Luigi Bormioli Corp., Inc. v. United States

Slip-Op 00-134

United States Court of International Trade

______________________________
:
Luigi Bormioli Corp., Inc., :
:
Plaintiff, :
: Court No. 97-09-01554
v. :
:
United States, :
:
Defendant. :
______________________________:

[Summary Judgment for Defendant.]

Dated: October 19, 2000

Barnes, Richardson & Colburn (Sandra Liss Friedman, Joseph
M. Spraragen and Frederic D. Van Arnam, Jr.), for plaintiff Luigi
Bormioli Corp., Inc.

David W. Ogden, Assistant Attorney General, Joseph I.
Liebman, Attorney in Charge, International Trade Field Office,
Attorney, Commercial Litigation Branch, Civil Division,
Department of Justice (Amy M. Rubin), Chi S. Choy, Attorney,
Office of Assistant Chief Counsel, International Trade
Litigation, United States Customs Service, of counsel, for
defendant.

OPINION

RESTANI, Judge: This matter is before the court on cross-

motions for summary judgment, pursuant to USCIT Rule 56, brought

by both plaintiff, Luigi Bormioli Corp., Inc. (“Bormioli”), and

defendant, the United States (“Defendant”). Bormioli requests

that the court decide, as a matter of law, that the appraised

transaction value of the subject merchandise that it imported,

glassware from Italy, should exclude the 1.25% charge of one
COURT NO. 97-09-01554 PAGE 2

month’s interest. Defendant cross-moves arguing that the 1.25%

charge is not “bona fide” interest and should be included as part

of the appraisement value of the merchandise. The court agrees

with the Defendant.

Jurisdiction and Standard of Review

The court has jurisdiction pursuant to 28 U.S.C. § 1581(a)

(1994). The court will grant summary judgment if the “pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law.” USCIT Rule 56(c).

Motion to Strike

As a preliminary matter, Bormioli argues that the court

should strike Defendant’s “Response to Plaintiff’s Statement of

Material Facts as to Which There Are No Genuine Issues to Be

Tried” [hereinafter “Defendant’s Response”] from the record

pursuant to USCIT Rule 7. Contrary to plaintiff’s motion,

Defendant’s submission does not violate the dictate of Rule 7

that “[n]o other pleading shall be allowed, except that the court

may order a reply to an answer . . . .” USCIT Rule 7(a).

As a cross-movant for summary judgment, the government is

allowed under USCIT Rule 56(b), (h) to submit two statements of
COURT NO. 97-09-01554 PAGE 3

material facts, one as part of its motion for summary judgment

and a second statement of material facts in opposition to

Bormioli’s statement of material facts. Rule 56(h) requires a

party to submit a short statement to controvert those statements

of material facts of the plaintiff with which the defendant

disagrees. USCIT Rule 56(h) (“All material facts . . . will be

deemed to be admitted unless controverted by the statement

required to be served by the opposing party.”).

In this case, however, it appears Defendant is contesting

not the material facts but Bormioli’s interpretation of the legal

import of those facts. Defendant’s Response clarifies that the

legal conclusion as to the status of those material facts is

critical to the dispute, rather than any particular material

facts being at issue. As the Response serves the cause of

substantial justice by clarifying the issues, it will not be

stricken, assuming a technical defect exists. Cf. Beker Indus.

Corp. v. United States, 7 CIT 199, 200-03, 585 F. Supp. 663, 665-

67 (1984) (finding that pleading serves substantial justice where

defendant’s answer complied with the spirit of pleading rules);

Transam. Elecs. Corp. v. United States, 70 Cust. Ct. 35, 37-38,

354 F. Supp. 1369, 1371-72 (1973) (finding that pleading serves

substantial justice where defendant’s answer made a clear
COURT NO. 97-09-01554 PAGE 4

presentation even though it did not format its answer into

separate paragraphs). Bormioli’s Motion to Strike is DENIED.

