First Sale Valuation

First Sale is an allowable interpretation of valuation regulations. Kohl’s utilizes the First Sale Valuation program to reduce the import duty assessed on our imported merchandise. Kohl’s is required to declare the “Transaction Value” of our merchandise to U.S. Customs. The regulations state that Transaction Value is the “Price Actually Paid or Payable when goods are sold for exportation to the United States.”
First Sale Value requires a “multi-tiered transaction,” that the sale is at “arm’s length,” and that the goods are sold for export to the United States. Under this requirement, Kohl’s can legally declare the “first sale” in a transaction as that sale affected the “export to the United States.” ** United States Federal Court of Appeals decision: Nissho Iwai America Corp. vs. United States.
Kohl’s collaborates with outside legal counsel to determine qualifications for First Sale. Our legal counsel will work directly with our Vendors to assess the Vendor’s business structure, transactions, and financial records to prove qualification for First Sale. This information is kept confidential between our legal counsel and the vendor.
Determining the transaction value in a “multi-tiered” transaction involves a buyer (Kohl’s), a middleman (Vendor), and the manufacturer (Factory).
  • There must be a “first sale” from the factory to the Middleman (Vendor) and a second or final sale from the vendor to Kohl’s (First Cost).
  • Kohl’s must prove that when the middleman purchased the goods, the goods were “clearly destined for export to the U.S.
The manufacturer and middleman must work at “Arm’s Length.”
 
  • No relationship between the Vendor and Factory.
  • If there is a relationship, the lawyers will seek to prove that the relationship does not affect the price between the factory and the middleman.
Once the vendor and factory are approved, first sale documents are provided with every shipment. The First Sale value is declared at the time of entry, and a lower duty amount will be assessed on our merchandise.