Update on Proposed Re-Interpretation of "First Sale" Valuation

Comments for the proposed interpretation of the "First Sale" rule are due on April 23, 2008.  To date, 18 comments have been posted.  Two of the comments have been filed by attorneys which support the proposed change.  Comments against the proposed interpretation include Boeing, Wicked Fashions Inc., RG Barry Corporation, Northern Tool and Equipment Co., Inc., The New Zealand Manufacturers and Exporters Association and COAC.  In addition, there is a filing from AAFA (American Apparel and Footwear Association) with over 95 signatures from companies and associations against the proposed changes. 
U.S. Customs and Border Protection ("CBP") is proposing that the transaction value (or price paid or payable) for imported goods in a series of sales is the price paid or payable in the last sale occurring prior to the goods' importation into the United States, rather than the price in the first or earlier sale.  CBP states that this is based on its proposed revised interpretation of the phrase "when sold for exportation to the United States" such that CBP no longer believes that the first (or earlier) sale qualifies as a sale for exportation to the United States.  CBP states that this proposed interpretation is in line with the conclusions of the Technical Committee on Customs Valuation as set forth in Commentary 22.1, entitled, "Meaning of the Expression 'Sold for Export to the Country of Importation' in a Series of Sales."
Comments in support of the proposed changes cite administrative ease in applying the rule indicating that "it also brings some consistency and clarity to the process."  Comments against the proposal cite the existing case law.  Several comments indicate that the term "sold for exportation to the United States" has a clearly established meaning and that the proposal will be inconsistent with this meaning and with 19 U.S.C. 1401a(f)(2)(B).  In addition, the proposals indicate that "The timing of the proposal is especially troubling considering the current state of the U.S. economy.  At a time when the Administration and Congress are working together to expedite an economic stimulus package that will promote more consumer spending to avert a possible recession, it is incomprehensible that CBP would now be proposing a new tax to U.S. Consumers."  (See comments from R.G. Barry Corporation). Other comments believe that the timing, process and manner that CBP employed to publish its position violates the integrity of partnership between the government and business and undercuts the goal of the economic stimulus package.