April 2019 — Question 79

ACME, a U.S. Company, purchases 100 machines from a company in Japan. ACME will make an initial down payment for the machines. Once the machines are made, ACME will make another payment. The Japanese company ships the machines to the United States on a Free on Board (FOB) basis. Once the goods are entered into the United States, ACME will make another payment to the Japanese company. What charges would NOT be included in the dutiable value of the machines?

• AAs a part of the price of the machines, the invoice from the Japanese company, presented to CBP when the merchandise is entered into the United States, includes a charge to transport the machines from Nagano to Toyko, Japan so that they could be shipped to the United States.
• BACME hires its sister company in Boise, Idaho and pays them to develop design plans and technical know-how and to furnish them to the Japanese company free of charge for making the machines more efficient.✓ CBP's answer
• CThe sales agreement indicates that if the machines are delivered on time, the Japanese company will receive a bonus payment.
• DOne of ACME’s customers in the United States wants modifications made to the machines. These modifications must be made at the time of production, resulting in a higher cost to make the machines. ACME does not have the funds to pay the Japanese company for the extra costs of the modification and the Japanese company will not produce machines with the modification without first receiving payment for increased production costs, so ACME has its customer send a payment to the Japanese company for the additional costs of the modifications.
• ETo ensure that the goods are safely shipped to the United States, ACME hires a company who charges ACME a fee to load the machines onto pallets and bubble wrap them for delivery to the United States. Category XV – ACE