Home › Discussion › Practical Exercises › Quiz 1 Q 2 – Price actually paid or payable
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Practical Exercise: Using the following information, answer questions 63 through 74.
July 5, 2004 – Household Makeovers, Inc., places an order with its affiliated Chinese manufacturer, Painted Spaces, for 3,000 wooden paintbrushes consisting of 90% natural (i.e., horsehair) and 10% synthetic bristles with a width of 3”.
July 15, 2004 – Painted Spaces completes the production lot, and forwards the finished product to its distribution facility located in Hong Kong.
July 17, 2004 – The merchandise is laden on the vessel Red Book and departs the same day.
July 20, 2004 – Red Book arrives in Singapore. The container of paintbrushes, still destined for the U.S., is unloaded and placed on the dock.
July 21, 2004 – Household Makeovers, Inc. files for bankruptcy and immediately sells the paintbrushes while in transit to Casual Painter, a Taiwanese trading company. Casual Painter assumes the same terms of sale and will be the importer of record for this shipment. The container of paintbrushes is loaded onto the vessel Minnow, which is destined for the U.S.
July 23, 2004 – Minnow departs from Singapore destined for Los Angeles.
August 15, 2004 – The broker submits a CBP3461 and the shipment is released two days later.
August 19, 2004 – The vessel docks in Los Angeles with the intent to unlade.
September 1, 2004 – The paintbrushes are repackaged in the U.S. with disposable gloves, painters’ tape, an acrylic 1” paintbrush, a 12” diameter stainless steel container for holding paint and one quart of white paint.
Manufacturer:
Painted Spaces
8 Jihu Road, Unit 9, Guangzhou, People’s Republic of China
Broker:
James Bond
dba Quick Imports (CBP-approved trade name), 456 Broadway, Los Angeles, CA 90045
Filer Code: 007Price List (C.I.F. Port of Los Angeles), negotiated annually between Household Makeovers, Inc. and Painted Spaces, applies to both affiliated and unaffiliated parties:
$2.00 per brush greater than 3”
$1.59 per 3” brush
$1.35 per 1” brushActual freight, insurance and other costs incidental to the international shipment = $579.
Estimated calculated costs for foreign inland freight for this shipment = $325.
Gross Weight = 800 lbs. or 363 kgs.
Tare Weight = 50 lbs. or 23 kgs.
Net Weight = 750 lbs. or 340 kgs.
Packing List = 150 cartons (20 brushes per carton)
Dumping Information:
1. On October 4, 2004, the Department of Commerce publishes in the Federal Register the Final Results of its Administrative Review of the Antidumping Duty Order (A-570- 501) on Natural Paintbrushes from the People’s Republic of China for the period October 31, 2003 through October 1, 2004.
2. For all shipments of natural paintbrushes from the Peoples Republic of China exported by the following producers/exporters, entered or withdrawn from warehouses for consumption during the period October 31, 2003 through October 1, 2004, the antidumping liability is as follows:
A-570-501-001 Painted Spaces 86%
A-570-501-002 Mao’s Animal By Products 79%
A-570-501-003 Paint the World Red 116%
A-570-501-004 All Others 145%What is the entered value of this shipment?
A. $4,770
B. $4,191
C. $4,516
D. $4,445
E. $5,349I am not sure how to derive at the answer. It doesn’t state how many of each paint brush – total of 3000.
19 CFR 152.102(f) “Price actually paid or payable” means the total payment (whether direct or indirect, and exclusive of any charges, costs, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise from the country of exportation to the place of importation in the United States) made, or to be made, for imported merchandise by the buyer to, or for the benefit of, the seller.
Here, Household Makeovers, Inc., placed an order with its affiliated Chinese manufacturer, Painted Spaces, for 3,000 wooden paintbrushes consisting of 90% natural (i.e., horsehair) and 10% synthetic bristles with a width of 3”.
Price List (C.I.F. Port of Los Angeles), negotiated annually between Household Makeovers, Inc. and Painted Spaces, applies to both affiliated and unaffiliated parties:
$2.00 per brush greater than 3”
$1.59 per 3” brush
$1.35 per 1” brushSince the price list applies to both affiliated and unaffiliated parties, it can be accepted as the transaction value in an arms length transaction.
The paintbrushes are repackaged in the U.S. with disposable gloves, painters’ tape, an acrylic 1” paintbrush, a 12” diameter stainless steel container for holding paint and one quart of white paint. However, these are domestic goods which are added to the imported goods by repackaging post import, and so these goods are irrelevant for calculating entered value for import.
Actual freight, insurance and other costs incidental to the international shipment = $579.
The c.i.f. price will include these elements of cost due to international freight and insurance.The brushes imported from China are 3″ brushes that cost $1.59 c.i.f.
Quantity = 3000
Price c.i.f. = 3000×1.59 = $4,770
The c.i.f. value does not include any domestic freight and so the estimated calculated costs for foreign inland freight for this shipment of $325 is irrelevant. However, we have to deduct the charges for international freight and insurance from the c.i.f. value to derive the entered value.
$4,770 – $579 = $4,191Answer choice B is the correct answer.
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