Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. Our readers must be working on exam protests because the majority of questions asked this week involved the April 2009 Customs Broker Exam.

Question:
Why wouldn’t the answer to Question 15 on the April 2009 Exam be “A” instead of “B”?


To answer this week’s question, we must review the actual question from the exam.

15. An antidumping or countervailing duty reimbursement certificate must be filed _____.

A. at the time of importation of the goods
B. prior to liquidation of the entry
C. with the CBP Form 7501 Entry Summary
D. prior to issuance of liquidation instructions by the Department of Commerce
E. prior to importation of the goods


Next, we should remember the instructions given on the first page of the exam.

“Each question is designed to have a single best answer.”


Keeping these instructions in mind, we find information about the reimbursement certificate in 19 CFR 351.402(f). Part 351.402(f)(2) specifically states that "the importer must file prior to liquidation a certificate in the following form with the appropriate District Director of Customs…."

Notice the language used in Question 15. The “…certificate “MUST” be filed ___.” Notice it doesn’t state “may be filed” but states “MUST be filed.” Now, let’s look at the potential answers to see which one is the single best answer CBP refers to.

Answer A:
It would be acceptable to file the reimbursement certificate at the time of importation, but filing it at that time is not mandatory. This answer falls into the “may be filed” category.

Answer C:
It would also be acceptable to file the certificate at the time the Entry Summary is filed, but it is not mandatory to file at that time. This answer also falls into the “may be filed” category.

Answer D:
Filing the reimbursement certificate prior to issuance of liquidation instructions by the Department of Commerce is another acceptable alternative; however, it is not mandatory.

Answer E:
It would be acceptable to file the reimbursement certificate prior to the importation of the goods. Many importers file blanket certificates that are good for up to a year. Again, this meets the “may be filed” criteria.

Answer B:
Part 351.402(f)(2) specifically states that "the importer must file prior to liquidation a certificate in the following form with the appropriate District Director of Customs…." This statement complies with the “must be filed” requirement in 351.402(f)(2) and Question 15.

While Answers A, C, D and E are all acceptable options for filing the certificate, it “MUST” be filed prior to liquidation. Using this analysis, Answer B is the single best answer.


Do you have a question for the Wizard? Submit your question by clicking on the link in the space for “Ask the Wizard.” Maybe the Wizard will have a question for the blog readers next week. See you next Friday!

Valuation and the Customs Broker Exam

As we continue our series on valuation, this week we will address one of the difficult questions from the April 2009 Customs Broker Exam. Valuation questions included on the exam are usually difficult. The key to answering Question 76 on this exam is knowing what components can be deducted and in what order.

Note: This is not the official answer to Question 76, but an attempt to analyze the question and provide a starting place for discussion.

Question 76
Select the correct answer for calculating the transaction value of a shipment with details as follows:

• $1,750,000 entered amount
• CIF New York Duty Paid, MPF included
• Price includes $25,000 ocean freight, $25 marine insurance, $1500 trucking freight (New York to Baltimore, MD), $100 broker fee in Baltimore, $100,000 customs duties and fees.
• The actual duty rate is 6.5%
• The actual MPF rate is 0.21%

Potential Answers:

A. TV = entered amount minus ocean freight, marine insurance, trucking freight, and customs broker fee; add MPF and 6.5% duty.

B. TV – entered amount minus ocean freight, marine insurance, trucking freight and customs broker fee. Divide remainder by 1.0671. Multiply the remainder by .0021. Subtract $485from the entered amount minus the authorized deductions. Divide the remainder by 1.065.

C. TV = entered amount minus ocean freight, marine insurance, trucking freight, maximum MPF, and 6.5% actual duty rate.

D. Divide out the actual duty rate, and then subtract the ocean freight, marine insurance, trucking freight and customs broker fee.

E. TV = entered amount minus ocean freight, marine insurance, and trucking freight fee and divide by 1.06701, multiply by .0021 for actual MPF; subtract MPF as allowed from the entered amount minus deductions and divide by 1.065 to yield Transaction Value.

Let's determine the status of each component.
1. 25,000 freight - not dutiable [152.102(f)]
2. $2500 insurance - not dutiable [152.102(f)]
3. $1500 U.S. domestic transportation - not dutiable [152.103(i)(1)(ii)]
4. $100 broker fee - not dutiable [152.102(f) - related services]
5. Duties - not dutiable [152.103(i)(2)]
6. MPF - not dutiable [152.103(i)(2)]

Answer A is incorrect because duty and MPF are deducted, not added.
Answer C is incorrect because the brokerage fees should be deducted. This would be the second best answer.
Answer D is incorrect because duty should not be divided out on the amount that includes freight and insurance since these two items are non dutiable and their value should not be included in the amount duty is calculated on. Answer E is incorrect because the brokerage fee should be deducted before calculating the duty.
Answer B is the best answer, as explained below.

Deduct the ocean freight, insurance trucking freight and broker fee. Then divide the remainder by the duty and MPF rate. Since the maximum deduction for MPF is $485and this amount is met due to the value, only $485 should be deducted and then the duty can be deducted.

$1,750,000 - $25,000 - $2,500 - $1,500 - $100 = $1,720,900
$1,720,900/1.0671 = $1,612,689
$1,612,689 x .0021 = $3,386.61 MPF = $485 Max MPF

Go back to the value determined after deducting freight, insurance, trucking and broker fee:
$1,720,900 - $485 = $1,720,415

Calculate Duty Deduction
$1,720,415/1.065 = $1,615,413

Now that the Wizard has provided some thoughts on the potential answer to this question, we would like to hear from our readers. Is this explanation correct? Is there a better answer? We are looking forward to some great discussions on this issue, so please respond with your thoughts and answers for this question.

Preliminary Answers for the April 2009 Exam

UPDATE: FULL COMPLETE COPY OF THE WIZARD'S ANSWERS NOW POSTED.

As many people sit on pins and needles waiting to see the answers posted for the most recent Customs Broker’s Exam, our very own Wizard has taken the exam and provided a list of possible answers and related regulations where the answers were found. Since we just received the exam this morning, the Wizard has not had time to complete all of the answers, so we are posting what the Wizard has completed today. We will post the remaining answers on Wednesday.

We invite you to post your answers, explanations, arguments and other comments. Obviously, Boskage Commerce Publications cannot guarantee the accuracy of these answers since CBP has the one and only answer key, but the Wizard has an excellent record of achieving a score of better than 90%.

Click HERE to view an complete copy of the Wizard’s answers for the April 2009 Exam!

NOTE: IF YOU ARE NOT SEEING THE COMPLETE ANSWERS, YOUR WEB BROWSER PROBABLY HAS THE OLD DOCUMENT CACHED AND IS NOT DISPLAYING THE NEW DOCUMENT.

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April 2009 Exam Copy Received

We received a copy of the April 2009 Customs Broker Exam this morning and the Wizard just started to work. We will try to post preliminary answers (or whatever we have by then) by the close of business at 5:00 p.m. EST.

April 2009 Exam Needed

Does anyone have time to send a copy of the April 2009 Customs Broker Exam that was given today? The Wizard was hoping to work on it tonight so the preliminary answers could be posted on Tuesday. If you have a copy to send us today before 7:00 EST, please send by fax or email to the following:

Attention: Wizard
FAX: 269-673-5901
EMail: inquiries@boskage.com