A recent federal court ruling serves as an important reminder to importers utilizing the first sale rule of the need to strictly comply with the requirements for using this advantageous valuation methodology.
In a lengthy decision in Meyer Corporation v. U.S. issued March 1, the Court of International Trade denied an importer’s claims for duty-free treatment under the Generalized System of Preferences and use of first sale appraisement. Specific to the first sale issue, the court criticized the importer's arguments that it met the "all costs plus profit" test and the importer's failure to provide the necessary financial information to properly assess the viability of its first sale claim.
In the very last paragraph of its decision, the CIT opined on the issue of whether the first sale rule was intended to apply to transactions involving non-market economy participants or inputs, but then caught itself in mid-thought and deferred that issue for an appellate court to sort out.
While the decision is disappointing for the particular plaintiff before the court, it does nothing to the more than 30-year-old precedent that permits importers to lawfully appraise merchandise at the earlier (or first) sale in multi-tiered transactions. The ruling relates only to the facts before the court that were determined to be insufficient to grant the requested relief.
Nonetheless, whenever the courts strike down an importer's ability to utilize first sale, it serves as an important reminder that importers using this methodology must take the necessary steps to appraise their imported goods with reasonable care and regularly monitor their programs.
Sandler, Travis & Rosenberg, PA pioneered the use of first sale in 1988 in McAfee v. U.S., protected the use of first sale in 2008 when U.S. Customs and Border Protection attempted to extinguish it, and remains committed to providing the most sophisticated implementation and maintenance programs to permit importers continued compliant use of first sale appraisement. ST&R will continue to monitor this litigation regarding possible appeal and administrative resolution and will vigorously defend the right to use first sale.
For further information, please contact attorneys David Cohen, Mark Tallo, Mark Segrist, or Chuck Crowley.
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