Quiz 1, Question 10

§ 152.105
(c) Prices. The deductive value of the merchandise being appraised is whichever of the following prices (as adjusted under paragraph (d) of this section) is appropriate depending upon when and in what condition the merchandise concerned is sold in the United States:

(1) If the merchandise concerned is sold in the condition as imported at or about the date of importation of the merchandise being appraised, the price is the unit price at which the merchandise concerned is sold in the greatest aggregate quantity at or about such date.

(d) Deductions from price. The price determined under paragraph (c) of this section will be reduced by an amount equal to:

(1) Any commission usually paid or agreed to be paid, or the addition usually made for profit and general expenses, in connection with sales in the United States of imported merchandise that is of the same class or kind, regardless of the country of exportation, as the merchandise concerned;

(2) The actual costs and associated costs of transportation and insurance incurred with respect to international shipments of the merchandise concerned from the country of exportation to the United States;

(3) The usual costs and associated costs of transportation and insurance incurred with respect to shipments of the merchandise concerned from the place of importation to the place of delivery in the United States, if those costs are not included as a general expense under paragraph (d)(1) of this section;

(4) The customs duties and other Federal taxes currently payable on the merchandise concerned by reason of its importation, and any Federal excise tax on, or measured by the value of, the merchandise for which vendors in the United States ordinarily are liable; and

(e) Profit and general expenses; special rules.

(h) Unit price in greatest aggregate quantity. The unit price will be established after a sufficient number of units have been sold to an unrelated person. The unit price to be used when the units have been sold in different quantities will be that at which the total volume sold is greater than the total volume sold at any other unit price.

Here, the unit price sold in the greatest aggregate quantity is $15 per carton (300 cartons). The cartons of watermelons are appraised under deductive value. Under the applicable rules cited above, international and domestic freight and insurance charges are to be deducted, customs duties are to be deducted, and either profits and general expenses or commissions are to be deducted.

-Profit & General Expenses:$1.50
-Commissions:$1.50
-Transportation & Insurance from Mexico to Nogales, Arizona:$1.00
-Transportation & Insurance from Nogales, Arizona, to Tucson, Arizona:$0.85
(not included as a general expense)
-Customs Duties:$1.14

Therefore deductive value = 15 – 1.50 – 1- 0.85 -1.14 = $10.51 which is answer choice D.