Background

Bormioli is the importer of record for thirteen entries of

merchandise in late 1996. Pl.’s Mem. of Law in Support of Mot.

for Summ. J. at 3-4 (“Pl.’s Br.”). The imported merchandise

consists of various articles of glassware purchased by Bormioli

from its parent corporation, Luigi Bormioli S.p.A. (“Bormioli

Italy”). Pl.’s Statement of Material Facts Not in Dispute

Pursuant to Rule 56(i) at ¶ 4. The United States Customs Service

(“Customs”) appraised the merchandise on the basis of transaction

value under 19 U.S.C. § 1401a(b) (1994). Id. at ¶ 5. Customs

determined that the transaction value of the imported merchandise

was represented by the invoice price plus an additional charge of

1.25% of the invoice price or value as stated therein. Id. at ¶

6.1 Bormioli argues that the additional 1.25% charge is interest

for one month and should not be included in the transaction value

of the imported merchandise.

1
The charge was not reflected in the relevant invoices but
was discovered during a Customs audit.
COURT NO. 97-09-01554 PAGE 5

Discussion

Customs’ policies as to the status of the 1.25% charge are

found in the Treatment of Interest Charges in the Customs Value

of Imported Merchandise, TD 85-111, 50 Fed. Reg. 27,886 (Cust.

Serv. 1985) (notice of Customs’ position) [hereinafter “TD 85-

111"], and the Treatment of Interest Charges in the Customs Value

of Imported Merchandise, 54 Fed. Reg. 29,973 (Cust. Serv. 1989)

(statement of clarification) [hereinafter “Statement of

Clarification”].

Customs promulgated TD 85-111 in order to implement a

decision by the Committee on Customs Valuation of the General

Agreements on Tariffs and Trade (“GATT”).2 TD 85-111, 50 Fed.

Reg. at 27,886. The Statement of Clarification was promulgated

to clarify the earlier Treasury Decision. Statement of

Clarification, 54 Fed. Reg. at 29,974.3 The Statement of

2
The Committee on Customs Valuation was established
pursuant to the GATT Agreement on the Implementation of Article
VII, adopted during the Tokyo Round of trade negotiations.
Article VII of the GATT addressed “Valuation for Customs
Purposes.” Decisions adopted by the Committee relate to the
interpretation and application of particular valuation
provisions, the terms of which had been found to be ambiguous
when enforced by different nations’ customs authorities.
3
The Statement of Clarification provides, in relevant
part, as follows:
Customs interprets the term “interest” to encompass
only bona fide interest charges, not simply the notion
of interest arising out of delayed payment. Bona fide
(continued...)
COURT NO. 97-09-01554 PAGE 6

Clarification does, however, add a new requirement that

excludable interest charges be reflected as interest expenses in

the importer’s books. Id. at 29,974.

Bormioli argues that the court should not give any deference

to Customs’ definition of interest as formulated in the Statement

of Clarification and that TD 85-111 is not applicable. See Pl.’s

Br. at 18-21, 23-27. Alternatively, it argues that it satisfies

the requirements of TD 85-111. See Pl.’s Br. at 21-23. Customs

avers that it properly adopted the Statement of Clarification in

order to define the term “interest” because TD 85-111 only

discusses the criteria according to which interest at a

particular rate is deemed excludable from price. See Statement

of Clarification, 54 Fed. Reg. at 29,974; Defendant’s Response at

10-13. Customs further asserts that Bormioli has failed to meet

the conditions of TD 85-111. See Defendant’s Response at 18-29.

Because the court rests its decision on the statute and TD

85-111, it need not decide whether the Statement of Clarification

merely interprets rather than changes the law in violation of the

Administrative Procedure Act (“APA”), 5 U.S.C. § 553(c) (1996),

3
(...continued)
interest charges are those payments that are carried on
the [importer’s] books as interest expenses in
conformance with generally accepted accounting
principles.
54 Fed. Reg. at 29,974.
COURT NO. 97-09-01554 PAGE 7

or of 19 C.F.R. § 177.10(c)4 (1999), as alleged by plaintiff.

