SIGNIFICANT INCREASES TO IMPORT DUTIES POSSIBLE, Rapid Customs Information Bulletin, Vol. 1, No. 2
U.S. Customs and Border Protection is seeking comments from the public regarding an interpretation of transaction value in multi-tiered sales transactions, which, if adopted, could significantly increase the value to which U.S. import duties are applied. Customs' proposed interpretation of transaction value will apply only to U.S. imported merchandise that was subject to two or more sales prior to its importation into the United States.
For example, assume U.S. company A contacts foreign distributor B and orders merchandise. Further assume that foreign distributor B contacts foreign manufacturer C to manufacture that merchandise. Under Customs' current interpretation of transaction value, which is supported by decisions of the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit, Customs uses the sale price of the merchandise between distributor B and manufacturer C (the " First Sale") as the basis for transaction value if Customs finds the sale between distributor B and manufacturer C to be at arm's length, and the goods were identified as being destined for the United States at the time of the First Sale.
Now, using an interpretation issued in July 2007 by a Technical Committee of the World Customs Organization's Committee on Customs Valuation, which has already been adopted by many WTO members, Customs is proposing to use the price of the merchandise in the sale to the U.S. importer (the transaction between U.S. company A and foreign distributor B in the example above) (the "Last Sale " instead of the "First Sale") as the basis for transaction value, if Customs finds the sale to the U.S. importer to be at arm's length.
Customs states that some of the benefits to this new interpretation are the following: (1) access to records will be easier because the documents associated with the sale to the U.S. importer will likely be more readily available than those associated with the sale between the foreign distributor and the foreign manufacturer; and (2) Customs will be better able to identify, calculate, and apply the additions to transaction value, such as assists, to the sale to the U.S. importer.
As you can see, most of the benefits that Customs states the new interpretation will provide are actually adverse to importers. There is also an issue of whether Customs has the authority to change its position in a manner contrary to judicial precedent.
Click here to view 01/24/08 Federal Register notice http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/E8-1140.htm
Comments on Customs' proposed interpretation must be received by Customs on or before March 24, 2008. Please let me know if you would like to submit a comment on Customs' proposed interpretation.
If you have any questions about the proposed interpretation, please do not hesitate to contact Harvey B. Fox, Esq. of Adduci, Mastriani & Schaumberg, L.L.P. via e-mail at fox@adduci.com
HARVEY B. FOX did his undergraduate work at the University of Baltimore where he also received his J.D. in 1964. He was with the U. S. Customs Service for almost 30 years prior to entering the private practice of law in October 1995. He served as Director, Office of Regulations and Rulings, from 1986 through 1995, where he was responsible for the development, implementation and evaluation of national legal programs and policies and for the issuance of rulings regarding the importation of merchandise into the United States.
From 1980 through 1986, he served as Director, Classification and Value Division, where he was responsible for issuing legal determinations concerning the tariff classification and valuation of merchandise imported into the United States. He also served as the head of the Customs Delegation to the Customs Cooperation Council (CCC) for valuation in Brussels. From 1977 through 1980, as Director of the Entry Procedures and Penalties Division, he issued decisions regarding country of origin, infringements of copyright and trademark registrations, restricted merchandise, penalty matters and entry procedures. From 1973 through 1977, as Director, Regulations and Legal Publications Division, he drafted policy matters and regulations dealing with the importation of merchandise and disseminated legal decisions to the public and Customs field offices.
He was President of the Customs Lawyers Association for seven years and is a member of the District of Columbia and Maryland Bars, the American Bar Association, the Federal Bar Association and the District of Columbia Bar Association. He is admitted to practice before the Supreme Court, Court of International Trade, Court of Appeals
of Baltimore where he also received his J.D. in 1964. He was with the U. S. Customs Service for almost 30 years prior to entering the private practice of law in October 1995.
HARVEY B. FOX
fox@adduci.com
202. 467. 6300
My contact:
Alex Lech Bajan
CEO
RAQport Inc.
2004 North Monroe Street
Arlington Virginia 22207
Washington DC Area
USA
TEL: 703-528-0114
TEL2: 703-652-0993
FAX: 703-940-8300
sms: 703-485-6619
EMAIL: office@raqport.com
WEB SITE: http://raqport.com
