CBP Withdraws Proposal to Eliminate First Sale Rule

(Vicki DeLuca — VP Operations, GHY USA, Inc.)

Attention: GHY Customers

The First Sale option for Valuation will stay in effect — nothing changes as far as the regulations for using the First Sale and the required back up to prove it if customs comes calling.

Keep in mind that the litmus test for sales qualifying under the “First or Earlier Sale Rule” is that the material must be sourced by the middleman in accordance with a predetermined sales agreement with the U.S. buyer, that the articles were made for the U.S. buyer (supported by a P.O. from the buyer to the middleman dated prior to the middleman’s P.O. to the source), with shipping documents from the source supporting that the articles are being shipped direct to the middleman’s buyer or the buyer’s designated consignee. It’s advisable to secure an acceptance of such pricing from CBP before filing entries in this manner.

It will be more important than ever to have supporting documents and ensure all is in order if you are using this method — as effective YESTERDAY (only US Customs can get away with making something effective yesterday and publishing it this coming Monday) — if you are using the First Sale Method it must be clearly marked on your US Customs Invoice so the Customs Broker can clearly see that you want that method reported to CBP. We now have to flag an indicator in the US Customs entry. Which ultimately means they can now run reports on importers - the # of shipments, values, origins etc that are using First Sale method of valuation and send out requests and audit those importers. They are very aggressive with issuing penalties for non-compliance.

Click here to view a Trade Notice regarding this issue from one of our trade associates, the U.S. trade law firm of Sandler, Travis & Rosenberg, P.A.

If you have any questions about this, on’t hesitate to contact Joan Studeny in Pembina or Bob Cowie in Winnipeg.