April 2018 — Question 47
Your client is importing a used aircraft engine manufactured in England from a Canadian shipper. Your client has accepted the aircraft engine on consignment and has promised to find a US buyer for the engine. Your client will receive a commission on the sale of 5%. The asking price for the engine is $90,000. The shipper paid all of the transportation costs ($1,000) from its dock to your client’s dock on a through bill of lading. What is the entered value of the used aircraft engine?
- AUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000
- BUnder transaction value, the dutiable value of the aircraft engine is the asking price of $90,000, minus the $1,000 transportation cost, plus the sales commission due the importer of $4,500 ($90,000x5%), or $93,500
- CUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000, plus the $1,000 transportation cost, plus the sales commission due the importer of $4,500 ($90,000 x 5%), or $95,500
- DUnder transaction value, the entered value of the aircraft engine is the asking price of $90,000, minus the $1,000 transportation cost, minus the sales commission due the importer of $4,500 ($90,000 x 5%), or $84,500
- ETransaction value cannot be used on a consignment shipment, the entered value of the aircraft engine cannot be determined under transaction value and one of the other bases of appraisement must be applied✓ CBP's answer
Why this answer
Transaction value under 19 CFR 152.103 is the price actually paid or payable for merchandise when sold for exportation to the United States. Goods shipped on consignment are not sold: the consignee merely holds the engine and looks for a buyer after importation, so there is no sale for exportation and no price paid or payable, and transaction value cannot apply at all; appraisement must move to the alternative bases in the statutory hierarchy. Options A through D all fail for that threshold reason, because however the asking price, freight, and commission are adjusted arithmetically, an asking price on consigned goods is not a sale price. Watch for: Treating the $90,000 asking price as a sale price and merely adjusting it for freight and commission.
Original CBLE Simulator explanation — the question and key above are CBP's; this analysis is ours. Verify against the current edition before relying on it in practice.
CBP's cited authority
Answer and citations as published in CBP's official answer key for the April 2018 examination.
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