Articles
Customs Alert - Customs Proposes New Interpretation Of Statute Defining Transaction Value
By Carl Soller
Feb. 5, 2008
Customs proposes new interpretation of statute defining “transaction value” – import duties likely to increase under new definition – wearing apparel imports highly impacted
Customs and Border Protection (“Customs”) has recently proposed a new interpretation of the statutory definition of “transaction value,” the primary method of appraising imported merchandise. The objective of the proposed change is to eliminate the “first sale” rule which has been utilized by importers of multiple sale import transactions for almost twenty years as a means of determining transaction value. Simply put, the first sale rule allows importers of multiple sale import transactions to use the price paid by the buyer in the first sale as the dutiable value for U.S. Customs purposes. For instance, where an importer contracts to purchase goods from a middleman, who purchases the goods from the manufacturer, under the first sale rule, the transaction value is based on the price paid by the middleman to the manufacturer.
The recent proposed interpretation, however, seeks to reverse this rule by advancing a “last sale” rule in which the transaction value of multiple sale imports would be determined on the basis of the price paid in the last sale occurring prior to the introduction of the goods into the U.S. In essence, the transaction value under this rule would be the price paid by the U.S. buyer. Consequently, under the proposed interpretation, transaction values would increase, resulting in substantial duty increases for importers.
If you wish to discuss the additional requirements under the current rule, have any questions regarding the proposed change, or wish to submit comments in response to the proposed interpretation, please contact Carl Soller or C.J. Erickson.
Comments must be received by Customs by April 23, 2008.