H349649

H349649 May 11, 2026 OT:RR:CTF:VS H349649 AMW CATEGORY: Valuation Taeho Bae [ ] [ ] [ ] RE: “First sale” appraisement; imported automotive parts Dear Mr. Bae: This is in response to your letter, dated June 4, 2025, on behalf of [ ] (the “Requestor” or the “Parent”) for a prospective ruling on the use of “first sale” valuation of certain importations of automotive parts into the United States. You have requested confidential treatment for the information contained in its submission, which includes certain identifying information. Inasmuch as the request conforms to the requirements of 19 CFR §177.2(b)(7), the company’s request for confidentiality is approved. The information contained within brackets and all attachments to the request will not be released to the public and will be withheld from published versions of this ruling. FACTS: The following facts are based on your June 4, 2025, ruling request and follow-up information provided to this office on November 24, 2025, and January, 22, 2026. [ ] [the “Importer”] is a U.S.-based subsidiary of the Requestor that manufactures finished motor vehicles in the United States. The Importer imports certain component parts from the [ ] (“Country A”) via a related middleman, [ ] (the “Middleman”). The Middleman is an affiliate of the Requestor and is a related party to the Importer. The Middleman, meanwhile, purchases the component parts from unrelated manufacturers in Country A, including [ ] (the “Manufacturer”). To illustrate the prospective transactions, you provided representative documentation regarding a transaction involving the importation of a Shaft Assembly Propeller (the “components” or the “merchandise”) produced by the Manufacturer. The request states that the exemplary transaction occurs as follows: 1. The Importer places a purchase order with the Middleman; 2. The Middleman places a corresponding purchase order with the Manufacturer; 3. The Manufacturer produces and sells the components to the Middleman; 4. The components are transported to a facility owned by the Middleman in Country A; 5. The Middleman inspects the components, pays the Manufacturer, and packages and prepares the components for exportation; 6. The Middleman sells the components to the Importer and exports the components to the United States. In support, the Requestor provided the following documentation relating to a representative transaction related to the import of components purchased from the Manufacturer via the Middleman: • Purchase order issued by the Importer to the Middleman and generated within the Parent’s internal sales system, described as “SAP, [ ] Partner, Etc.”; • Receipt issued by the Middleman to the Importer acknowledging receipt of the purchase order and assigning a new purchase order number for a corresponding purchase by the Middleman from the Manufacturer; • Receipt issued by the Manufacturer within “[ ] Partner” system acknowledging the Middleman’s purchase order. The Importer is listed as the eventual recipient. • “Goods release Slip” memorializing transfer from the Manufacturer’s Country A plant for an “outbound destination” at the Middleman’s Country A packaging facility; • “Delivery Instruction Sheet” issued by the Middleman regarding delivery of the components at its Country A packaging plant; • “Goods Receipt Confirmation” issued by the Middleman’s Country A packaging plant to the Manufacturer; • Document titled “Materials Management>Receiving Information>Daily InspectionInformation [sic]” (described in the request as an “Inventory Transfer Record”). The document lists the Middleman as packing site and as customer; • Tax invoice listing the Manufacturer as “seller” and Middleman as “buyer”; • A shipping mark and photographs showing that merchandise received by the Middleman from the Manufacturer is repackaged and labeled for shipment to the Importer in the United States; • Commercial invoice issued by the Middleman to Importer, providing terms of sale as delivered duty unpaid (“DDU”) Montgomery, AL, USA; • Marine Cargo Insurance Policy for shipment of merchandise from Country A to the United States, referencing the invoice, and listing the Middleman as the insured party; • Sea Waybill for a shipment of “vehicle parts” from Country A to Mobile, Alabama. The document references the underlying invoice number and the Middleman as the shipper and Importer as consignee; • Packing List referencing the underlying invoice; • CF-7501 Entry form dated March 24, 2025 • Deposit Slip from the Middleman, showing receipt of funds from the Importer with a line item referencing the underlying purchase order. 