April 2018 — Question 50
The importer, Company A, imports 1,000 batteries from an unrelated overseas seller at a price of $0.50 CIF per battery. The overseas seller buys the batteries in bulk from an overseas manufacturer. Company A requires each battery to be individually wrapped in polythene with a cardboard backing for display at retail outlets in the United States. Company A provides the polythene and cardboard backing materials free of charge to the overseas seller. Company A obtains the materials from a supplier in the United States at a cost of $40 for the quantity required to wrap 1,000 batteries. The seller of the imported batteries arranges for an overseas packing company to carry out the wrapping/packing. This company charges the seller of the imported goods, $60 per 1,000 batteries for this service. The documents show that the total overseas freight and insurance costs totaled $10. What is the customs value in the United States for a shipment of 1,000 batteries?
- A$530✓ CBP's answer
- B$500
- C$600
- D$540
- ENone of the above. Category VII – Drawback
Why this answer
Transaction value starts with the price actually paid or payable, here $500 CIF for 1,000 batteries, which already reflects the $60 wrapping service the seller paid for. The polythene and cardboard the importer supplies free of charge are an assist, adding $40 and yielding $540 CIF. But U.S. customs value excludes international freight and insurance, so the documented $10 comes off, leaving $530. Option D tempts because it correctly adds the assist but forgets to strip the freight and insurance out of the CIF price, and option C effectively double-counts the packing charge the seller already built into its selling price. Watch for: Adding the $40 assist but forgetting to deduct the $10 international freight and insurance from the CIF price.
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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