CAFC Again Faults CIT for Ruling Against Meyer in First Sale Case
A three-judge panel at the U.S. Court of Appeals for the Federal Circuit told the Court of International Trade that it has now twice wrongly told an importer that its first-sale price method to determine the duty level of its cookware was prohibited.
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The ruling, issued Dec. 13, orders the CIT to again consider whether CBP was wrong to reject the first-sale price Meyer Corp. U.S. submitted to the agency, which was based on the price paid by distributors in Macau to a Thai manufacturer and by distributors in Hong Kong to a Chinese manufacturer. The manufacturers, distributors and importers share the same parent company -- Meyer International Holdings, Ltd.
CBP said that the price Meyer Corp., U.S., paid to the distributors in Macau and Hong Kong was the amount that should be subject to duties.
The appellate judges' opinion said that when a related buyer purchases the good from a related seller, Customs can still rely on that price “if an examination of the circumstances of the sale of the imported merchandise indicates that the relationship between such buyer and seller did not influence the price actually paid or payable.” The transaction price between related parties, it said, "is also acceptable 'if the transaction value of the imported merchandise closely approximates ... the transaction value of identical merchandise, or of similar merchandise, in sales to unrelated buyers in the United States.'” Judges Sharon Prost, Todd Hughes and Tiffany Cunningham heard the case, with Hughes writing the opinion.
Both in the first CIT decision in 2021, and after the appellate court remanded that decision, CIT said the fact that Meyer International Holdings wouldn't share financial documents made it impossible for the government to know if it was priced as a bona-fide sale.
At that time, CIT said for an "all costs plus profit" test, "costs are obviously critical to that determination, and the real costs of inputs from [China] are suspect, given its status as a nonmarket economy country.”
In its first decision, the appellate court said nothing in the statute or in CBP regulations says goods made in a nonmarket economy, or goods made with components from a NME, cannot be accurately priced for a costs-plus-profits test (see 2208110060).
When CIT took up the case a second time, it no longer talked about NMEs, but it still rejected the claim because Meyer International Holdings didn't open its books. That Meyer Holdings didn't respond to a discovery request from the government, even on remand, when it knew that the first-sale valuation was rejected by CIT on the first go-round, was suspect, the trade court said.
The appellate court wrote: "While some statutory provisions that fall within the purview of the Court of International Trade more freely authorize the imposition of adverse inferences, assessing transaction value for related parties under 19 U.S.C. § 1401a(b)(2)(B) is not one of them."
It said that CIT's focus on the parent company's noncooperation "is particularly inappropriate because, in doing so, the trial court ignored other record evidence produced by Meyer, including sworn testimony from employees and an expert opinion that was based on examination of company records. The trial court did not grapple with any of this evidence: it did not evaluate the credibility of the witnesses, weigh the evidence that was before it, or explain why, as a matter of law, that record evidence was or was not sufficient for Meyer to meet its burden."
Meyer said CIT should look at both the "all costs plus profit" calculations it offered, and the normal pricing practices test in deciding whether CBP was wrong to choose the second sale as the value for the tariffs.
The appellate court said CIT didn't consider both avenues for Meyer to justify the first sale, and that it should look at both -- without assuming Meyer is lying about the costs-plus-profit calculations.
"We note that this decision should not be read as putting a thumb on the scale regarding the outcome on remand. Rather, it is an acknowledgment that Meyer was entitled to have its case heard on the merits of the record it presented, not disposed of based on conclusory speculation," the opinion said.
(Meyer Corp., U.S. v. U.S., Fed. Cir. #23-1570, dated 12/13/24; Judges: Sharon Prost, Todd Hughes and Tiffany Cunningham; Attorneys: John Peterson of Neville Peterson for plaintiff-appellant Meyer Corp.; Beverly Farrell for defendant-appellee U.S. government)