BOC issues revised rules on operation of CBWs

• Customs Memorandum Order No. 03-2022 spells out revised rules on the establishment, supervision, operation, and control of customs bonded warehouses

• The order implements amended guidelines on CBWs under Customs Administrative Order 01-2022

• It institutes a full compliance regime for CBW operations and provides sanctions for violations

• It also implements an IT-enabled CBW management system

The Bureau of Customs has issued revised regulations on the establishment, supervision, operation and control of customs bonded warehouses (CBW).

Customs Memorandum Order (CMO) No. 03-2022, dated March 3, 2022, implements Customs Administrative Order (CAO) 01-2022 dated February 10, 2022, which provides amended guidelines on the establishment, operation, supervision and control of CBWs.

CMO 03-2022 provides procedures for the establishment of CBWs and their operations, and institutes a full compliance regime for CBW operations and provides sanctions for violations.

The order takes effect 15 days after its publication in a newspaper of general circulation.

The order also implements an IT-enabled CBW management system and details accountabilities of BOC personnel assigned to CBW and CBW operators, including client-exporters.

A CBW refers to a warehouse authorized by the BOC to import, receive, and store goods or materials either for manufacture into finished products for export or storage. Only the BOC is authorized and responsible for the licensing of all CBWs. These warehouses are considered as extension of customs premises concerning the dutiable goods stored thereat for the protection of government revenue.

Under CMO 03-2022, goods for transfer to CBWs is subject to mandatory non-intrusive inspection at the port of discharge whether covered by a goods declaration for warehousing (WSAD) or goods declaration for transit (TSAD).

Unless the goods entered for warehousing are placed under alert order or selected for physical or non-intrusive examination, the district collector should allow the immediate transfer of bonded goods to these CBWs where 100% physical examination will be conducted.

Goods entered for warehousing may remain in a CBW for a maximum period of one year from the time of arrival at the warehouse, whether covered by a WSAD or TSAD.

For customs common bonded warehouses (CCBW), reckoning of the storage period starts from the arrival of goods at the mother warehouse. For perishable goods, the storage period will be three months from the date of arrival at the warehouse, extendible for another three months with valid reason and upon written request.

CMO 03-2022 provides that importations to CBWs should be made within the limits of the warehouses’ respective authority/license, as applied for and approved. Goods not authorized for importation under warehousing or in excess of the volume and quantity allowed under the CBWs’ license will be subject to payment of duties and taxes.

Except when goods are intended for use as a component in the manufacture/production of another finished product for export as approved by the Customs Bonded Warehouse Committee (CBWC), no importation of finished goods for warehousing will be allowed, according to the order.

Restricted and regulated goods without the corresponding clearance and/or import authority duly issued by a competent authority will be subject to seizure and forfeiture proceedings.

No withdrawals for domestic consumption will be allowed, except upon approval by the district collector, as recommended by the operating division and only upon payment of the corresponding duties and taxes. Such withdrawal for local sales/domestic sales should not exceed 30% to the total volume of bonded raw materials transferred to the CBW for the year. The prohibition on the threshold limit for local sales, however, will not apply to private customs bonded warehouses.

A manufacturing customs bonded warehouse operator or accredited member may, on account of insufficiency of operational facilities or a lack of material time to meet export commitment, withdraw the bonded goods without payment of duty and/or tax and sub-contract the processing thereof, subject to approval of the district collector and certain guidelines under CMO 03-2022.

Importation by industry-specific customs bonded warehouses of fibers, yards, fabrics, and accessories for the manufacture of garments will not be allowed.

A CBW operator must apply for an Authority to Operate with the collection district that has jurisdiction over the area where the proposed CBW is located.

The Authority to Operate a CBW is valid for three years counted from the date of its approval.

If the lease contract submitted during the application is less than three years, the validity of the authority to operate will be coterminous with the lease contract, unless a new one with a longer period is submitted.

Validity of extension warehouses, additional facilities, subcontractors, and membership to CCBWs will be coterminous with the validity of the authority to operate the main CBW.
The application for renewal of authority to operate should be filed not later than 90 days but not earlier than 120 days before its expiration.

BOC will impose an annual warehousing supervision fee, service fee, and other charges on the operation of CBWs, including its extension, accreditation of members and additional facilities, if any.

The Customs commissioner may order the audit and inspection of CBWs by the Warehousing Monitoring and Audit Unit of the Post-Clearance Audit Group based on certain grounds, including, among others, derogatory report/information, as a prerequisite to the renewal of the license to operate, or as a referral by the district collector or operating divisions.

CMO 03-2022 states that the Warehouse Coordination Division should ensure that rules and regulations are properly implemented through the effective coordination, evaluation, supervision, and monitoring of warehousing operations/activities, including liquidation of bonded goods and subsequent bond cancellation.

The order repeals other inconsistent CMOs and issuances. – Roumina Pablo