DOJ Embraces Meyer Decision in First Sale Dispute at CIT

A company must be able to prove that prices weren't distorted for transactions involving non-market economies (NMEs) when claiming first sale treatment, the Department of Justice said in an April 29 Court of International Trade filing (Imperia Trading, Inc. v. U.S., CIT # 15-00142). DOJ's argument relies on a recent CIT decision involving imported Meyer cookware that said the involvement of Chinese companies made it difficult to determine whether a transaction is affected by non-market influence (see 2104200075). DOJ made the filing as part of a dispute over whether Imperia Trading, an importer of apparel made in China, can use the sale from a Hong Kong middleman company for appraisement.

The DOJ filing, a cross-motion for summary judgment, said the lawsuit should be dismissed for several reasons. The case involves imported apparel in 2012 and 2013 that CBP eventually said wasn't eligible for first sale treatment due to a lack of sufficient documentation. Imperia would like the transaction value for the entries in question to be based upon the price paid by Team Energy, a seller in Hong Kong that was the middleman. But, Imperia gives no "support," such as "witnesses or records custodians," that "Team Energy is not related to any of the manufacturers for purposes of the Customs appraisement statute," DOJ said. Such information is necessary to show a bona fide sale, it said.

On the question of NME influence and the Meyer decision, Imperia said this case and Meyer differed because the parties here are unrelated. While DOJ disputes whether the parties are actually unrelated, "more fundamentally, this position ignores the distortive effect of a non-market economy, which occurs outside the distortive effects arising from the relatedness of parties," it said.

The manufacturers are located in China, which is recognized by the CIT as an NME, DOJ said. "Whether the presence of a non-market economy could foreclose the possibility of first sale treatment is an open issue," DOJ said. "However, the Meyer Court suggests that a party might be able to establish the absence of market-distortive influence through 'the factors used by entities located [in the non-market economy] to obtain a duty rate other than the country-wide rate established by the U.S. Department of Commerce in antidumping-duty proceedings involving nonmarket economy participants.'” The case is before Chief Judge Mark Barnett.