CBP Failed to Allow 'First Sale' Valuation for Woodworking Tools, Importer Argues at CIT

CBP improperly disallowed valuation using the first sale rule of imported woodworking tools, importer Woodcraft Supply said in an Aug. 16 complaint at the Court of International Trade. The woodworking specialty retailer argued that purchases from its Taiwanese vendors were made "at arms length" and that the court should order the reliquidation of its imported merchandise appraised using first sale value (Woodcraft Supply v. U.S., CIT # 22-00252).

Woodcraft said that its suppliers, Asia Woodriver International Trade Company Limited and Woodriver International Trade Co., Ltd., purchase requested items from a variety of Taiwanese sellers and consolidate those goods for shipment to Woodcraft. Woodcraft said it is unrelated to either of the Woodriver entities, and that neither is related to any of the suppliers/manufacturers from whom they have sourced the articles. Woodcraft also said that the manufacturers are selected "solely by the Woodriver Entities without direction or input" from Woodcraft. The Woodriver companies act as independent buyers/sellers and not as agents for either Woodcraft or the manufacturers, Woodcraft argued.

Purchase orders from Woodcraft to Woodriver only identified the products but did not dictate which factory or supplier to use. The middlemen had "complete discretion" over both the purchase and the sale of the goods at issue, Woodcraft said. They were free to negotiate with the vendors about the terms of sale and the delivery of the goods and had "ultimate authority" with respect to resale.

A "bona fide sale" occurred in each instance between the vendor and the Woodriver Entities as evidenced by the "FOB" shipping terms and the foreign factories noted on each purchase order that Woodriver issued, Woodcraft said. Its purchase orders to the Woodriver middlemen did not identify specific vendors or suppliers. The middlemen resold the items in question at a profit and selected their own customers, such as Woodcraft, without consulting their vendors.

The middlemen ordered the imported merchandise and had it delivered for their own inventory. They initiated all transactions with the foreign vendors on their own behalf, and as the manufacturers are not related to Woodriver, there is a presumption that transactions between these parties are at arm’s length, Woodcraft said.

Woodcraft argued that these factors, when combined, "clearly established that these transactions are bona fide sales," which supports the use of first sale appraisement for the imported merchandise.