Comments on CBP's Proposal to No Longer Value Merchandise Using "First Sale" Principal are Due by March 24th
U.S. Customs and Border Protection has issued a proposed interpretation for the expression "Sold for Exportation to the U.S." for the purposes of applying the transaction value method of valuation in a series of sales importation scenario.
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CBP is proposing that in a transaction involving a series of sales, the price actually paid or payable for the imported goods when sold for exportation to the U.S. is the price paid in the last sale occurring prior to the introduction of the goods into the U.S., instead of the first (or earlier) sale.
Under this proposal, transaction value will normally be determined on the basis of the price paid by the buyer in the U.S.
(CBP's current interpretation is to base transaction value on the price paid by the buyer in the first or earlier sale (e.g., the sale between the manufacturer and the intermediary) provided the importer can establish by sufficient evidence that this was an arm's length sale and that, at the time of such sale, the merchandise was clearly destined for exportation to the U.S.)
Application of this '"first sale" principle often results in the transaction value being determined on the basis of the price paid by a foreign buyer to a foreign seller.
Last Sale Rule Could Allow Additional Costs to be Captured as Dutiable
CBP states that its proposed interpretation to base transaction value on the last sale would make it more likely that the following statutory additions, as applicable, would be captured as dutiable: packing costs, selling commissions, assists, royalties and licenses, and proceeds from a subsequent resale.
Actions CBP Would Take if it Adopts Last Sale Principle
CBP also states that if this proposed interpretation is adopted, it will result in the revocation of T.D. 96-87 (1997), the modification or revocation of administrative rulings that have analyzed the series of sales issue using the first-sale criteria, and the revocation of any treatment previously accorded by CBP to substantially identical transactions.
In addition, the application of the E.C. McAfee Co. v. U.S. (1988), Nissho Iwai American Corp. v. U.S. (1992) and Synergy Sport International, Ltd. v. U.S. (1993) court decisions would be limited to the specific entries at issue in those cases.
(See ITT's Online Archives or 01/24/08 and 01/25/08 news, 08012405 and 08012505, for earlier BP summaries of this proposed interpretation.)
Written comments on this proposed interpretation are due by March 24, 2008.
CBP contact: Lorrie Rodbart (202) 572-8740
CBP proposed interpretation (USCBP-2007-0083, FR Pub 01/24/08) available at http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/pdf/E8-1140.pdf