Meyer Appeals CIT Decision Denying First Sale Valuation

Cookware importer Meyer Corporation is appealing a Court of International Trade ruling to the U.S. Court of Appeals for the Federal Circuit over whether the importer can use the first sale valuation method for its cookware imports brought in from Thailand and China, according to a May 10 filing. The original March 1 CIT decision raised eyebrows after Judge Thomas Aquilino called into question the use of first sale with non-market economies. The Department of Justice recently cited the Meyer case in another lawsuit over first sale valuation (see 2104300049).

Aquilino found that the involvement of Chinese companies in Meyer's business made it difficult to determine whether the transaction was conducted at arm's length and undistorted by non-market influences, as required for first sale valuation (see 2103020040). Aquilino stopped short of ruling that all imports originating in NME countries could never receive first sale valuation, though he did call on the Federal Circuit to clarify -- an outcome of increasing likelihood given Meyer's appeal.

Currently, first sale valuation is determined under the criteria established in a 1992 Federal Circuit decision involving Nissho Iwai. Companies seeking first sale treatment must prove that the goods were 1) purchased via bona fide sales that 2) are clearly destined for the U.S., 3) are transacted at arm's length and 4) are “absent any distortive non-market influences.” While CIT agreed Meyer's cookware passed the first two hurdles of the Nissho Iwai first sale test, it disagreed that the imports were bought at arm's length and devoid of non-market influences. Recent analysis from KPMG found it unlikely that the Nissho Iwai decision created a blanket prohibition on the valuation method in NMEs since that case didn't involve NME country participants (see 2104200075).