Posted: June 23rd, 2015

Customs Classification and Valuation: Peanut Butter and Jelly Swirl from China.

Customs Classification and Valuation: Peanut Butter and Jelly Swirl from China.

1.    Fast Food, Inc. (FF)
a.    Produces lines of food that can be spread on bread for meals which are “quick, easy and nutritious”
b.    Peanut butter and Jelly swirl
i.    Costs $.55 to produce/kg.
c.    Plant on US west coast, but exclusive of any import duties.
d.    Executives
i.    Want supplies at less than $.55/kg.
2.    Double Happiness
a.    Chinese company which produces PB&J swirl in China for export.
b.    Proposed that it seeks to sell the PB&J combination to FF for resale in US market.
c.    Three alternatives
i.    1st
1.    Small amounts price is $.50/kg – CIF
2.    Orders over 250 metric tons price is $.40/kg – CIF
ii.    2nd
1.    Small order $.40 FOB Hong Kong
2.    Orders over 250 metric tons – $.30 FOB Hong Kong
a.    Freight and insurance costs from Hong Kong to US are estimated to be $.10/kg.
iii.    Third
1.    Double Happiness would establish sales office in US and would sell from that office for FF for $.50 (or $.40)/kg, plus any import duties assessed by US Customs.

Answer the following questions:

1.    Classify the product that FF is importing from China.
2.    What is the origin of the product if peanuts come from Philippines?
3.    What would be the valuation of the product? Come up with different options.

Your answers must be emailed to me by 11:59 pm on Wednesday (June 24, 2015)

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