TexMex in Mexico agrees to produce mining drill bits for an unrelated U.S. purchaser, the Jackson Company in Kentucky. The agreed-upon price for these items was $75 each. Subsequent to the order confirmation, TexMex realizes that they do not have the proper grade of industrial diamond for the cutting portion of the drill bit. In order to meet the delivery deadline, TexMex purchases the proper grade of diamond from Las Portas, an unrelated Mexican vendor. This would normally have increased the unit price of the drill bits by $15 each, but in order to get into the U.S. market with the hope of expanding their business dealings with the Jackson company, TexMex decides to take a loss on this initial sale and keeps the price at $75 each. You now have the shipment at the release point with entry invoices showing a unit price of $75 each. Your client, the Jackson Company, forwards you a copy of the letter of credit for this payment, at $75 each only. Which of the following statements pertaining to the appraisement of this importation is correct?
A) Appraisement should be at $90 each, since the $15 each charge for vendor items is an assist and must be included in the appraised value.
B) Appraisement should be at the $75 each. There is no basis for the addition of $15 per unit diamond charge to the appraised value.
C) Appraisement should be at $90 each. The $15 per unit diamond charge, although not an assist, is an indirect payment and is part of the price paid or payable.
D) Appraisement should be at $90 each. The $15 per unit diamond charge represents a missing element of value and must be added to the invoice price to arrive at the proper appraised value.
E) Appraisement should be $90. The $15 per unit diamond charge is a proceed that needs to be added to the original contract price.
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The Answer is: B
Citation: 19 CFR 152.102 (a) and CFR 152.103 (a)(1) and (2). CFR152.103 (g)
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