2 The Parent has clarified that the Manufacturer is not selected as a vendor by the Middleman or Importer, but rather by the Parent itself. Specifically, the Parent conducts a “global competitive bidding process based on fair criteria such as price, production capacity, R&D, and other relevant factors….” The Parent has provided an internally prepared “Bidding Results Report” stating that the Manufacturer had been selected as the supplier for the subject shaft propeller units over five other prospective manufacturers after having “submitted the lowest quotation and achieved the highest overall score….” In addition to the documentation described above, the Requestor has provided the Supply Agreement governing the relationship between the Middleman and Manufacturer. This agreement outlines the terms governing the pricing practices, transfer or merchandise, and payment between the Manufacturer and Middleman. As outlined in the Supply Agreement, the unit price is typically set by the Manufacturer and communicated to the Parent: “[t]he unit price of parts shall be based on the price supplied by [the Manufacturer] to [the Parent], excluding the ranking fee….”1 The Supply Agreement also specifies that the Manufacturer shall deliver merchandise to the Middleman and that title will transfer from the Manufacturer to the Middleman upon the date the parts are deemed to be delivered (i.e., the date the parts pass inspection). Accordingly, the agreement grants the Middleman authority to inspect components produced by the Manufacturer within ten days of receiving the parts and to return any components deemed defective. Finally, the agreement stipulates that the Middleman will pay the Manufacturer via promissory note within 60 days of the issuance of a tax invoice. The domestic shipping terms between the Manufacturer and Middleman are not specified on the transaction documents presented. In response to U.S. Customs and Border Protection’s (“CBP’s”) request for shipping documents between the Manufacturer and the Middleman, the Parent responded that “it is not ordinarily required for parties to exchange or issue a documentation demonstrating the transfer of title every time goods are transferred or moved.” The Parent also presented a “Cargo Transportation Agreement” between the Manufacturer and a local transportation company (the “Inland Carrier”). In relevant part, this agreement specifies that “responsibility for products transferred by [the Manufacturer] to [the Inland Carrier] shall rest with the [Inland Carrier] from the time of receipt until unloading at the designated warehouse…” and, further, the Inland Carrier “shall be responsible for any damage or loss occurring during this period.” As provided in the Middleman’s invoice, the sale between the Middleman and Importer is based on a DDU term of sale. The Country A port of shipment is [ ], and the U.S. port of importation is Mobile, Alabama. The Parent has also provided an “Import Supply Agreement” between the Middleman and Importer. The Import Supply Agreement grants the Middleman exclusive rights to supply parts needed in automobile construction originating from Country A to the Importer outside of parts directly produced by the Parent. Further, each purchase order submitted by the Importer to Middleman shall “contain a firm order for materials…to be supplied… for [Imp

Merchandise imported into the United States is appraised in accordance with Section 402 of the Tariff Act of 1930, as amended by the Trade Agreements Act of 1979, codified at 19 U.S.C. § 1401a. The preferred method of appraisement is transaction value. For purposes of this ruling, we accept that transaction value is the proper method of appraisement for the imported merchandise. Transaction value is the “price actually paid or payable for the merchandise when sold for exportation to the United States” plus certain statutorily enumerated additions.2 Unless there is a bona fide (good faith) sale of merchandise for exportation to the United States, the transaction value method cannot be used. The Parent seeks to utilize the “first sale” transaction value of the sale between the Manufacturer and Middleman occurring in Country A. In Nissho Iwai American Corp. v United States, 982 F.2d 505 (Fed. Cir. 1992), the court reviewed the standard for determining transaction value in a multi-tiered transaction. The case involved a foreign manufacturer, a middleman, and a U.S. purchaser. The court held that the price paid by the middleman to the foreign manufacturer was the proper basis for transaction value. The court stated that in order for the foreign manufacturer’s price to be a valid transaction value, the transaction between the foreign manufacturer and the middleman needed to be a sale negotiated at “arm’s length” that was free from any non-market influences, and involved goods clearly destined for exportation to the United States. In accordance with the Nissho Iwai court decision and our own precedent, we presume that transaction value is based on the price paid by the importer. An importer may request appraisement based on the price paid by the middleman to the foreign manufacturer in situations where the middleman is not the importer. It is the importer’s responsibility to show that the “first sale” price is acceptable under the standard set forth in Nissho Iwai. The U.S