Valuation – deductions from price

(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;

As per sub-clause (1) you have to deduct either the commission or the addition for profit and general expenses.

15 – 1.5 – 1 – 0.85 – 1.14 = 10.51 which is Answer choice D.

When two clauses of a sentence are connected by the connector “or”, you have to apply one of the two clauses but not both. So here you can deduct either the commission or the addition for profit and general expenses, but you cannot deduct both to get a lower assessable value. Here both have the same value 1.5 so it does not matter which one you deduct, you will get the same answer 10.51. But Customs will not allow you to deduct both items to derive a lower assessable value and pay less customs duty.

I will be adding a discussion board on the site under the link Discuss so you can post questions for answers there and everyone else who may have the same doubt/s can see the explanations.

Thanks,
Joe

From: Doug Pratum [mailto:DPratum@flatworldgs.com]
Sent: Tuesday, March 23, 2021 3:25 PM
To: info@customsbrokerexamprep.com
Subject: RE: Valuation question

10. Question
1 point
Wally’s Watermelons, a large agricultural market in Tucson, Arizona, imports, through the U.S. Customs port of Nogales, Arizona, 500 cartons of seedless watermelons on consignment from a grower in Mexico. Once placed for sale at the market, all of the cartons are sold to unrelated parties within two days. Based upon an examination of the merchandise, including identical or similar watermelons, the unit price sold in the greatest aggregate quantity is $15 per carton (300 cartons). The cartons of watermelons are appraised under deductive value. Wally’s Watermelons submits the following cost sheets:
-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
What is the appraised value?
• A. $ 9.01 per carton
• B. $13.51 per carton
• C. $15.00 per carton
• D. $10.51 per carton
• E. $11.51 per carton
Correct. The correct choice is: D
Explanation:
5 D 19 CFR 152.105

From: info@customsbrokerexamprep.com <info@customsbrokerexamprep.com>
Sent: Tuesday, March 23, 2021 2:09 PM
To: Doug Pratum <DPratum@flatworldgs.com>
Subject: Valuation question

This email originated from outside of the organization.

Would you please reproduce the question, answer choices, and the official answer with citation so I can check it quickly?

Thanks,
Joe

Offline message sent by Doug Meadows
Offline message sent on Tuesday, March 23, 2021, at 19:03 (GMT+0)
Site : customsbrokerexamprep.com

Submitted From : https://www.customsbrokerexamprep.com/quizzes/valuation-quiz-1/

Name : Doug Meadows
Email : dpratum@flatworldgs.com

Message: Question 10— just so I don’t drive myself crazy, isn’t the correct answer A ? Current deductive items include each item listed in the question. Thanks, Doug