tax, which was equal to the entered value of the merchandise. The appellant herein contends that such foreign value was the correct value for the importation at bar.

Two hearings were had by the trial court. In the first case (Reap. Dec. 9817), the court found that the plaintiff's evidence was insufficient to overcome the presumption of correctness attaching to the appraiser's finding that the export value of similar merchandise, i.e., the Ace gum, was correct. A rehearing was granted and, at the second trial, an affidavit made by one Cipriano Garza Elizondo, manufacturer of bubble chewing gum under the firm name of Chicles Hercip, was received in evidence (plaintiff's collective exhibit 4). This additional proof, in our opinion, established that there was no export value for the "Ace" gum, since it was not generally sold or offered for sale for exportation to the United States, but was sold and offered for sale to one customer only. It was not, therefore, freely offered for sale in the usual wholesale quantities to all persons desiring to buy for exportation to the United States. When competent evidence to that effect was introduced by the plaintiff at the trial, the Government could no longer rely upon the presumption of correctness of its appraisement. If it relied upon such appraisal after the introduction of the evidence referred to by the plaintiff, the defendant should have gone forward with proof. The presumption of correctness attaching to the Government's appraisal stood only so long as there was no competent evidence introduced to refute or overcome the presumption. Once such evidence was introduced, the Government lost the protection of the presumption and faced the necessity of offering evidence in support of its appraisal, if it continued to rely upon it.

The trial court, in the second case (Reap. Dec. 10439), made the following statement:

While it would appear from this affidavit that the "Ace" brand of bubble chewing gum could not properly be used as a basis of appraisement, since it was not freely offered to all purchasers for exportation to the United States, even if the appraiser's action is erroneous, it is incumbent upon plaintiff to establish that there was an export value for such merchandise and what that export value was. *** [Italics by the court.]

Citing Kobe Import Co. v. United States, 42 CCPA 194, C.A.D. 593, the court, in the Tanous case, supra (Reap. Dec. 10439), further stated that:

The ultimate fact to be established here is that, at the time of exportation of the within merchandise, such merchandise was freely offered for sale to all purchasers in the usual wholesale quantities and in the ordinary course of trade for exportation to the United States at 6.50 pesos per 100 tablets, plus tax. *

The Kobe case, supra, does not sustain, in our opinion, the position taken by the single judge. That case really is not applicable to the situation now before us. In the Kobe case, both parties relied upon export value as the correct basis of appraisement. They contended, however, for different export values. No question concerning foreign value was involved. In the case at bar, the plaintiff established and the trial court held that a foreign value for such merchandise in the same amount as the entered value existed. The trial court (Reap. Dec. 10439) also found that the evidence was not sufficient to establish that such merchandise was freely offered for sale for export nor to overcome the presumption of correctness attaching to the appraiser's finding of an export value for similar merchandise higher than the foreign value of such merchandise. However, the plaintiff, at the trial below, offered, in our opinion, competent evidence that no export value existed for "Ace" gum at the time of exportation of the merchandise in question. Furthermore, the plaintiff's evidence shows that, if an export value existed for the imported gum, it was no higher than the foreign value established.

We make reference now to the statement of the single judge (Reap. Dec. 10439) that: "The ultimate fact to be established here is that, at the time of exportation of the within merchandise, such merchandise was freely offered for sale to all purchasers in the usual wholesale quantities and in the ordinary course of trade for exportation to the United States at 6.50 pesos per 100 tablets, plus tax." This, in our opinion, is not the burden imposed upon the appellant under the law. When the presumption of correctness attaching to the official appraisal was overcome, as we find in this case, the merchandise should have been appraised on the basis of foreign value, as contended by the appellant. Whether the written contract, referred to in the opinions of the trial court, ever became effective or not, makes no difference, since plaintiff's evidence showed that, if an export value for such merchandise existed, it was not higher than the foreign value of the imported merchandise. Since, as established by the record, there was no export value for similar merchandise-relied upon by the Government as the basis of appraisal-then the export value for "such" merchandise, if such export value existed, should have been used only if it was higher than the foreign value claimed and established by the plaintiff below. The evidence in the case at bar indicates that, if an export value for "such" merchandise existed, it was the same as the foreign value shown to be equal to the entered value of the merchandise.

The Government, in the case at bar (brief, page 14), contends that "it is incumbent upon the appellant to show either that there is an export value for such merchandise which is equal to or higher than the foreign value of such merchandise, or in the absence of such proof,

to prove the nonexistence of an export value for similar merchandise," maintaining, in this connection, that the appellant has failed to prove that there were no other manufacturers of merchandise similar to the imported merchandise upon which an export value might be predicated. We are of the opinion that it was not required, as indicated by the Government, that the appellant make inquiry of all other gum manufacturers in Mexico, if any existed, to determine whether there was an export value for any similar product. That is unreasonable and really an impossible burden to cast upon the plaintiff below. If the Government contended for an export value of similar merchandise other than that based upon "Ace" gum, it should have offered proof to that effect. We are, therefore, of the opinion that the judgment of the trial court should be reversed and that appraisal should have been based upon the foreign value of such merchandise, there being no higher export value for such merchandise.

Upon the record before us, we find as facts:

1. That the imported merchandise consists of "Chiclines" brand bubble chewing gum, manufactured by Chiclera Industrial Mexicana, S.A., exported from Mexico on February 27, 1947.