See Floral Trade Council v. United States, 17 CIT 392, 395, 822

F. Supp. 766, 769 (1993) (distinguishing interpretations from

rules). As will be demonstrated, the court finds TD 85-111 does

not add new requirements but rather interprets the statute.

The court now addresses what deference, if any, should be

accorded TD 85-111, assuming it is properly issued. The analysis

of Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467

U.S. 837, 842-43 (1984), has been applied in appraisement cases.

See, e.g., Generra Sportswear Corp. v. United States, 905 F.2d

377, 379 (Fed. Cir. 1990). The Supreme Court recently found

Chevron analysis equally applicable to regulations affecting

classification decisions. See United States v. Haggar Apparel

Co., 526 U.S. 380, 386-390 (1999). Subsequent to the Haggar

decision, the court has ruled that Chevron deference does not

extend to ordinary Customs classification rulings, as they are

not subject to notice and comment procedures. Marathon Oil Co.

v. United States, 93 F. Supp.2d 1277, 1279 n.2 (Ct. Int’l Trade

2000)(citing Mead Corp. v. United States, 185 F.3d 1304, 1307

(Fed. Cir. 1999), cert. granted, 120 S. Ct. 2193 (U.S. May 30,

2000) (No. 99-1434)). Customs rulings do not carry the force of

4
19 C.F.R. § 177.10(c) appears to apply to rates of duty
rather than appraisement issues.
COURT NO. 97-09-01554 PAGE 8

law because they merely interpret and apply Customs law to a

specific set of facts. Id.

In marked contrast to standard Customs rulings, however, TD

85-111 was not issued in response to a specific set of facts

arising from a ruling request. Rather, as previously noted,

Customs developed the methodology set forth in TD 85-111 as a

generally applicable response to a decision of the GATT Committee

on Customs Valuation.

In Genesco Inc. v. United States, 102 F. Supp. 2d 478, 482-

84 (Ct. Int’l Trade 2000), the court addressed the level of

deference owed a similar general Customs policy statement. The

Genesco court noted that the Supreme Court, in Christensen v.

Harris County, had “reject[ed] Chevron deference for policy

statements, interpretive rules, agency manuals, and enforcement

guidelines lacking the force of law,” and had held instead that

”interpretations contained in formats such as opinion letters are

‘entitled to respect,’ but only to the extent that they are

persuasive.” Genesco, 102 F. Supp. 2d at 483 (discussing

Christensen v. Harris County, 120 S. Ct. 1655 (2000) (citation

omitted)).5 Recognizing that TD 92-108, the policy statement at

5
Defendant’s Reply Brief did not clarify the Chevron
deference discussion in its brief-in-chief to note the refinement
of Chevron found in the Supreme Court’s recent decision in
Christensen. The government cannot pick and choose which Supreme
(continued...)
COURT NO. 97-09-01554 PAGE 9

issue in Genesco, had been subject to a notice and comment

procedure, in contrast to the agency opinion letter in

Christensen, the court in Genesco held that TD 92-108 “merit[ed]

at least the respect of the court, if not Chevron deference.”

Id. at 484.

Even if TD 92-108 were entitled to enhanced deference, TD

85-111 is not. As indicated, TD 92-108 was subject to a notice

and comment procedure, whereas TD 85-111 was not. Only after the

notice and comment procedure, or similar “procedural safeguards,”

does the presumption of a reasoned and informed articulation of

statutory interpretation attach. Mead, 185 F.3d at 1307 (finding

Chevron deference inapplicable to Customs classification

rulings). Nor is there any other reason to conclude that

Congress intended policy statements issued by Customs in the

format of TD 85-111 to have the force of law.6

5
(...continued)
Court cases it will follow.
6
Although the court concludes that TD 85-111 is not
entitled to Chevron deference under a Christensen analysis, the
court does not decide whether a similar policy promulgated
through adjudication with the attendant procedural safeguards
would warrant greater deference than that granted TD 85-111. Cf.
INS v. Aguirre-Aguirre, 526 U.S. 415, 416 (1999) (recognizing
that Board of Immigration Appeals “should be accorded Chevron
deference as it gives ambiguous statutory terms ‘concrete meaning
through a process of case-by-case adjudication’”) (quoting INS v.
Cardoza-Fonseca, 480 U.S. 421, 448-49 (1987)); Gonzalez v. Reno,
215 F.3d 1243, 1245 (11th Cir. 2000) (declining to give INS
(continued...)
COURT NO. 97-09-01554 PAGE 10

