Under what circumstances is the first sale rule applicable in customs valuation?

The first sale rule in customs valuation is applicable when goods are transferred through multiple sales before their importation into the United States. Specifically, this rule allows customs officials to base the value on the price of the first sale that occurs in the chain of transactions leading to the importation. This can significantly lower the customs duties owed, as it enables importers to use a lower transaction price rather than the last transaction price, which is typically higher.

By using the price from the initial sale, the first sale rule reflects the actual commercial reality of the transaction, as it recognizes the value created at each stage of the sale. This approach is particularly beneficial for multinational corporations and companies that purchase goods through various intermediaries before they reach the U.S. market.

The other options do not apply to the first sale rule: Domestic sales do not qualify for this rule since it applies specifically to goods crossing international borders. Valuation based on the last transaction price would negate the purpose of the first sale rule, and import limits relate to quantity and not valuation practices. Hence, the correct circumstance under which the first sale rule is applicable is when goods are resold multiple times before importation.