2. That such merchandise was entered at 6.50 Mexican pesos per 100 tablets, plus stamp tax, and was appraised at 8 Mexican pesos per 100 tablets, net, packed, plus 1.65 per centum Mexican stamp tax.

3. That the appraisement was made on the basis of export value of similar merchandise, based on the price of "Ace" brand bubble gum, manufactured by Chicles Hercip in Monterrey, Nuevo Leon, Mexico.

4. That, at or about the date of exportation of the merchandise at bar, the "Ace" brand bubble chewing gum, manufactured by Chicles Hercip in Monterrey, Nuevo Leon, Mexico, was not freely offered for sale to all purchasers in the principal markets of Mexico, in the usual wholesale quantities and in the ordinary course of trade, for exportation to the United States, but that the sale thereof for export to the United States was restricted to one exclusive purchaser.

5. That merchandise, such as that in question, was freely offered for sale for home consumption in Mexico to all purchasers in the principal markets of Mexico, in the usual wholesale quantities and in the ordinary course of trade, at 6.50 Mexican pesos per 100 tablets.

6. That the evidence adduced failed to establish that similar merchandise was freely offered for sale to all purchasers in the principal markets of Mexico, in the usual wholesale quantities and in the ordinary course of trade, for exporation to the United States, at or about the time of exportation of the instant merchandise.

7. That the evidence presented established the nonexistence of an export value for either such or similar merchandise which was higher than the foreign value.

We, therefore, conclude as matters of law:

1. That there was no export value for either such or similar merchandise which was higher than the foreign value.

2. That the foreign value, as defined in section 402 (c) of the Tariff Act of 1930, as amended by the Customs Administrative Act of 1938, is the proper basis for the determination of the value of the merchandise involved herein.

3. That such foreign value is 6.50 pesos per 100 tablets (or per kilo), f.o.b. Mexico City, net, packed, plus 1.65 per centum Mexican stamp tax, as entered.

Judgment will be entered accordingly.

(A.R.D. 165)

UNITED STATES v. JOHN V. CARR & SON, INC.

Metal parts for antivibration mounts

EXPORT VALUE-SALES TO A SELECTED PURCHASER-PRICES WHICH FAIRLY REFLECT MARKET VALUE

Where it appears that the exporter of parts for antivibration mounts does not include certain fixed items of overhead, such as taxes, insurance, and depreciation, in computing his export price to an American affiliate, a selected purchaser, for the reason that such costs are "absorbed" in the cost of production of merchandise used for its own further manufacturing operations, as well as in the price of such articles sold for home consumption in the country of exportation, it may not be said that such export price fairly reflects the market value of the merchandise within the contemplation of section 402 (f) (1) (B), Tariff Act of 1930, as amended by the Customs Simplification Act of 1956. A price that does not embrace all of the elements entering into actual cost of production is not fairly reflective of market value. SAME

In ascertaining the price which fairly reflects the market value of imported merchandise, the value of goods in the foreign market is a relevant consideration, and where the export price to a selected American purchaser is much lower than the price of such goods in the foreign market, export value, within section 402 (b), as amended, supra, has not been established.

CONSTRUCTED VALUE-RELATED PERSONS

In the instance of transactions between related persons, the appraiser is authorized, by virtue of the provisions of section 402 (g) (F), Tariff Act of 1930, as amended by the Customs Simplification Act of 1956, to disregard any element of constructed value, as defined in section 402 (c) of said act, as amended, which does not fairly represent the amount usually reflected in sales of merchandise of the same general class or kind. And where the exporter's calculations of general expenses do not include certain fixed costs incurred in the manufacture of identical merchandise for home consumption, the appraiser properly added such costs in estimating constructed value.

John W. Douglas, Assistant Attorney General (Daniel I. Auster, trial attorney), for the appellant.

Barnes, Richardson & Colburn (Joseph Schwartz of counsel) for the appellee. Before LAWRENCE, RAO, and FORD, Judges; LAWRENCE, J., dissenting

RAO, Judge: This is an application for review of a decision and judgment holding that export value, as defined in section 402 (b) of the Tariff Act of 1930, as amended by the Customs Simplification Act of 1956, was the proper basis for determining the value of certain imported metal parts for antivibration mounts used in the production of automobiles, and that such value was as represented by the invoiced and entered values of such merchandise. The decision under review is reported as John V. Carr & Son, Inc. v. United States, 48 Cust. Ct. 506, Reap. Dec. 10138.

It is contended here that the record before the trial judge was inadequate to establish statutory export value and that statutory constructed value, as defined in section 402 (d) of the Tariff Act of 1930, as amended, supra, and as returned by the appraiser, should have been held to be the value of the merchandise under consideration. The provisions in question, as amplified by statutory definitions, are expressed in the following language:

Section 402, as amended, supra:

(b) 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 abscence 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.

(d)

CONSTRUCTED VALUE.-For the purposes of this section, the constructed value of imported merchandise shall be the sum of—

(1) the cost of materials (exclusive of any internal tax applicable in the country of exportation directly to such materials or their disposition, but remitted or refunded upon the exportation of the article in the production of which such materials are used) and of fabrication or other processing of any kind employed in producing such or similar merchandise, at a time