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CIT Wrongly Imposed the Non-Market Economy Test in Connection with First Sale Transactions

In Meyer Corporation v. US., the importer sought to establish the dutiable value of its imported cookware using the “first-sale” price from the manufacturer to the distributor.  The Court of International Trade (“CIT”) required Meyer to prove not only that the sales were conducted at arms-length but were also unaffected by China’s status as a non-market economy.  Finding that the importer did not prove the absence of “non-market influences,” the CIT did not allow the importer to rely on the first-sale prices.

The Court of Appeals for the Federal Circuit (“CAFC”) overruled the CIT and held that there is no basis in the value statute for Customs or the court to consider the effects of a nonmarket economy on transaction value.  The Court noted that the statute requires only that the goods are clearly destined for export to the United States and “the relationship between [the] buyer and seller did not influence the price actually paid or payable.”  The Court vacated and remanded the case to the trial court to reconsider Meyer’s qualifications for first-sale duty savings treatment.

The CAFC decision is significant as it resolves an open question regarding the valuation of goods imported from China (and other non-market economies) and the viability of the first sale duty savings program in connection with those purchases.

If you would like additional information about this case or the first sale duty savings rule, please contact our office.


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