This requirement was due to a proposal by U.S. Customs and Border Protection (CBP) to modify it’s interpretation of the phrase “sold for exportation to the United States” in order to eliminate the “first sale” valuation and instead use the valuation of the “last sale”. Congress voted to require CBP to conduct a one-year study during which CBP will compile statistics and report them to the International Trade Commission (ITC) on the importations that use “first sale” valuation.
Background –U.S. law states that import duties are generally based on the value of the transaction; i.e., the price actually paid or payable for goods when sold for exportation to the U.S. If there is a series of sales involved – from the foreign factory to a middleman and then to the U.S. buyer, for example – under “first sale” the duty is based on the value of the first sale in the series where the goods are destined for the United States, which is typically lower than any subsequent sale. If the “first sale” was a “sale for exportation to the United States” then the first sale (plus certain additions) can be declared as the transaction value of the imported merchandise. U.S. CBP accepted first sale appraisement where (a) the transaction between the factory and the middleman is a “sale” of merchandise; (2) this sale is an arm’s length transaction, and (3) the goods are clearly destined for export to the United States as a result of this sale.
New Reporting – If you are currently using “first sale” valuation as your transaction value on imported merchandise, you must report this to CBP on your entries beginning September 20, 2008.
“First Sale” valuation will be reported to CBP as part of the entry summary filing. The importer must indicate on the commercial invoice that “first sale” valuation was used in determining the transaction value of the importation. If the commercial invoice does not indicate “first sale” and “first sale” is applicable, then you must communicate this information to John S. Connor either by email, fax, or letter. However, we recommend declaring on each commercial invoice: “Appraisement under the First Sale Rule”.
Based on Section 15422 of the Farm Bill H.R. 6124:
- CBP must provide the collected information to the ITC on a monthly basis.
- ITC must submit a report to the House Ways and Means Committee and the Senate Finance Committee:
- The aggregate number of importers that used the “first sale” rule to determine the transaction value; The tariff classification of the imports;
- The aggregate transaction value of the imports and;
- The aggregate transaction value of all imported merchandise that used the “first sale” rule.