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August 21, 2008 | CBP Withdraws Proposal to Eliminate First Sale Rule
Interim Rule Also Outlines Data Collection Requirements
| In a victory for consumers, domestic manufacturers, importers and others, U.S. Customs and Border Protection is formally withdrawing a Jan. 24 proposal that would have eliminated the favorable import valuation methodology available under the First Sale Rule. This withdrawal, which is included in an interim rule to be published in the Aug. 25 Federal Register, will prevent what could have been an 8 to 15 percent increase in duty liability for all imports. It also means that any future attempt by CBP to revoke the First Sale Rule, which would be subject to a number of congressionally imposed standards, will have to start from scratch.
The interim rule also outlines how importers must comply with a new one-year First Sale data reporting requirement. Under the 2008 Farm Bill, importers of record must make a declaration at time of entry as to whether the transaction value of the imported merchandise is determined on the basis of the price paid in the first or earlier sale. To satisfy this requirement, CBP is amending its regulations to require importers to enter an “F” next to the declared value on the entry summary (form 7501) at the line-item level if the First Sale Rule was used to determine the value of the imported merchandise. CBP will use this information to report to the International Trade Commission each month on the frequency of the use of First Sale, the tariff classification of imported goods entered at the first sale value and the transaction value of such merchandise.
Although the Farm Bill requires these First Sale declarations to be made beginning Aug. 20, CBP has delayed enforcement until Sept. 20 to give the trade sufficient time to comply. CBP will not reject First Sale entries made between Aug. 20 and Sept. 19 based on the First Sale declaration requirement, but importers remain obligated to accurately declare the use of First Sale and amend these entries if necessary. Despite CBP’s grace period, importers are advised to coordinate with their customs brokers to make the necessary declarations as soon as possible.
Don’t let First Sale savings pass you by. Importers contemplating the use of First Sale now that it is no longer under threat of revocation should contact Sandler, Travis & Rosenberg, P.A., for details on moving forward with those plans. Importers currently using the First Sale Rule should consider reviewing their first sale transactions to ensure that proper declarations are made upon entry.
For further information, please contact:
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Sandler, Travis & Rosenberg, P.A., is a customs and international trade law firm concentrating in assisting clients with the global movement of goods, ideas and personnel and the setting of global trade policy. Our affiliated consulting company, Sandler & Travis Trade Advisory Services Inc., is a leading provider of trade-related management and consulting services to government and industry. For more information about ST&R and STTAS, please visit our Web site. |
Published by Sandler, Travis & Rosenberg, P.A.
NOTE: Information contained herein is of necessity a summary of complicated and fact-specific issues. It is not intended to convey legal advice, and receipt of it does not constitute or create an attorney-client relationship. Before you act on any information provided in this document, you should seek professional advice regarding its applicability to your specific circumstances.
© 2010, all rights reserved. August 21, 2008
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