In view of Haggar, which brought tariff statutes within the

same regime of statutory interpretation as other statutes, the

court sees no reason to interpret Chevron differently depending

on the type of decision reviewed. Chevron’s meaning should not

differ based on whether classification or appraisement is

involved. Because the court concludes that in Haggar and

Christensen the Supreme Court has refined the rule of Chevron, it

also concludes that Generra no longer requires deference to every

Customs policy which is not reduced to a regulation, if indeed it

ever did so. Generra did not explain why it did not follow in an

appraisement case the principles of non-deference previously

applicable to classification cases. It simply applied general

Chevron principles, rather than any rule of interpretation unique

to Customs law. While Chevron deference will be applied in some

appraisement cases, it is not appropriate here. Thus, the issue

here is whether TD 85-111 properly interprets the statute. If

not, the court must determine whether Customs’ actions in this

case are otherwise a proper application of the statute.7

6
(...continued)
informal adjudication reduced deference under Christensen
analysis), cert. denied, 120 S. Ct. 2737 (2000).
7
Bormioli argues that TD 85-111 does not apply because the
phrase “included in the price paid or payable” means that
“interest” must be a distinct charge within the price paid or
payable. See Pl.’s Br. at 20-21. Bormioli concludes from this
(continued...)
COURT NO. 97-09-01554 PAGE 11

TD 85-111 was prompted by the GATT Committee’s decision that

interest charges included in price are not to be considered part

of the transaction value. The GATT decision also set forth three

criteria to be used in determining whether the interest at the

rate charged could be excluded from the transaction value. See

TD 85-111, 50 Fed. Reg. at 27,887. Section § 1401a(b)(1)(A)-(E)

of Title 19 of the U.S. Code, which establishes the exclusive

list of additions to the price paid or payable, does not list

interest. See Caterpillar Inc. v. United States, 20 CIT 1169,

1175, 941 F. Supp. 1241, 1246 (1996) (finding that list of

mandatory and permissive additions to price actually paid or

payable is exclusive). Our appraisement laws are presumed to be

consistent with GATT. See Federal-Mogul Corp. v. United States,

63 F.3d 1572, 1581-82 (Fed. Cir. 1995) (noting that “absent

express Congressional language to the contrary, statutes should

not be interpreted to conflict with international obligations”

such as GATT agreements). GATT determinations, while lacking the

enforceability of domestic law, should nevertheless not be

7
(...continued)
erroneous reading that the “interest” which was charged
separately, was not included as distinct charge within the price
paid or payable and therefore TD 85-111 does not apply. Bormioli
confuses language describing the GATT decision with the effective
language of the TD, which states “whether or not included in the
price actually paid or payable.” TD 85-111, 50 Fed. Reg. at
27,886 (emphasis added). Thus, TD 85-111 does apply.
COURT NO. 97-09-01554 PAGE 12

ignored. See John H. Jackson, The WTO Dispute Settlement

Understanding – Misunderstandings on the Nature of Legal

Obligations, 91 Am. J. Int’l L. 60, 63-64 (1997) (noting

obligation of Member States under international law to comply

with WTO rulings, notwithstanding limited means of enforcing such

obligation under WTO rules).

TD 85-111 also is consistent with the statutory scheme.

Plaintiff does not argue that TD 85-111 restricts any previous

practice to the detriment of importers. In fact, if it is a

change, it is likely more favorable. Nor can it reasonably

contend that this policy statement does much more than require an

importer to show that the disputed charge is really bona fide

interest as opposed to part of the price. Even without TD 85-111

Customs would have to do something to determine whether the

charge was excludable as interest. All charges between the buyer

and the seller are presumed to be part of the price paid or

payable. Generra, 905 F.2d at 379 (“The term ‘total payment’ is

all inclusive.”).

