CLAP CUSTOMS REVIEW AND CENTER FOR PROFESSIONAL

DEVELOPMENT
Room 204, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila / Contacts - Globe: 09063811016 / 09068172757
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2022 CBLE REVIEW ON PRACTICAL COMPUTATIONS – DAY 3

ICC INCOTERMS 2020 (SEC. 415, CMTA) - COMPUTATIONS
By: ENGR. RUBEN C. PEDREZA
CEO / Review Director

TRANSPOSITION : INCOTERMS FORMULAS TRANSPOSITION : INCOTERMS FORMULAS

ILLUSTRATION No.1 ILLUSTRATION No.2
GIVEN: FOB = EXW + O/C GIVEN: CIF = FOB + INS + FRT

b) O/C FIND: a) FOB b) INS c) FRT

FIND: a) EXW
SOLUTION:
SOLUTION:
a) FOB = CIF - (INS + FRT)
a) EXW = FOB - O/C
b) INS = CIF - (FOB + FRT)
b) O/C = FOB - EXW c) FRT = CIF - (FOB + INS)
12
11

TRANSPOSITION : ADDITION / SUBTRACTION TRANSPOSITION : ADDITION / SUBTRACTION

ILLUSTRATION No.3 SOLUTION : ILLUSTRATION No.3

GIVEN: EQ. : CFR = FOB + FRT

Substitute given values
CFR / INV - $ 5,500.00 $ 5,500.00 = FOB + $ 500.00
FRT / BL - $ 500.00 Solving for FOB by TRANSPOSITION

FIND: FOB = $ 5,500.00 - $ 500.00

TOTAL FOB VALUE TOTAL FOB = $ 5,000.00

13 14

Solution :
SUBSTITUTION – Mathematical tool used to CFR = FOB + FRT
substitute a given value for a term in an equation By Substitution :
to reduce 2 unknowns to only 1 unknown. $ 10,500.00 = FOB + 0.05 FOB
Example: $ 10,500.00 = 1.05 FOB

Given : By Transposition, solve for “FOB” :

CFR – $ 10,500.00 $ 10,500.00
FOB =
FRT – 5% of FOB 1.05
Find : FOB = $ 10,000.00
FOB & FRT using the formula : x 0.05
CFR = FOB + FRT FRT - $ 500.00
23

ILLUSTRATION No. 4 ILLUSTRATION No. 5

GIVEN: FOB - $ 10,300.00 FIND: EXW GIVEN:
O/C – 3% of EXW Using the formula:
T otal CIP - $16,800.00
FOB = EXW + O/C
SOLUTION:
by substitution: 3% of EXW T otal FRT - 8% of T OT AL FCA

FOB = EXW + 0.03 EXW T otal INS - 4% of T OT AL FCA

= 1.03 EXW
by transposition: FIND:
$ 10,300.00
EXW = Total Customs Value based on the Formula
1.03
= $10,000.00 CIF = FOB + INS + FRT

Prof. RUBEN C. PEDREZA, CB, EE, MCA

Page 1 of 5
 CLAP CUSTOMS REVIEW AND CENTER FOR PROFESSIONAL
DEVELOPMENT
Room 204, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila / Contacts - Globe: 09063811016 / 09068172757
Email: pedrezasem@gmail.com FB: www.facebook.com/clap.stacruz/

Solution: ILLUSTRATION No. 5

Solution: ILLUSTRATION No. 5
1st Solution :
Formula : CIP = FCA + INS + FRT $ 16,800.00 = FCA + 0.04FCA + 0.08FCA
1) based on the given data, equate “INS” & “FRT” in terms of “FOB”
$ 16,800.00 = 1.12 FCA
a) INS = 0.04 FCA (Gen. cargo ins. rate)
b) FRT = 0.08 FCA (given) By TRANSPOSITION, solve for “FCA”

2) Substitute value of “INS” & “FRT” in terms of FOB in the

CIF formula $ 16,800.00
FCA =
1.12
$ 16,800.00 = FCA + 0.04 FCA + 0.08 FCA
Total FCA = $ 15,000.00
CIF INS FRT

Alternative Solution: ILLUS. No. 5 INCOTERMS 2020

CIP - FRT EXWORKS (EXW)
2nd Solution : FCA =
1.04 COUNTRY OF ORIGIN Carrying Aircraft

Substitute value of “FRT” in terms of “FCA” Carrying Vessel

FRT EXW Sea Frt
Air Freight
(Pre-paid/collect)
(Prepaid or collect)
CIP - 0.08 FOB CUSTOMS
FCA =
1.04
1.04 FCA = CIP - 0.08 FOB
Seller’s warehouse,
1.04 FCA + 0.08 FCA = CIP Port of Shipment at origin
Factory, plant or EXW = COST OF GOODS (Seaport/Airport)
premises
1.12 FCA = $ 16,800.00
DELIVERY : Seller delivers goods at his warehouse, factory, plant and may or may
By transposition, solve for “FCA” not be his premises (not loaded to collecting vehicle provided by buyers)
$ 16,800.00
FCA = N O T E : Importer pays for ocean/air freight charges prior to departure at origin or
1.12 upon arrival of goods at destination. Port to port insurance not included
FCA = $ 15,000.00 in seller’s invoice price. 32
(CV)

