Meyer's First Sale Case Is a 'Cautionary Tale,' Customs Lawyer Says
The Court of International Trade's recent decision against the use of first sale valuation for Meyer Corp.'s cookware imports "is a cautionary tale" for importers, customs attorney Lawrence Friedman, partner at Barnes Richardson, wrote in a Feb. 15 blog post. In instances in which parties involved in a potential first-sale transaction are related, such as Meyer's, Friedman said that CBP will "take a very detailed look into the whole series of transactions" and that the importer should expect to show that each tier is a bona fide sale for export to the U.S.
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The case deals with sets of pots and pans imported from China and Thailand via a Chinese middleman for which Meyer sought first-sale valuation. The Thai producer, Chinese middleman and importer are subsidiaries of parent company Meyer Holdings. After initially issuing a ruling skeptical of whether first sale could be used at all for non-market economies, (see 2103020040). Judge Thomas Aquilino issued a narrower ruling holding that first sale cannot be used in Meyer's case (see 2302090053). The judge said the court didn't know the extent to which Meyer Holdings had the ability to influence the price paid for the goods sold between affiliates, given the company's failure to submit certain financial information.
Friedman said that proving first sale for unrelated parties "should be easier as the manufacturer wants to be fully compensated for its wares and should normally be considered free to set its price." However, CBP will still examine those transactions as well, including the second or third tier sales, to see if they are bona fide, the blog post said, though Friedman found this to be a "largely irrelevant" practice seeing as if any one sale meets the test, the importer can use it as the transaction value.
Friedman said -- emphasizing that he wasn't giving legal advice -- that if an importer is considering claiming first sale valuation, it should make sure its documents "show evidence of a sale for export to the United States including the transfer of both title and risk of loss to the buyer."