FIRST SALE
APPRAISEMENT
Frank J. Desiderio, Esq.
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
399 Park Avenue, 25 Floor
New York, NY 10022
212-973-7740
www.gdlsk.com
Italy 2012
PRESENTED BY
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“First Sale”
Exists where there are “back to back” sales from the
factory to a middleman and from the middleman to
the Importer.
• Allows the Importer to treat the middleman’s
profit and non-production overhead as a non-
dutiable element of the price.
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
3
First Sale Program
• Exists where the seller subcontracts the actual production.
• Does not reduce the amount paid by the Importer to the seller for the merchandise.
• Can be implemented without any additional cost to the seller.
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
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First Sale Program
IMPORTER MIDDLEMAN
RELATED
FACTORY
$100 $80
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
UNRELATED
FACTORY
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Cost Duty % Duty Total
Vendor FOB Price $100.00 15% $15.00 $115.00
Savings Under First Sale Program:
Cost Duty % Duty Total
Middleman (Vendor) FOB Price $100.00 15% $15.00 $115.00
Overheads & Profit $20.00 _____ ______ _______
Factory Cost $ 80.00 15% $12.00 $112.00
Duty Savings $ 3.00
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
First Sale Program
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• Sale from the factory to the middleman must be “at
arm’s length.”
– Unrelated parties are presumed to deal at arm’s length.
– Related parties must demonstrate that the relationship does
not influence the price paid to the factory.
– Several different ways to validate a related party price.
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
First Sale Program
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Documentation Requirements
First Sale Program
1. Purchase order from middleman to factory
2. Factory Invoice to middleman
3. Payment from middleman to factory
4. Middleman invoice to the Importer with cost breakdown
5. If middleman provides material, trim or other production assists to the factory, we may also require:
A. A cost sheet
B. Purchase orders for material and trim
C. Invoices for material and trim
D. Payments for material and trim
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP
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Program Benefits
First Sale
• Potentially applicable to all product lines, in all countries
• Allows the Importer to remove the middleman’s profit and overhead from the dutiable value
• Takes advantage of existing vendor business structure
• Allows the vendor to become more price competitive without lowering the sale price to the Importer
Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP 8607421 _ 1
