BOC sets out rules on import clearance for consumption entries

A new regulation covering customs clearance of all imports entered for consumption through a formal entry process was recently issued by the Bureau of Customs (BOC).

Customs Administrative Order (CAO) 09-2020 applies to all imports covered by goods declaration for consumption through a formal entry process, whether or not subject to duties and taxes.

The new order, which implements relevant sections of the Customs Modernization and Tariff Act (CMTA), was signed on February 20 by Customs commissioner Rey Leonardo Guerrero and on March 6 by Finance Secretary Carlos Dominguez III, but was just recently posted on the BOC website. It takes effect 30 days after publication in a newspaper of general circulation or the Official Gazette.

According to CAO 09-2020, all goods imported into the Philippines should be entered through a customs office at a port of entry, or may be admitted to or removed from a Free zone, as the case may be.

Imported goods are deemed “entered” in the Philippines for consumption when the goods declaration is electronically lodged, together with any required supporting documents in the BOC electronic cargo clearance system portal.

All goods—including those previously exported from the Philippines—when imported into the Philippines are subject to duty and tax.

However, there are goods exempt from duties and taxes, including:

• Conditionally tax and/or duty-exempt importations under Section 800, Chapter 1, Title VIII of the CMTA
• De minimis importations
• Relief consignments
• Importations under the customs bonded warehousing system
• Goods for admission to Free zones
• Stores under Sections 818 to 821 of the CMTA
• Goods granted exemption privileges under other laws

Except those considered as conditionally tax and/or duty-exempt importations, all importations by  the government for its own use or that of its subordinate branches or instrumentalities, or corporations, agencies owned or controlled, are subject to duties, taxes, fees, and other charges.

According to CAO 09-2020, owners of imported goods are the consignee; holder of the negotiable bill of lading (B/L), air waybill (AWB), or other equivalent transport document if duly endorsed by the consignee therein or if consigned to order, duly endorsed by the consignor; and underwriters of abandoned goods and salvors of goods saved from wreck at sea, coast, or in any area of the Philippines.

Unless relieved by laws and regulations, the importer or owner is liable for duties, taxes, and fees and other charges plus interests, if any, due for each importation. Such liability constitutes a personal debt of the importer or owner to the government and will be discharged only upon full payment. It also constitutes a lien on the imported foods which may be enforced while such goods are under customs custody.

To enhance customs control and support cost-effective customs operations geared towards a paperless customs environment, BOC should, after consultation with directly affected parties and stakeholders, develop and implement an information and communications technology-enabled customs cargo clearance system based on international standards. Towards this end, BOC should communicate, exchange, and process trade- and logistics-related information in the national and international level through the National Single Window facility “for the efficient and prompt clearance of goods and commodities in a technology-neutral and secured infrastructure for business, industries, and government.”

No entry of imported goods is allowed unless the goods declaration has been lodged with BOC. All goods declaration must be lodged through BOC’s portal, which allows the declarant to accomplish, submit, and register goods declaration online at anytime and anywhere following a prescribed format.

Section 408, a new provision under the CMTA, allows the electronic lodgment of goods declaration at a designated office other than the port of entry, according to the book “Understanding International Trade, Tariff and Customs” authored by former BOC deputy commissioner Atty. Agaton Teodoro Uvero.

Under CAO 09-2020, BOC must also accept electronic documents, permits, licenses, or certificates, which should have legal effect, validity and enforceability as any other document or legal writing. This is a new provision (Section 109) under the CMTA that legally mandates BOC to accept electronic documents and to recognize their legal effect, validity and enforceability as an alternative to paper-based documentary requirements.

The declarant is responsible for the accuracy of the goods declaration and for paying all duties, taxes, and other charges due on the imported goods.

A declarant is any person who makes goods declaration or in whose name a goods declaration is made, and may be:

• The importer
• A customs broker acting under the authority of the importer or from a holder of the bill
• A person duly empowered to act as agent or attorney-in-fact for each holder of the bill consistent with international standards and customs best practices

The customs broker is responsible for the accuracy of the goods declaration but not for payment of duties, taxes, and other charges due on the imported goods.

The declarant should sign the goods declaration, even when assisted by a customs broker, who should likewise sign the goods declaration.

Goods declaration must be lodged within 15 calendar days (previously 30 days under the Tariff and Code of the Philippines) from the date of discharge of the last package from the vessel or aircraft. BOC should also develop a facility to enable the lodgment and clearance of goods declaration prior to the arrival of the goods. This, according to Uvero’s book, complies with Section 409 that allows advance lodgment and clearance of goods. At present, BOC allows the advance filing of goods declaration even prior to the arrival of the goods.

Provisional goods declaration, another new provision (Section 403) under the CMTA, may also be allowed in order to facilitate trade and to prevent goods from being declared abandoned.

CAO 09-2020 likewise implements the methods of valuation under Sections 700 to 708 of the CMTA, which while substantially based on the old rules, are now provided in seven sections unlike the old rules which are provided in only a single section.

Examination of goods, when required by BOC, will be conducted immediately after the goods declaration has been lodged.

The cost of examination is for the account of the importer. All expenses incurred by BOC for the handling or storage of goods and other necessary operations is chargeable against the goods, and must constitute a lien thereon.

On assessment, BOC will issue the final assessment notice (FAN) to the importer signifying that the assessment is complete. Assessment is deemed final 15 calendar days after receipt of the FAN by the owner, importer, or consignee.

Subject to existing laws and rules on foreign currency exchange, the international accepted standards and practices on the mode of payment or remittance covering import transactions should be recognized, in compliance with a new provision (Section 415) of the CMTA. These standards include those developed by the International Chamber of Commerce on International Commercial Terms and on international letter of credit such as the Uniform Customs and Practice for Documentary Credits.

Unpaid duties, taxes, and other charges will incur a legal interest of 20% per annum computed from the date of final assessment when payment becomes due and demandable. The legal interest will likewise accrue on any fine or penalty imposed. These are new policies introduced in the CMTA.

Any person who makes or attempts to lodge, process, and clear imported goods by means of false or fraudulent statements, including non-disclosure in the Revised SDV Form in the existence of any relationship with the buyer and the seller and payment of other costs that should be included in the price paid or payable of the imported goods, is subject to sanctions and penalties provided under the CMTA and other applicable penal provisions. – Roumina Pablo