H357206

H357206 August 7, 2026 OT:RR:CTF:VS H357206 ZJK CATEGORY: Valuation Mr. Matthew Clark Director, Trade Consulting Solutions Kuehne + Nagel Inc. 20000 S. Western Ave. Torrance, CA 90501 Re: Prospective Ruling Request; First Sale Dear Mr. Clark: This is in response to your letter dated December 1, 2025, on behalf of your client [ ], in which you request a binding ruling pursuant to 19 C.F.R. Part 177 regarding the acceptability of “first sale” transaction value appraisement for merchandise which [ ] imports to the United States. [ ] has asked that certain information submitted in connection with this ruling be treated as confidential. Inasmuch as this confidentiality request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), it is approved. The information contained within brackets in italics will not be released to the public and will be withheld from published versions of this ruling letter. FACTS: [ ] (the “Importer”) is an importer of mixing equipment with medical and industrial applications. In addition to the Importer, there are two other relevant parties identified in the ruling request: [ ] (the “Manufacturer”) and [ ] (the “Intermediary”). It is undisputed that all three parties qualify as “related” in accordance with 19 C.F.R. § 152.102(g). In support of its ruling request, the Importer submitted several documents which provide information regarding representative transactions. The transaction begins with the Importer placing a purchase order with the Intermediary that identifies the requested items, quantities, price per unit, and net value of each line item in USD. The purchase order also includes the date of delivery, identifies the delivery term as Delivered at Place (DAP) [ ], and specifies the terms of payment as 30 days net. While the purchase orders provide information regarding the Importer’s contention that the Intermediary is a “true middleman,” the terms of sale between the Intermediary and the Manufacturer warrant greater attention. 2 The transfer price between the Intermediary and the Manufacturer is governed by an intercompany contract manufacturing and supply agreement. The agreement specifies that the transfer price shall be the forecasted direct costs (raw materials, labor, packaging), plus an “appropriate proportion” of indirect overhead costs (engineering, quality, information technology, logistics, etc.), plus a fixed 7% markup. The agreement allows for ex-ante price adjustment if order volumes are “well below or above” the forecasted volumes submitted by the Intermediary at the end of the prior year; however, a price adjustment will not be made due to cost efficiency or inefficiency on the part of the Manufacturer. Further, the Intermediary makes payment to the Manufacturer monthly, one month after receiving the invoice. Finally, risk and title pass to the Intermediary upon delivery to the Intermediary. If delivery terms specify that the Manufacturer must deliver directly to the customer, then it is the customer who assumes the risk and takes title upon delivery. In either scenario, the Manufacturer retains title to the goods until delivery. The Importer requests a ruling from CBP allowing the first sale price between the Manufacturer and the Intermediary to serve as the basis for appraisement using the transaction value method of valuation. In support of its request, the Importer argues that (1) the first sale between the Manufacturer and the Intermediary is a bona fide sale conducted at arm’s length, and (2) the merchandise is clearly destined for export to the United States at the time of first sale. The Importer provided several documents in support of their ruling request which detail representative transactions. Regarding their contention that the first sale between the Manufacturer and the Intermediary is a bona fide sale conducted at arm’s length, the Importer submitted two case studies with supporting documents including invoices, an intercompany netting statement, a bulk payment confirmation, bills of lading, entry summaries, and delivery notes. The complexity of the two case studies warrants some additional discussion. The first case study includes one invoice between the Manufacturer and the Intermediary ([ ]) with the terms of payment listed as [ ]. However, there is no corresponding proof of payment because the Intermediary makes a monthly bulk payment to the Manufacturer. The submitter included proof of bulk payment for a value of CNY[ ], or roughly $[ ]. The first case study also includes an invoice between the Intermediary and the Importer ([ ]) with terms of payment listed as [ ]. Further, the first case study includes a bill of lading ([ ]) which lists the total weight as [ ] kg and an entry summary ([ ]) which lists the gross invoice value as $[ ]. The gross invoice value corresponds with line [ ] on the intercompany netting