April 2021 — Question 70
A German chemical producer sells chemicals to its related party in the United States at a 30% discount of the price it sells the same chemicals to other unrelated parties in the United States. Its related party also resells the chemicals in the United States to other unrelated parties who use the chemicals in producing other goods. The German chemical producer acts as the importer of record and claims that transaction value is the proper method of appraisement for the importations of chemicals to its related party and to the unrelated parties. The German chemical producer offers no explanation as to why its related party receives a 30% discount on the price. Select the CORRECT statement below.
- AThe German chemical company is correct that it must use the transaction value method to appraise the importations of chemicals for both the related party and unrelated parties.
- BThe German chemical company must use the computed value method to appraise the importations of chemicals for both the related party and unrelated parties because the related party price is influenced by the relationship.
- CThe German chemical company must use the transaction value to appraise the importations of chemicals for the unrelated parties, and it may not use this method for the related party because the 30% discount on the price of chemicals is only extended to the related party and this demonstrates that the relationship has influenced the price between the related parties, such that appraisement must follow the valuation hierarchy.✓ CBP's answer
- DThe German chemical company must use the deductive value method to appraise the importations of chemicals for both the related party and unrelated parties because the related party price is influenced by the relationship and the chemicals are resold by the related party in the United States.
- EThe German chemical company must use the deductive value method to appraise the importations of chemicals for the related party because the chemicals are resold by the related party in the United States, and it must use the transaction value method to appraise the importation of chemicals for the unrelated parties. Category XIII – Marking
CBP's cited authority
Answer and citations as published in CBP's official answer key for the April 2021 examination.
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