## Facts

- Luigi Bormioli Corp., Inc. (the importer) purchased glassware from its Italian parent company for importation into the United States.
- The parent company generally required payment within 60 days, but issued letters (1987–1989) allowing extended payment terms (eventually up to 90 days) with interest purportedly tied to the prevailing Italian prime rate.
- In 1996 entries, the importer’s payments often did not match the written terms: payments were frequently late, and the amount labeled as “interest” was charged as a flat 1.25% of invoice price per month (about 15% annually) rather than a prime-rate-based charge.
- U.S. Customs appraised the merchandise using transaction value and included the 1.25% monthly charge in the dutiable value as part of the price actually paid or payable.
- The importer challenged the appraisal, asserting the 1.25% charge was bona fide interest excluded from transaction value under Treasury Decision 85-111 (TD 85-111).
- The Court of International Trade granted summary judgment to the United States, and the importer appealed.

## Issues

1. Whether the importer proved that a 1.25% monthly charge was bona fide interest excludable from transaction value under TD 85-111, rather than part of the price actually paid or payable under 19 U.S.C. § 1401a(b).

## Decision

- The Federal Circuit affirmed summary judgment for the United States.
- The court held the importer did not establish that the 1.25% monthly charge qualified as bona fide interest under TD 85-111.
- Customs properly included the charge in transaction value as part of the price actually paid or payable.

## Legal Principles

- Transaction value under 19 U.S.C. § 1401a(b) generally includes all amounts paid or payable for imported merchandise unless a recognized exclusion applies.
- TD 85-111 permits exclusion of interest only when the importer proves a bona fide financing arrangement and a true interest component, including terms comparable to those independent parties would use in similar circumstances.
- The importer bears the burden to prove an asserted interest charge falls within TD 85-111’s exclusion; labeling a charge as “interest” is insufficient.
- In evaluating claimed interest exclusions, Customs and reviewing courts may consider actual payment conduct and the economic substance of the arrangement; material deviations from documented terms support treating the charge as part of price.
- Customs’ reasonable interpretation and application of its valuation guidance may receive deference when supported by the record.

## Conclusion

Because the importer’s actual payment behavior and flat monthly charge materially departed from the claimed prime-rate-based financing terms, the court agreed the charge was not proven to be bona fide interest under TD 85-111 and remained included in transaction value for duty assessment.


Luigi Bormioli Corp., Inc. v. United States, 304 F.3d 1362 (Fed. Cir. 2002)