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Sign inApril 2026 · Q75 · Valuation & Duty
A formula price is still a price actually paid or payable
Explain that when a foreign subsidiary sells ore to its U.S. parent at the New York Mercantile Exchange (NYMEX) ore price on the date the ore arrives in the United States, that agreed formula can produce the price actually paid or payable under 19 CFR 152.103(a)(1), because the price is considered without regard to its method of derivation and may be arrived at by applying a formula; the amount need not be known at the time of shipment. Recognize the boundary: the formula settles only how the price is derived. Because the buyer and seller are related, transaction value is still acceptable only if the relationship did not influence the price under an examination of the circumstances of sale, or the value closely approximates a test value, and the other 152.103(j)(1) limitations are also met. A formula is not an automatic related-party safe harbor and does not make transaction value acceptable in every subsidiary sale.
What you will learn
Explain that when a foreign subsidiary sells ore to its U.S. parent at the New York Mercantile Exchange (NYMEX) ore price on the date the ore arrives in the United States, that agreed formula can produce the price actually paid or payable under 19 CFR 152.103(a)(1), because the price is considered without regard to its method of derivation and may be arrived at by applying a formula; the amount need not be known at the time of shipment. Recognize the boundary: the formula settles only how the price is derived. Because the buyer and seller are related, transaction value is still acceptable only if the relationship did not influence the price under an examination of the circumstances of sale, or the value closely approximates a test value, and the other 152.103(j)(1) limitations are also met. A formula is not an automatic related-party safe harbor and does not make transaction value acceptable in every subsidiary sale.
19 CFR 152.103(a)(1) Price actually paid or payable – General; 19 CFR 152.103(j)(1) Limitations on use of transaction value – In general; 19 CFR 152.103(j)(2)(i) Related person transactions; 19 CFR 152.103(k)(2) Restrictions and conditions on sale; 19 CFR 152.103(l)(1) Related buyer and seller – Validation of transaction, with interpretative note 2; 19 CFR 152.103(l)(2)(i) Test values · Exam cover: HTSUS 2025 Basic Edition, no supplements; 19 CFR cover 'Revised as of January 1, 2024'. Actual GovInfo annual edition file used here is revised as of April 1, 2024 (2024-04-01); disclosed, not relabeled as January 1.
Explained using the historical edition for this exam.