On January 24, 2008, U.S. Customs and Border Protection (CBP) published a notice in the Federal Register proposing to change its practices with regard to the proper customs valuation of imported products in multi-sale transactions.
Specifically, CBP is proposing rejecting the use of "first sale" valuation and instead requiring the use of the "last sale," i.e., the price paid in the last sale occurring prior to the introduction of the goods into the U.S., as the basis of transaction value for such products.
Under current conditions, importers may value imported products in situations involving multiple sales (e.g., those involving a sale from the manufacturer to a middleman overseas and a sale from the middleman to the buyer in the U.S.), at the "first sale" price between the manufacturer and the overseas middleman if certain conditions are met. Specifically, the first sale must be an arm's length sale and the goods must be clearly destined for export to the U.S.
CBP proposes changing its interpretation of the meaning of "sold for export to the United States" when determining the acceptability of transaction value in multi-sale transactions by accepting only the last sale to the U.S. in meeting this requirement of transaction value. CBP states this change is based on a report to the World Customs Organization (WCO) by the Technical Committee on Customs Valuation adopted in April 2007 -- Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Exportation to the Country of Importation' in a Series of Sales" -- and would align CBP's treatment of such sales with most other World Trade Organization (WTO) members.
CBP's proposed action would overturn nearly 20 years of legal and administrative precedent and would cause importers to reevaluate their current customs valuations and abandon any current use of "first sale" valuations, resulting in the potential payment of additional duties and fees.
CBP is accepting comments on the proposed interpretation until March 24, 2008. Global Trade Expertise (GTE) can assist importers in determining the effect the proposed interpretation will have on an importer's customs valuations. GTE can also assist importers in drafting comments to CBP. Please contact us if you have any questions. We would be happy to discuss the matter with you at no charge.