INCOTERMS 2020 INCOTERMS 2020

FREE CARRIER (FCA)
COUNTRY OF ORIGIN CARRIAGE PAID TO (CPT)
1 2
Customs COUNTRY OF ORIGIN
FCA FCA 1 2
OR
Customs
CPT CPT
OR

Seller’s warehouse, Carrier Port of Shipment

Factory or plant (airlines/shipping lines/NVOCC) at origin (Seaport/Airport
- Frt collect) Port of Shipment
Seller’s warehouse, Carrier
FCA = EXW + OC (airlines/shipping lines/NVOCC)
at origin (Seaport/Airport
Factory or plant - Frt pre-paid)
DELIVERY : Seller delivers the goods at any of 2 places at origin:
CPT = FCA + O/C
a) seller’s premises loaded to the collecting vehicle provided by the buyer,
or DELIVERY : Seller delivers the goods by handing them over to the custody of the
b) Another named place where goods were handed over to the carrier or carrier or his agent (seller fulfills his obligation to deliver when goods
another person (forwarder) nominated by the buyer ready for unloading are handed over to the carrier and not when the goods reaches the port
from vehicle provided by the seller of destination)
N O T E : Importer pays for ocean/air freight charges upon arrival of goods at destination.
Port to port insurance not included in seller’s invoice price.
N O T E : Seller pays for ocean/air charges prior to departure at origin. Port to port
34
insurance not included in seller’s invoice price. 36

INCOTERMS 2020 INCOT R S 2 2

CARRIAGE & INSURANCE PAID TO (CIP)
COUNTRY OF ORIGIN
Seller port anu acturer,
CO NTR OF ORI IN
1 onsignor a S b S
2 ustoms
Customs
CIP CIP
OR

Port of Shipment
Seller’s warehouse, Carrier Seller s warehouse, actory,
at origin (Seaport/Airport Pier
Factory or plant (airlines/shipping lines/NVOCC) plant or premises
- Frt pre-paid) S rt ollect
CIP = CPT + INS
DELIVERY : Seller delivers the goods by handing them over to the custody of the Seller delivers goods at any o points at seaport o shipment
carrier or his agent (seller fulfills his obligation to deliver when a. at the port side o carrying vessel on board arriving delivery vehicle, not
goods are handed over to the carrier and not when the goods unloaded
reaches the port of destination) b. at the starboard side o carrying vessel or on board a barge lighter, ready or
loading on board the vessel
N O T E : Seller pays for ocean/air freight charges prior to departure at origin. Port mporter pays or ocean reight charges upon arrival o goods at destination. Port
to port insurance included in seller’s invoice price. 38 to port insurance not included in seller s invoice price.

Prof. RUBEN C. PEDREZA, CB, EE, MCA

Page 2 of 5
 CLAP CUSTOMS REVIEW AND CENTER FOR PROFESSIONAL
DEVELOPMENT
Room 204, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila / Contacts - Globe: 09063811016 / 09068172757
Email: pedrezasem@gmail.com FB: www.facebook.com/clap.stacruz/

INCOT R S 2 2 INCOTERMS 2020

COST & FREIGHT (CFR)
CO NTR OF ORI IN COUNTRY OF ORIGIN
B CFR
(Frt. Pre-Paid)
rt. ollect
S S CUSTOMS

Seller s warehouse, Seller’s warehouse, Seaport at origin

Port o Shipment at origin Seaport at origin Factory, plant or premises
Port of Shipment at origin
actory, plant or premises
CFR = FOB + FRT
B DELIVERY : Seller delivers goods on board carrying vessel at port of shipment
(seller fulfills his obligation to deliver when goods are loaded on
Seller delivers goods on board carrying vessel at seaport o shipment
board the vessel and not when the goods reaches the port of
destination)
mporter pays or ocean reight charges upon arrival o goods at
destination. Port to port insurance not included in seller s invoice price. N O T E : Seller pays for ocean freight charges prior to departure at origin. Port to port
53
insurance not included in seller’s invoice price.

INCOTERMS 2020
INCOTERMS 2020
COST, INSURANCE & FREIGHT (CIF) DELIVERED AT PLACE (DAP)
Co unt ry o f De st inat io n
COUNTRY OF ORIGIN Arriving aircraft
CIF
(Frt. Pre-Paid) Customs
CUSTOMS DAP

Buyer’s warehouse
Seller’s warehouse, Arriving vessel Port of Destination1 / Designated place
Port of Shipment at origin Seaport at origin
Factory, plant or premises DAP = FOB/FCA + FRT + Dest. O/C
CIF = FOB + INS + FRT
DELIVERY : elivers goods at buyer’s warehouse or designated place ready or unloading rom arriving
DELIVERY : Seller delivers goods on board carrying vessel at port of shipment vehicle provided by him
(seller fulfills his obligation to deliver when goods are loaded on board N O T E : Seller pays for ocean/air freight charges prior to departure at origin. Port to port insurance
the vessel and not when the goods reaches the port of destination) not included in seller’s invoice price.
Seller pays destination inland reight charges up to buyer’s warehouse.
N O T E : Seller pays for ocean freight charges prior to departure at origin. Port to Buyer pays import duties/taxes, import clearing expenses including expenses for
44
port insurance included in seller’s invoice price. 55 unloading of goods from arriving delivery vehicle.

