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April 2024, question 69

Valuation, Appraisement and Duty Assessment · Valuation

The U.S. importer entered into an agreement with an unrelated exporter/manufacturer for the purchase of 10,000 branded hats. The purchase contract contained the following terms: the price for the 10,000 hats is $50,000.00; the merchandise may be resold only in New York; and the buyer indicates that it will spend $5,000.00 on his own account to promote the sale of the merchandise. No selling commission, assist, royalty, or license fee is involved. Is transaction value the proper method of appraisement and, if so, what is the transaction value?

  1. No, transaction value is inapplicable because there is a restriction on the disposition or use of the merchandise (i.e., the merchandise may be resold only in New York).
  2. Yes, $50,000.00
  3. Yes, but it is impossible to calculate the transaction value based on the information provided
  4. Yes, $55,000.00
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CBP's answer: B. B: Yes, $50,000.00

Advertising the buyer does on its own account is not an indirect payment to the seller and is not added to the price, and a restriction that only limits the geographic area of resale does not defeat transaction value. The price paid is $50,000, so transaction value is $50,000 (B).

Activities such as advertising, undertaken by the buyer on his own account, other than those for which an adjustment is provided in § 152.103(b), will not be considered an indirect payment 19 CFR 152.103(a)(2)
limit the geographical area in which the merchandise may be resold 19 CFR 152.103(j)(1)(i)

Search for: advertising undertaken by the buyer on his own account

CBP's key cites: 19 CFR 152.103(a)(2)

Question and key from CBP's April 2024 exam and answer key. The walk-through is ours; quotes are from the pinned editions in the reference viewer (HTSUS 2026 Basic, 19 CFR 2025 edition).