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October 2026, question 77

Valuation, Appraisement and Duty Assessment · Valuation

Western Bowman (Bowman), a large United States retail store chain, wholly owns a factory in Chile. The factory manufactures ornate, wooden arrow shafts and ships them to Bowman in the United States. Because the parties are related and CBP determined that the relationship influenced the transfer price, transaction value is not acceptable. Transaction value of identical or similar merchandise is also unavailable. The imported arrow shafts are not further processed after importation. They are sold in the United States in the condition as imported. The profit and general expenses of the imported arrow shafts are consistent with those reflected in sales in the United States of imported merchandise. CBP appraises the merchandise using deductive value. The following information is available for one importation of arrow shafts. The arrow shafts are imported from Chile on March 1, 2026. Within 90 days after importation, Bowman sells the arrow shafts to unrelated U.S. retail customers at the following prices and quantities: US Selling Price per Dozen Quantity Sold • $42.00 400 dozen • $39.00 700 dozen • $36.00 300 dozen The following costs are incurred: Item Amount per Dozen • Profit and general expenses in the United States $5.50 • Federal excise tax $7.80 • Ocean freight and insurance from Chile to the U.S. $2.25 • Transportation from place of importation to place of $1.50 delivery in U.S. (already included in general expenses) • Arrow shaft designs undertaken in the U.S. and $2.00 supplied free of charge to the Chilean factory What is the deductive value of one dozen arrow shafts?

  1. $19.95
  2. $20.45
  3. $21.45
  4. $23.45
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CBP's answer: D. D: $23.45

Deductive value starts with the unit price at which the merchandise is sold in the greatest aggregate quantity at or about the date of importation (152.105(c)(1)). The $39 price covers 700 dozen, the largest quantity. Then deduct profit and general expenses ($5.50), international transportation and insurance ($2.25), and Federal excise tax ($7.80) under 152.105(d). The U.S. transportation is already in general expenses and the design assist is not deducted. $39.00 less $15.55 is $23.45, so D is right.

the price is the unit price at which the merchandise concerned is sold in the greatest aggregate quantity at or about such date 19 CFR 152.105(c)(1)
The actual costs and associated costs of transportation and insurance incurred with respect to international shipments of the merchandise concerned from the country of exportation to the United States; 19 CFR 152.105(d)(2)

Search for: the unit price at which the merchandise concerned is sold in the greatest aggregate quantity

CBP's key cites: 19 CFR 152.105

Question and key from CBP's October 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).