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Atty. Agaton Uvero THE Bureau of Customs (BOC) is now implementing the Bulk and Break Bulk Cargo Clearance Enhancement Program (BBBCCEP) as provided under Customs Administrative Order (CAO) No. 3-2010 and Customs Memorandum Order (CMO) No. 18-2010.

The program requires bulk and break bulk importers to secure a Load Port Survey (LPS) report. Failure to secure such report will result in administrative penalties on the part of the importer. In addition, the importer will have to request for the conduct of a Discharge Port Survey (DPS) upon arrival of the shipment.

Bulk and Break Bulk Cargo

Bulk cargo generally refers to cargoes in a mass of one commodity not packaged, bundled, bottled or otherwise packed; those cargoes (dry or liquid) which are loaded (shoveled, scooped, forked, mechanically conveyed or pumped) in volume directly into a vessel’s hold or cargo that is unbound as loaded; without count in a loose unpackaged form. Shipments of commodities (e.g. corn, wheat) and petroleum products fall within this category.

Break-bulk cargo, on the other hand, refers to non-containerized cargo grouped or consolidated for shipment and broken down, sub-divided into unitized cargo such as in pallets or packed in bags, boxes or other individual units to be loaded into or discharged from vessels. These cargoes loaded individually and described in terms of quantity and weight, (e.g. steel coils, logs, sacks of rice) and not in shipping containers nor in bulk as with oil or grain.

Coverage

CAO 3-2010 and CMO 18-2010 are not very clear on the exact coverage of the program. This early, the private industry has already raised concerns and requested customs to exempt certain importations from coverage of the program.

Citing serious administrative constraints and operational impossibilities, the private sector has requested BOC to suspend the application of the program on the following:

  1. airfreight shipments
  2. imported completely built-up units (CBUs)
  3. transit cargos bound for PEZA zones

Presently, no cargo survey system is implemented in international airports worldwide. To require a DPS report on all airfreight shipments at NAIA will be administratively impossible.

On the other hand, PEZA zones are considered ‘non-customs territory’ and transit cargo bound for PEZA zones are not subject to taxes and duties. Further, the customs control system for such cargo is effectively implemented post importation through the monitoring and liquidation of exported cargoes.

In the case of CBU vehicles, these are imported as finished products not subject to further packing and are assessed duties and taxes based on value regardless of weight. In contrast, duties and taxes for bulk cargo (e.g. wood, steel, coal, grains, etc.) are determined by weight.

Industry leaders have already requested the Office of the President to expressly provide exemption on these importations.

No Load Port Survey (LPS)

Cargo surveying of bulk and break-bulk cargo involves the inspection, analysis and computation of bulk or break-bulk cargo at the Port of Loading. The main purpose of surveying is to confirm and verify the quantity and quality of the shipment in relation to the goods specifications agreed upon between the buyer and the seller. Surveying confirms the agreements and provides support for the final settlement of the price as agreed between the parties. Cargo surveying is performed by third parties accredited by the Philippine government.

From a customs perspective, an LPS report serves as supporting basis for determining the correct dutiable weight, quantity, description of goods in tariff terms, and/or cargo make or quality. The report is submitted to customs to support the declarations made upon importation.

For shipments not covered by an LPS report, the same shall be treated as high-risk shipments and subject to customs under guarding until such time that a DPS is conducted and a DPS report is submitted to customs.

The author is the legal director of AFPI, PISFA and PUC. He is a lecturer on logistics, indirect tax and customs, and a trainor of Ateneo Graduate School and BayanTrade Academy on International Supply Chain Management. Please contact agatonuvero@yahoo.com for your comments.

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