INCOTERMS 2020 INCOTERMS 2020

DELIVERED AT PLACE UNLOADED (DPU) DELIVERED DUTY PAID (DDP)
Country of Destination Country of Destination
Arriving aircraft (Frt. Pre-paid)
Arriving aircraft DPU Customs
(Frt. Pre-paid) Customs DDP

Buyer’s warehouse
Buyer’s warehouse Arriving Vessel (Frt. Pre-paid) Port of Destination Designated place
Arriving Vessel (Frt. Pre-paid) Port of Destination Designated place
DDP = FOB/FCA + FRT + Dest. O/C
DPU = FOB/FCA + FRT + Dest. O/C DELIVERY : Seller delivers goods at buyer’s warehouse or designated place ready or unloading rom
DELIVERY : Seller delivers goods at buyer’s warehouse or designated place. vehicle provided by him.
N O T E : Seller pays for ocean/air freight charges prior to departure at origin. Port to port insurance
N O T E : Seller pays for ocean/air freight charges prior to departure at origin. Port to port insurance not included in seller’s invoice price.
not included in seller’s invoice price.
Seller pays destination inland reight charges up to buyer’s warehouse e cluding
Seller pays destination inland reight charges up to buyer’s warehouse including expenses for unloading of goods from arriving delivery vehicle.
expenses for unloading of goods from arriving delivery vehicle. Seller pays import duties/taxes and import clearing expenses.
48

Buyer pays import duties/taxes and import clearing expenses. 46

SUMMARY OF INCOTERMS FORMULAS INCOTERMS FORMULAS

(Originally conceptualized &derived by Engr. R. Pedreza) 8) FCA = EXW + O/C
1) EXW = FOB/FCA - O/C 9) FCA = CPT - FRT
2) EXW = CFR/CPT - (O/C + FRT) 10) FCA = CIP - (INS + FRT)
3) EXW = CIF/CIP - (O/C + INS + FRT)

4) FAS = EXW + O/C 11) CFR = FOB + FRT

5) FOB = EXW + O/C 12) CFR = EXW + O/C + FRT

6) FOB = CFR - FRT
13) CFR = CIF - INS
7) FOB = CIF - (INS + FRT)

Prof. RUBEN C. PEDREZA, CB, EE, MCA

Page 3 of 5
 CLAP CUSTOMS REVIEW AND CENTER FOR PROFESSIONAL
DEVELOPMENT
Room 204, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila / Contacts - Globe: 09063811016 / 09068172757
Email: pedrezasem@gmail.com FB: www.facebook.com/clap.stacruz/

INCOTERMS FORMULAS INCOTERMS FORMULAS

14) CPT = FCA + FRT
15) CPT = EXW + O/C + FRT
20) CIP = FCA + INS + FRT
16) CPT = CIP - INS
21) CIP = EXW + O/C + INS + FRT

17) CIF = FOB + INS + FRT

22) CIP = CPT + INS
18) CIF = EXW + O/C + INS + FRT

19) CIF = CFR + INS

INCOTERMS FORMULAS Determination of Customs Value

24) DAP/DPU/DDP = EXW + Origin O/C + FRT + Dest. O/C

23) DAP/DPU/DDP = FOB/FCA + FRT + Dest. O/C

To determine the CUSTOMS VALUE
of imported goods for assessment
25) DAP/DPU/DDP = CFR/CPT + Dest. O/C
purposes it is equal to the FOB
Note: value or Cost of Goods as
1) Shipments by AIR/SEA – use EXW, FCA and CPT contemplated in CMO 20-2004.
2) Shipments by SEA ONLY – use EXW, FOB and CFR

DETERMINATION OF OTHER CHARGES (O/C)

Under the provisions of CMO 43-93, whenever the

other dutiable charges are not indicated as a separate
value in the invoice, the said charges are already
deemed included in the FOB value. (FOB = EXW + O/C)

On the other hand, whenever the other charges are

indicated in the invoice price as a separate value, the
Exw value is adopted as the customs value while the
other charges shall be indicated as a separate
component of the dutiable value.
(DV = EXW + O/C + FRT + INS) 38

Prof. RUBEN C. PEDREZA, CB, EE, MCA

Page 4 of 5
 CLAP CUSTOMS REVIEW AND CENTER FOR PROFESSIONAL
DEVELOPMENT
Room 204, 2nd Floor, Manuel F. Tiaoqui Bldg., Plaza Sta. Cruz, Manila / Contacts - Globe: 09063811016 / 09068172757
Email: pedrezasem@gmail.com FB: www.facebook.com/clap.stacruz/

Prof. RUBEN C. PEDREZA, CB, EE, MCA

Page 5 of 5