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inconsistencies in respondent's calculation, notably that
seemingly identical shipments are assigned substantially
different customs duties. However, the fact that the amount of
customs duties arrived at by petitioner's calculations is much
greater than either the amount reported on petitioner's returns,
or the amount calculated by Mr. Lee at the time the invoices were
prepared, indicates that petitioner's method of calculating the
appropriate customs duties overstates customs duties. On brief,
petitioner calculated that the total customs duties for its
fiscal years 1989 and 1990 were $792,121.09 and $1,194,213.13,
respectively. However, petitioner deducted on its Federal income
tax returns only $398,900 and $630,135, respectively, for its
fiscal years 1989 and 1990 for customs duties for both garments
and badges.
We are convinced that the purchase invoices were properly
matched by respondent to the corresponding customs invoices.
Therefore, the numbers on the customs invoices represent the
calculations made by Mr. Lee at the time the garments were
shipped. It was these amounts that petitioner actually paid as
customs duties with respect to the documented sales for which the
record permits a matching with customs duties invoices. These
are the amounts properly includable in petitioner's cost of goods
purchased or inventories as customs duties costs.
There is some evidence in the record to indicate that not
all items were subject to customs duties that may explain some of
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