A custom house is a government office where duties are collected and where vessels are entered and cleared. Nearly every seaport of consequence has a custom house. So also have important towns near the Canadian and Mexican boundaries.
Duties are of two kinds, specific and ad valorem.
A specific duty is one levied at a specified sum per yard, gallon, ton, etc.
An ad valorem duty is one levied at a certain percentage of the value of the goods, at the port of export.
Tare is an allowance made for the weight of bags, barrels, or cases, in which merchandise is shipped.
Leakage is an allowance made for loss of liquids from casks, barrels, etc., in shipping.
Breakage is an allowance made for the loss of liquids from bottles in shipping.
Example: Find the duty on 4 dozen bottles of cologne, allowing 4% for leakage and 3% for tare. The invoice value is 90 cents a bottle and the duty is 25% ad valorem and 20 cents specific. Find the total cost per bottle.
Work and Explanation:
| Leakage and tare are 4% + 3% = 7%. | ||||||||||||
| 4 dozen bottles = 48 bottles. | ||||||||||||
| The invoice value of 48 bottles is 48 × 90 cents | = | $ | 43 | .20 | ||||||||
| Tare and leakage are 7% of $43.20 | = | 3 | .024 | |||||||||
| Value on which duty is paid | $ | 40 | .176 | |||||||||
| Ad valorem duty is 25% of $40.176 | = | $ | 10 | .044 | ||||||||
| Specific duty is 48 × 20 cents | = | 9 | .60 | |||||||||
| Total duty | $ | 19 | .644 | |||||||||
| The total cost is | ||||||||||||
| Invoice value | $ | 43 | .20 | |||||||||
| Ad valorem duty | 10 | .04 | ||||||||||
| Specific duty | 9 | .60 | ||||||||||
| $ | 62 | .84 | ||||||||||