Home / Past exams / October 2024 / Question 74
October 2024, question 74
Valuation, Appraisement and Duty Assessment · Valuation
Acme Company in the United States paid $7,000 to a Brazilian factory for a shipment of hula hoops, CIF terms of sale. The $7,000 consists of $6,500 for the toys and $500 for ocean freight and insurance. The Brazilian factory charged Acme Company $8,250 for the toys; however, because the Brazilian factory owed Acme Company $1,750, the Brazilian factory charged only $6,500 for the hula hoops. What is the transaction value?
- $6,500.00
- $7,000.00
- $8,250.00
- $8,750.00
Show the answer and walk-through
CBP's answer: C. C: $8,250.00
Price actually paid or payable includes indirect payments, such as the buyer settling a debt the seller owes it, and excludes international freight and insurance. The factory's $1,750 debt to Acme was netted against the price, so the toys' price is $6,500 plus $1,750, which is $8,250. The $500 ocean freight and insurance is excluded, so the transaction value is $8,250 (C).
An indirect payment would include the settlement by the buyer, in whole or in part, of a debt owed by the seller, or where the buyer receives a price reduction on a current importation as a means of settling a debt owed him by the seller. 19 CFR 152.103(a)(2)
exclusive of any charges, costs, or expenses incurred for transportation, insurance, and related services incident to the international shipment of the merchandise 19 CFR 152.102(f)
Search for: settlement by the buyer of a debt owed by the seller indirect payment
CBP's key cites: 19 CFR 152.103(a)(2); 19 CFR 152.102(f)
Question and key from CBP's October 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).