Importer, US Swap Post-Trial Briefs on Whether Cookware Imports Get First Sale Treatment
Importer Meyer Corporation U.S. and the U.S. traded supplemental briefs last week following a bench trial at the Court of International Trade on whether Meyer's cookware imports are entitled to first sale valuation (Meyer Corporation U.S. v. United States, CIT # 13-00154).
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Meyer argued that it conclusively showed at trial that its goods were sold at "arm's length," a requirement of first sale valuation, under either CBP's "normal pricing practices test" or its "all costs plus a profit test." For both tests, Meyer said the government didn't offer any witnesses or evidence to counter the testimony of the company's lay witnesses, expert witness or benchmark studies put into evidence.
Meanwhile, the government argued that Meyer didn't meet its burden of proof "when it failed to include fundamental documents such as the purchase orders and proof of payment between the manufacturer/producer and the middleman." Without these documents, it's "impossible to identify or confirm the first sale price" or that the "price was honored and not reduced because of the relationship between the parties."
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).
After the U.S. Court of Appeals for the Federal Circuit said first sale is available for NMEs, the case returned to the trade court, where CIT Judge Thomas Aquilino said the cookware imports didn't qualify for first sale treatment. Aquilino said the court didn't know the extent to which parent company Meyer Holdings had the ability to influence the price paid for the goods sold between affiliates, due to the company's failure to submit its financial information (see 2302090053).
A bench trial proceeded as to whether Meyer established the four factors for first sale treatment. Specifically, the parties sparred over the requirement that the goods be transacted at arm's length.
In its post-trial brief, Meyer said it established its goods were transacted at arm's length under either CBP's "normal pricing practices" test or the "all costs plus profit" test. Under the first test, CBP looks to whether the "price has been settled in a manner consistent with the normal pricing practices of the industry in question." To show its goods satisfy this standard, Meyer called a few of its employees to testify at CIT to show how it negotiates prices between Meyer Holdings affiliates.
Meyer said the "most significant piece of evidence" relating to this test came from its expert witness, PricewaterhouseCoopers' Craig Pinkerton, who performed benchmark tests for Meyer Industries Thailand and Meyer Zhaoqing Metal Products starting in 2006. Pinkerton testified that CBP had accepted these tests for years and let Meyer use first sale valuation. Pinkerton said CBP "had erred by concluding that the related party sales from" the Thai and Chinese Meyer affiliates didn't meet the "statutory and regulatory tests for being acceptable as the basis of 'transaction value.'"
In its brief, the government emphasized Meyer's failure to submit purchase orders and proof of payment between the manufacturer and the middleman. The U.S. said without these "two pieces of critical information," it's "impossible to know whether" the manufacturer and middleman dealt with each other at arm's length. The government also said Meyer failed to follow the Federal Rules of Evidence when it didn't provide the "supporting documents" for the PwC reports prepared by Pinkerton but still provided testimony "based on these documents."