TD 85-111 establishes three criteria that must be met in

order for a charge to qualify as an interest payment at a

particular rate: 1) the interest charge is identified separately;

2) there is a financing agreement in writing; and 3) the buyer

can demonstrate that the goods were sold at the price “actually
COURT NO. 97-09-01554 PAGE 13

paid or payable,” and that the claimed rate of interest is the

prevailing rate for such transaction in the country where and at

the time when the financing was provided. TD 85-111, 50 Fed.

Reg. at 27,886.8

First, the court must determine whether the 1.25% charge is

identified separately. See TD 85-111, 50 Fed. Reg. at 27,886.

It is clear that the charge at issue was not included in the

invoice price. At least for some entries prior to those at

issue, it was referred to on a corporate charge document, which

was separate from the sales invoice. See Charge Document from

Bormioli Italy to Bormioli, Christides Aff., Ex. B at 1 (stating

“Special [payment] terms 15% interest charges for delayed payment

of one [month]”).

8
TD 85-111 provides, in relevant part:
[I]nterest payments, whether or not included in
the price actually paid or payable for merchandise,
should not be considered part of dutiable value
provided the following criteria are satisfied:
A. The interest charges are identified separately from
the price actually paid or payable for the goods;
B. The financing arrangement in question was made in
writing;
C. Where required by Customs, the buyer can
demonstrate that
-–The goods undergoing appraisement are actually sold
at the price declared as the price actually paid or
payable, and
–-The claimed rate of interest does not exceed the
level for such transaction prevailing in the country
where, and at the time, when the financing was
provided.
50 Fed. Reg. at 27,886.
COURT NO. 97-09-01554 PAGE 14

Next, the court must determine if the parties’ financing

arrangement was reduced to writing. Bormioli submits a series of

three letters that it claims demonstrate a financing agreement

exists between itself and Bormioli Italy. See Letters Between

Bormioli and Bormioli Italy, Christides Aff. Ex. A at 1-3. Each

letter sets forth that Bormioli Italy would charge interest at

the prime rate in effect in Italy at the time of the delayed

payment (more than 60 days from invoice). Id. Each interest

payment was to be made quarterly. Id. at 1, 3. The letters set

forth the payment terms that differed with each passing year. In

1987, Bormioli was required to make payments within 180 days.

Id. at 1. In 1988, Bormioli was required to make payments within

120 days. Id. at 2. In 1989, Bormioli was required to make

payments within 90 days. Id. at 3. Bormioli explains that the

change in payment terms reflected its growing financial strength.

Christides Aff. at ¶ 14.

The letters, however, do not reflect the terms of the

financing arrangement actually in operation between Bormioli and

Bormioli Italy. First, Bormioli made payments to Bormioli Italy

on six to twelve months worth of charges accruing on outstanding

invoices, rather than the quarterly payments indicated in the

letters. Id. at ¶ 18. Second, Bormioli made these late payments

at an additional charge of 15% annually, or at a rate of 1.25%
COURT NO. 97-09-01554 PAGE 15

per month, rather than the 11.1% average prime rate of interest

in effect in Italy during 1996.9 Id. at ¶ 20. Finally, most

payments made by Bormioli in 1996 did not meet the 90 day payment

term set forth in the 1989 letter agreement between Bormioli and

Bormioli Italy. See Def.’s Mot. for Summ. J., Ex. 3 at 1. The

date of most payments exceeded the 90 extended payment term by

between 1 day and 22 days. See id.

