of the transaction on the invoice was a correctable error, and the court should not have levied a duty on a duty. The majority mischaracterizes the arrangement as a 'rebate'; it was a pre-arranged agreement on how to allocate the cost of the duties, not a post-importation discount. The dissent argued that Century’s failure to state on the invoice that the price included the duty was a classic 'error, mistake, or inadvertence' that Congress intended to be correctable under 19 U.S.C. § 1520(c)(1). Customs even acknowledged it would have assessed the duty differently had it been properly notified. By refusing to allow correction, the majority enforces an unjust assessment and frustrates the statute's purpose of ensuring fair and correct duty collection.
Analysis:
This decision solidifies a strict interpretation of the 'transaction value' in customs law, emphasizing the critical importance of accurate documentation at the time of entry. It establishes that side agreements affecting the net price of goods are irrelevant for valuation unless disclosed to Customs as required by statute. The ruling also narrows the scope of the 'correctable error' provision, signaling that courts will treat repeated, negligent omissions as uncorrectable errors of law rather than excusable mistakes of fact. This places a significant burden on importers to ensure their paperwork is flawless and fully reflects the financial reality of their transactions upon importation.
