TM428C PRELIM EXAM

The following are no sale transactions, except:

• Free consignments, like, gifts, samples and promotional items

• Goods imported on consignments

• Goods imported by intermediaries, who do not purchase the goods and who sell them after importation

• Goods imported by offices that are separate entities

All of the following are conditions under which the buyer and the seller are considered related for customs purposes, except:

• They are officers or directors of one another’s business.

• They are legally recognized partners in business.

• Any person directly or indirectly owns, controls, or holds five percent (5%) or more of the outstanding voting stocks or shares of both seller and buyer.

• They are shareholders in the same company controlling less than five percent of voting stocks.

Which of the following is not an acceptable basis under Method Six?

• The selling price in the Philippines of locally produced goods

• The transaction value of the imported goods

• The computed value determined under Method Five

• The transaction value of identical goods

When multiple sales and agreements to sell occur before goods are exported to the Philippines, the sale for exportation is considered the __________ to the Philippines.

• Original Sale

• Second Sale

• Last Sale

• Sale

A buyer purchases goods from a supplier. The supplier’s owner is a member of the buyer’s family, specifically the buyer’s brother-in-law. According to the criteria for being considered related, what should be concluded regarding the acceptability of the transaction value?

• The transaction value is acceptable because the relationship is by affinity and does not influence the sale.

• The transaction value may be rejected since the buyer and supplier are related by affinity.

• The transaction value is acceptable as long as the buyer can prove that the price was not influenced by their relationship.

• The transaction value may be rejected if the relationship affects the negotiation of the price.

An importer purchases semi-finished goods from a supplier, and the price is established on the condition that the supplier will receive a specified quantity of the finished goods produced from those semi-finished goods. How should this arrangement be treated under the general principle?

• The arrangement is acceptable because the semi-finished goods will ultimately be converted into finished goods.

• The arrangement is unacceptable for customs purposes because the price is contingent upon the production and transfer of unrelated finished goods.

• The arrangement is acceptable if the value of the finished goods can be reasonably estimated at the time of the transaction.

• The arrangement is unacceptable because it introduces extraneous payment conditions that cannot be valued in relation to the imported goods.

A manufacturer sells a batch of imported electronic components to a retailer, stating that the price of the components will vary based on how much the retailer sells them for. What is the implication of this pricing structure in terms of customs valuation?

• The pricing structure is permissible because it reflects the market dynamics of supply and demand.

• The pricing structure is unacceptable for customs purposes as it is based on a condition that cannot be determined until after the sale.

• The pricing structure is acceptable if both parties agree to the terms in writing.

• The pricing structure is unacceptable because it ties the price of the imported goods to the resale price of other goods.

A seller quotes a price for an imported set of imported furniture but states that the price is contingent on the buyer also purchasing a set quantity of home decor items. According to the general principle, how should this pricing arrangement be evaluated for customs purposes?

• The pricing arrangement is acceptable because the buyer can choose whether to purchase the additional items.

• The pricing arrangement is acceptable as long as the additional items are of comparable value to the furniture.

• The pricing arrangement is unacceptable for customs purposes because it is conditional on the purchase of unrelated goods.

• The pricing arrangement is acceptable as long as the buyer is informed of the conditions prior to the sale.

A manufacturer sells agricultural equipment to a farmer, stipulating that the equipment can only be used in certain provinces as per local regulations. This condition is designed to comply with environmental laws. How does this restriction align with the general principle regarding permissible restrictions?

• The restriction is not permissible because it limits the geographic area where the farmer can use the equipment.

• The restriction is permissible as it is imposed by law, which is an acceptable limitation under the general principle.

• The restriction is not permissible because it could potentially diminish the equipment’s value.

• The restriction is permissible since it is required by Philippine authorities to comply with local regulations.

A supplier sells a batch of electronic devices to a retailer in the Philippines but includes a clause in the contract prohibiting the retailer from selling the devices until a specified promotional event takes place. This restriction is intended to align with a marketing strategy. Based on the general principle regarding permissible restrictions, how should this situation be evaluated?

• The restriction is not permissible as it prevents the retailer from disposing of the goods freely, thus violating the general principle.

• The restriction is permissible since it does not affect the value of the goods and is based on a marketing strategy.

• The restriction is permissible because it is a temporary limitation that does not substantially affect the goods’ overall value or use.

• The restriction is not permissible as it limits the retailer’s ability to sell the goods in the marketplace.