Thus, Bormioli did not comply with any of the 3 requirements

set forth in the letter agreements. It is difficult to credit

Bormioli’s claim that this financing agreement covered the

arrangements between Bormioli and Bormioli Italy when Bormioli

did not comply with any of the terms of the letter agreement, as

modified.10

9
Italy’s average prime rate figures, as reported by
Bormioli, were as follows for the years 1992-1996:
1992 - 14.35%
1993 - 11.6%
1994 - 9.58%
1995 - 10.9%
1996 - 11.1%
Def.’s Br. at 20-21 (citing Bormioli’s Interrogatory Responses).
Bormioli does not challenge this statement by Defendant, but
the interrogatory response was not included as an Exhibit by the
Defendant or Bormioli.
10
Bormioli attempts to explain the apparent discrepancies
between its actual arrangements and the letter agreements. It
justifies the use of a 15% per year charge by arguing that
because the prevailing prime rate in 1987 was 13.58%, the 15% per
year charge was commercially reasonable. See Pl.’s Br. at 17-18.
This argument is without merit. The terms of the 1987 letter
(continued...)
COURT NO. 97-09-01554 PAGE 16

TD 85-111's final requirement is that Bormioli demonstrate

both that the goods at issue were actually sold at the price

“actually paid or payable,” and that the claimed rate of interest

does not exceed the prevailing interest rate in Italy at the time

the financing was provided. TD 85-111, 50 Fed. Reg. at 27,886.

TD 85-111 further explains that, in order for Bormioli to

demonstrate that it sold the goods at issue for the price

actually paid or payable, Bormioli must document that the

interest and charges are consistent with those applicable to

sales of identical or similar merchandise. See id.

Bormioli explains that Bormioli Italy does not sell its

merchandise to any other vendors in the United States.

10
(...continued)
agreement clearly state that “[t]he rate of interest will be the
prime rate here in Italy in effect at the time.” Letters Between
Bormioli and Bormioli Italy, Christides Aff., Ex. A at 1. The
1987 letter agreement clearly contemplated an interest rate that
would change with time. This did not change with the two
additional letter modifications. Bormioli itself reported that
the average prime rate in 1996 was 11.1% and that it paid 4%
above the market. See Def.’s Br. at 20-21. Bormioli does not
explain the discrepancy between the average interest rate in 1996
and the interest rate that it paid to Bormioli Italy. Bormioli
also does not explain why, over the course of almost 10 years, it
would still be paying the same interest rate, if it was indeed an
interest charge. Bormioli asserts that the 1987 letter
agreement, as modified by the 1989 letter agreement, was in
effect in 1996. Christides Aff. at ¶ 15 (“The Financing
Agreement, as modified by the December 11, 1987 and June 8, 1989
letters, was in effect at all times in 1996.”). As indicated,
Bormioli states that its improved financial condition affected
the allowed time for payment.
COURT NO. 97-09-01554 PAGE 17

Christides Aff. at ¶ 34. Therefore, it utilized the prices

charged by Bormioli Italy to an unrelated purchaser in Canada,

Anglo-Canadian M. Co., Ltd. (“Anglo Canadian”). Id. The prices

are very close, differing at most by five cents, for identical

merchandise, identically packaged. See Price Comparison of

Anglo-Canadian and Bormioli Invoices, Christides Aff., Ex. I at

1.11

Nevertheless, this is insufficient because Congress requires

that comparisons closely approximate either the transaction value

of identical or similar merchandise in sales to unrelated buyers

in the United States, or the deductive value or computed value of

identical or similar merchandise in the United States. 19 U.S.C.

§ 1401a(b)(2)(B).12 In Bormioli’s case the seller and buyer were

11
Defendant claims that the merchandise is not identical
by comparing the prices of similar merchandise that is packaged
differently. Def.’s Br. at 25-26. Bormioli, though, explains
that Defendant compared merchandise packaged in retail boxes with
merchandise packaged in brown cartons, thus creating a larger
discrepancy than actually exists. See Pl.’s Reply Mem., Supp.
Aff. of Jeffrey F. Christides at ¶¶ 6-13.
12
Section 1401a(b)(2)(B) of Title 19 provides, in relevant
part, as follows:
The transaction value between a related buyer and seller
is acceptable for the purposes of this subsection . . . if the
transaction value of the imported merchandise closely
approximates –-
(i) the transaction value of identical merchandise, or of
similar merchandise, in sales to unrelated buyers in the United
States; or
(ii) the deductive value or computed value for identical
(continued...)
COURT NO. 97-09-01554 PAGE 18

related, and the statute makes no exceptions for comparisons to

sales of identical merchandise outside the United States. See 19

U.S.C. § 1401a(f)(2)(E) (1994).13 Thus, Bormioli has failed to

demonstrate that substantially identical or similar goods were

sold to another purchaser at the price actually paid or payable.

