IMPORTERS TO BE REQUIRED TO REPORT USE OF FIRST SALE TO U.S. CUSTOMS AND BORDER PROTECTION (CBP)

Earlier this year, CBP proposed to adopt a new interpretation of the first sale rule, which determined the value of goods based on the last sale prior to bringing the shipment into the U.S. Last month, CBP announced that they will not move forward with this new interpretation and would not revisit the issue until January 2011.

Under the recently enacted Food, Conservation, and Energy Act of 2008, also known as the Farm Bill, a new requirement was set forth requiring that the use of First Sale be reported. For one year, the U.S. International Trade Commission will report the aggregate transaction value of imported merchandise for which first sale is declared and the aggregate value of all merchandise imported into the U.S.

Importers will have to declare on Customs entries (CF 7501) whether or not first sale transaction value was used. It is anticipated that this new requirement will be mandatory within 90 days.

U.S. Customs and Border Protection (CBP) is currently working on programming changes to add a first sale declaration field to the CF 7501. If First Sale were not used, the box would remain blank.

Companies currently using the First Sale rule when determining transaction value should inform Metro Customs Brokers by declaring this on their commercial invoice. The trade anticipates that CBP will be reviewing first sale claims closely to ensure all the requirements of first sale are met.

We recommend that companies, who are considering using the First Sale rule or are presently using the First Sale rule, contact our regulatory compliance manager to discuss the process of evaluation to ensure that all requirements are in place.

Metro Customs Brokers will provide updates as more information becomes available. A copy of the Farm Bill, section 15422, page 1763 covering First Sale may be viewed by clicking on the following link.

First Sale Rule