April 2019 Test Q 47 Q 49

Q. 47
The classification of the Ladies hat crocheted to shape from unspun dyed raffia. Lined, trimmed w/grosgrain ribbon hat band, not sewn is 6505.00.9075 and its duty rate is 20.7 cents per kg + 7.5% of invoice value.
Here, the quantity of the hats is 2,728 kgs and so the specific duty payable is 2,728 x $0.207 = $564.70
The price is $9000.00 DDP New York. The Delivered Duty Paid price includes the cost of international freight, insurance, and customs duties paid to the destination in New York so these elements need to be deducted to arrive at the assessable value for customs duty determination.
The goods are arriving in NY by Italian Airlines so no HMF is applicable. However, MPF is applicable at the rate of 0.3464% in addition to the basic customs duty rate of 7.5%. Total duties and fees are 7.5%+0.3464% = 7.8464%.

First step to determine customs transaction value is to deduct the specific duty of $564.70.
$9,000 – $564.70 = $8,435.30
Next step is to deduct the ad valorem duties from this figure and to do that we need to divide $8,435.30 by 1.078464 = $7,821.59 which is the entered value.
7.5% of the entered value is 7,821.59 x .075 = $586.62
MPF is 7,821.59 x .003463 = $27.09
Ad valorem duties paid is 586.62 + 27.09 = $613.71
Total duties paid is $613.71 + $564.70 = $1,178.41 which is answer choice D.

Q. 49
Men’s 100% knit cotton sleeveless muscle shirt (2256 kg) 25 doz 24.80 USD ea. $7440.00
6110 Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted:
6110.20 Of cotton:
6110.20.10 Containing 36 percent or more by weight of flax fibers
6110.20.20 Other
Other
Men’s or boys’:
6110.20.20.67 Knit to shape articles described in statistical note 6 to this chapter
6110.20.20.69 Other
The HTSUS classification of men’s 100% knit cotton muscle shirt is 6110.20.20.69 and it is subject to 16.5% duty. It is imported by air, so HMF is not applicable but it is subject to MPF at 0.3464%. So the total duties and fees are 16.5+ 0.3464 = 16.8464% of the entered value.
The total duty paid DDP value is $7,440.00 which is inclusive of duties and fees paid at the rate of 16.8464%.
If we assume the value of the entered shirts to be y, the value inclusive of duties and fees will be y + 16.8463% of y = y + y(16.8464/100) = y+y(0.168464) = y(1+0.168464) = y(1.168464) = 7,440
Therefore, y = 7,440/1.168464 = $6,367.33, which is the entered value.
Since the value inclusive of duties and fees paid is $7,440, the amount of duties and fees paid = 7,440 – 6,367.33 = $1,072.67.
Answer choice A is correct.