Bormioli also fails to establish that the alleged 1.25%

monthly charge (15% annually) does not exceed the interest rate

prevailing in Italy at the time the financing was provided. See

TD 85-111, 50 Fed. Reg. at 27,886. The court notes that Bormioli

has failed to provide a prevailing interest rate in Italy other

than the prime rate. To determine whether the interest rates

charged Bormioli satisfy the final condition of TD 85-111,

therefore, without documentation establishing the prevailing

interest rate in Italy, the court compares Bormioli’s interest

rate to the Italian prime rate for the relevant years.

12
(...continued)
merchandise or similar merchandise;
but only if each value referred to in clause (i) or (ii) that is
used for comparison relates to merchandise that was exported to
the United States at or about the same time as the imported
merchandise.
13
Section 1401a(f)(2)(E) of Title 19 provides, in relevant
part, as follows:
Imported merchandise may not be appraised . . . on the
basis of –-
. . .
(E) the price of merchandise for export to a country
other than the United States . . . .
COURT NO. 97-09-01554 PAGE 19

Bormioli claims that the 15% interest rate charged by

Bormioli Italy was reasonable because that interest rate was the

best interest rate that a small start-up company could expect to

receive in 1987. See Pl.’s Br. at 17-18. It claims that the

prime rate in Italy at the time of the financing was 13.58%. Id.

at 17. The Financial Times reported that the prime rate at the

beginning of the year, when the 1987 letter agreement was signed,

was at 13%. David Lane, Lending Ceilings Bring a Note of

Caution, Fin. Times, Nov. 17, 1987, at Survey VIII. Bormioli

Italy charged Bormioli a full 1.5-2% higher than the prime rate

in 1987. By 1996, this gap had widened to 4%, but the rate

Bormioli Italy charged Bormioli never changed. See 1996 Italian

Prime Rate Report, available at Bloomberg Fin. News Serv., Code

ITBRPRIM (documenting an average prime rate of 11.069% in 1996).

In the absence of evidence showing a prevailing interest rate

other than the prime rate, plaintiff fails to meet TD 85-111's

requirement that the interest rate charged Bormioli be less than

the prevailing interest rate in Italy at the time of the

financing, whether in 1987 or 1996.

Bormioli only meets one of the three requirements set forth

in TD 85-111, namely, that the alleged interest charge was

separately listed. See TD 85-111, 50 Fed. Reg. at 27,886.

Further, Customs must have some way of making determinations as
COURT NO. 97-09-01554 PAGE 20

to whether extra charges are interest or simply late or other

charges unrelated to prevailing interest rates.14 Requiring an

importer to show that the charge was made pursuant to some

agreement calling for a reasonable rate of interest is well-nigh

a necessity. Whether Bormioli can be required to do anything

else, it can be required to do this with or without TD 85-111.

It failed this simple step. Thus, the court determines that the

facts alleged by Bormioli do not demonstrate that the charges at

issue are bona fide interest charges. Accordingly, they are

found to be part of the price paid or payable.

14
The court draws no conclusion as to Bormioli’s motives,
but Customs cannot allow loopholes in which the less than
attentive or dishonest may hide components of the actual price.
See Tikal Distrib. Corp. v. United States, 93 F. Supp. 2d 1269,
1271-72 (Ct. Int’l Trade 2000) (second set of invoices, not filed
with entries, included, inter alia, charges for exclusive selling
rights).
COURT NO. 97-09-01554 PAGE 21

Conclusion

For the reasons contained herein, the court GRANTS

Defendant’s Motion for Summary Judgment and DENIES Bormioli’s

Motion for Summary Judgment.

_______________________
Jane A. Restani
JUDGE

Dated: New York, New York

October 19, 2000