Penalty rules for import statement errors consolidated by BOC

The Bureau of Customs (BOC) has amended and consolidated guidelines and procedures for imposing penalties on importers and customs brokers after post-entry audit shows they committed errors in their statements on import transactions.

Under Customs Administrative Order No. 03-2015, failure to pay correct duties and taxes for imported goods merits penalties with three degrees of culpability—negligence, gross negligence, and fraud. The seriousness of the infraction may be mitigated or aggravated by available evidence.

Negligence is defined as the failure to take measures to ensure the completeness, accuracy, and correctness of the information and statements made in import-related documents as to result in deficiency, and as the failure to ensure compliance with requirement. Negligence is punishable with not less than one-half but not more than two times the revenue loss.

Gross negligence, on the other hand, is when a deficiency results from acts of emission done with actual knowledge, wanton disregard for, or indifference to the relevant facts. It has a fine equivalent to not less than 2 ½ but not more than four times the revenue loss.

Fraud, meanwhile, occurs when the false statement or act was committed or omitted knowingly, voluntarily, and intentionally, as established by clear and convincing evidence. Fraud is fined with not less than five times but not more than eight times the revenue loss.

Except in cases of fraud, the Customs commissioner has the power, under the Tariff and Customs Code of the Philippines (TCCP) and with the approval of the finance secretary, to compromise the imposition of the fine when the importer makes a voluntary and full disclosure of the deficiency before the audit.

The decision made by the Customs commissioner may be appealed before the Court of Tax Appeals according to Section 4202 of the TCCP.

The CAO also noted that any person who fails to maintain all required records will be levied an administrative fine equivalent to 20% ad valorem on the article or subject of the importations for which no records were kept. Moreover, delivery or release of subsequent articles will be put on hold as punishment.

Aside from administrative sanctions, an erring importer or customs broker may be slapped with criminal prosecution under Sections 3601, 3602, 3610, 3611, or other pertinent sections of the TCCP.

Meanwhile, some instances could mitigate the culpability of an erring customs broker or importer. These include times when the government is contributory to the error; cooperation of the importer throughout the post-entry audit process that transcends mere submission of required documents or mere grant of access to documents; corrective action immediately taken by the importer to address the issue; payment of deficiency duties immediately after being notified; and absence of any prior violation of the TCCP and related rules and regulations.

Aggravating circumstances, on the other hand, include the unexplained delayed compliance or total noncompliance with the demand to produce documents, obstructing or delaying administrative proceeding, and prior violation of the TCCP and other related rules and regulations.

CAO 03-2015 amends and consolidates the rules and procedures on imposing penalties under Section III of Customs Memorandum Order No. 01-2002, Section V of CMO 02-2002, and Section VI of CAO 05-2001, as amended by Section VI of CAO 04-2004.

In January last year, BOC’s post-entry audit unit was abolished and transferred to its mother agency, the Department of Finance, under a new office called Fiscal Intelligence Unit.

Recently, BOC released a codified list of all regulated imports as well as detailed information about the procedures for acquiring permits from regulating agencies. The codified list, which was previously non-existent, will be BOC’s basis in processing regulated imports starting April 20. There was no clear list before this that led to requiring additional and often unnecessary documents from applicants. – Roumina Pablo

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