CIT Says Meyer's Cookware Imports Don't Qualify for First Sale Treatment

John Peterson, counsel for Meyer, called the decision a "head-scratcher," adding that the "decision is cryptic and difficult to understand. If the missing holding company financials make it impossible to use the related party 'first sale' as the basis of transaction value, why does it not also make it unacceptable to use the related party 'second sale' between firms owned by the same holding company? Based on the judge's observations, transaction value should have been disallowed altogether and the matter remanded to Customs to appraise the goods on a different basis."

The case concerns sets of pots and pans imported from China and Thailand via a Chinese middleman for which Meyer sought first-sale valuation. Both the Thai producer and Chinese middleman are related to Meyer. In a March 2021 decision, the trade court initially called into question the use of first sale valuation not only for Meyer, but for all imports coming from countries with a non-market economy (see 2103020040).

Under a 1992 U.S. Court of Appeals for the Federal Circuit decision involving Nissho Iwai, companies seeking first sale treatment must prove that the goods were 1) purchased via bona fide sales that 2) are clearly destined for the U.S., 3) transacted at arm's length and 4) are “absent any distortive non-market influences.” While CIT agreed Meyer's cookware passed the first two hurdles of the Nissho Iwai first sale test, it disagreed that the imports were bought at arm's length and devoid of non-market influences.

In the initial CIT opinion, Aquilino used a definition of “non-market” economies taken from antidumping duty proceedings, noting that China is a non-market economy for antidumping duty purposes. However, the Federal Circuit on appeal said that CBP has no basis to consider a country's non-market economy status when deciding whether to grant first sale treatment to a given import (see 2208110060). From there, the case was sent back to CIT so that the trade court could figure out whether to grant first sale treatment to Meyer's imports.

Once back at CIT, Meyer sought either mediation or retrial, both of which the U.S. opposed (see 2212300033). Aquilino agreed, ruling not only to reject the retrial motion but ultimately finding that the pots and pans at issue did not qualify for first sale valuation. The judge reverted to his original finding, which said that Meyer should not be entitled to use the first transaction value between the China manufacturer and Meyer Hong Kong or the Thai manufacturer and Meyer Macau to appraise the cookware.

Acknowledging that the Federal Circuit precluded consideration of a country's non-market economy status, Aquilino said that he still could not ignore Meyer's non-responsiveness to the government's request for information over Meyer Holdings' financials during discovery. This refusal "hampered" the government's ability to find whether or not the parent company provided any assistance to reduce costs. The court said its "prior analysis shows that plaintiff’s failure to provide the financial information requested by it during discovery provided an independent reason as to why Meyer could not demonstrate a true first-sale value absent of influence -- not from a nonmarket-economy country per se -- but from the relationships of the related parties."

CIT was able to rely on its past ruling since the Federal Circuit did not undertake any actual analysis of Meyer's specific imports "[f]or whatever reason."

(Meyer Corp. v. U.S., Slip Op. 23-13, CIT #13-00154, dated 02/09/23, Judge Thomas Aquilino. Attorneys: John Peterson of Neville Peterson for plaintiff Meyer; Justin Miller for defendant U.S. government)