statement, and the total weight corresponds with the weight listed on the delivery note ([ ]). The second case study references two invoices between the Manufacturer and the Intermediary ([ ]), but the submitter only included a copy of the former. The payment terms are [ ], and like the first case study, there is no corresponding proof of payment because the Intermediary makes a monthly bulk payment to the Manufacturer. The bulk payment record referenced above presumably includes both case studies. The second case study also includes two invoices between the Intermediary and the Importer ([ ]) with terms of payment as [ ]. Finally, the second case study includes a bill of lading covering both transactions ([ ]) which lists the combined weight as [ ] kg and an entry summary covering both transactions ([ ]) which lists 3 two separate gross invoice values: $[ ] and $[ ]. The values correspond with lines [ ] and [ ] on the intercompany netting statement, and the total weight corresponds with the total combined weights of two delivery notes ([ ]). Additionally, the Importer provided an internal transfer pricing standard operating procedure, a pan-Asian benchmarking study, and an intercompany contract manufacturing and supply agreement between the Manufacturer and the Intermediary. Regarding the Importer’s argument that the merchandise was clearly destined for export to the United States at the time of sale, the requester provided copies of purchase orders, shipping labels, and corresponding delivery notes. ISSUE: Whether the first sale between the related Manufacturer and the Intermediary is a sale for exportation to the United States that may be used for appraisement purposes under transaction value. LAW AND ANALYSIS: 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 (TAA; 19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as the “price actually paid or payable for the merchandise when sold for exportation to the United States” plus certain statutory additions. 19 U.S.C. § 1401a(b)(1). The Importer seeks to use the transaction value of the first sale between the Manufacturer and the Intermediary. In Nissho Iwai American Corp. v United States, 16 C.I.T. 86 (1992), rev’d in part, 982 F.2d 505 (Fed. Cir. 1992), the Court of Appeals for the Federal Circuit reviewed the standard for determining transaction value when there is more than one sale which may be considered as being a sale for exportation to the United States. The case involved a foreign manufacturer, an intermediary, and a United States purchaser. The court held that the price paid by the intermediary/importer to the manufacturer was the proper basis for transaction value. The court further stated that for a transaction to be viable under the valuation statute, it must be a sale negotiated at arm’s length, free from any non-market influences, and involving goods clearly destined for the United States. In accordance with the Nissho Iwai decision and our own precedent,

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 (TAA; 19 U.S.C. § 1401a). The preferred method of appraisement is transaction value, which is defined as the “price actually paid or payable for the merchandise when sold for exportation to the United States” plus certain statutory additions. 19 U.S.C. § 1401a(b)(1). The Importer seeks to use the transaction value of the first sale between the Manufacturer and the Intermediary. In Nissho Iwai American Corp. v United States, 16 C.I.T. 86 (1992), rev’d in part, 982 F.2d 505 (Fed. Cir. 1992), the Court of Appeals for the Federal Circuit reviewed the standard for determining transaction value when there is more than one sale which may be considered as being a sale for exportation to the United States. The case involved a foreign manufacturer, an intermediary, and a United States purchaser. The court held that the price paid by the intermediary/importer to the manufacturer was the proper basis for transaction value. The court further stated that for a transaction to be viable under the valuation statute, it must be a sale negotiated at arm’s length, free from any non-market influences, and involving goods clearly destined for the United States. In accordance with the Nissho Iwai decision and our own precedent, we presume that transaction value is based on the price paid by the importer. In further keeping with the court’s holding, we note that an importer may request appraisement based on the price paid by the intermediary to the foreign manufacturer in situations where the intermediary is not the importer. However, it is the importer’s responsibility to show that the “first sale” price is acceptable under the standard set forth in Nissho Iwai. That is, the importer must present sufficient evidence that the alleged sale was a bona fide “arm’s length sale,” and that it was “a sale for export to the United States”