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April 2026, question 75

Valuation, Appraisement and Duty Assessment · Valuation

A foreign subsidiary sells ore to its U.S. parent company. The price of the ore charged by the subsidiary to its parent is the price of ore on the New York Mercantile Exchange on the date the ore arrives in the United States. Select the statement that is TRUE regarding this price.

  1. The price is acceptable under transaction value as it is based upon a formula which neither party can control.
  2. The price is not acceptable because it is not known at the time of shipment.
  3. The price is not acceptable because the parties are related.
  4. The price is acceptable under deductive value because it is based on the price of ore sold in the United States.
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CBP's answer: A. A: The price is acceptable under transaction value as it is based upon a formula which neither party can control.

In determining transaction value, the price actually paid or payable is considered without regard to its method of derivation and may be arrived at by applying a formula, such as an exchange price in effect on a given date (152.103(a)(1)). A price tied to the New York Mercantile Exchange ore price qualifies, so A is right. A price not fixed at shipment is not disqualified, relatedness alone does not defeat transaction value (152.103(l)), and deductive value is a fallback method, not the basis here.

may be arrived at by the application of a formula, such as the price in effect on the date of export in the London Commodity Market 19 CFR 152.103(a)(1)

Search for: arrived at by the application of a formula

CBP's key cites: 19 CFR 152.103(a)(1)

Question and key from CBP's April 2026 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).