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New rules on customs treatment of vessel stores take effect in Aug

  • The Bureau of Customs is set to implement an order which provides rules on the customs treatment of different types of stores for international vessels and aircraft
  • Under Customs Administrative Order 03-2021, customs treatment of stores should be uniformly applied, regardless of the country of registration or ownership of vessels or aircraft
  • CAO 03-2021 takes effect 30 days from its July 14 publication

The Bureau of Customs (BOC) will implement next month an order on the customs treatment of different types of stores for international vessels and aircraft.

Customs Administrative Order (CAO) No. 03-2021 aims to expedite clearance and delivery of stores. It also seeks to establish an ICT-enabled store inventory monitoring system, institute appropriate measures to prevent the unauthorized use of stores, and uniformly implement exemption from duties and taxes of stores regardless of the country of registration or ownership of vessels or aircraft.

The order takes effect 30 days after its publication last July 14.

CAO 03-2021 implements Chapter 4 (Sections 818 to 821) of the Customs Modernization and Tariff Act (CMTA).

There are two types of stores—stores for consumption and stores to be taken away.

Stores for consumption are goods intended for use by passengers and the crew on board vessels, aircraft, or trains, whether or not sold; and goods needed to operate and maintain vessels, aircraft or trains, including fuel and lubricants but excluding spare parts and equipment.

Stores to be taken away, meanwhile, include goods for sale to passengers and crew of vessels and aircraft with a view to being landed.

CAO-covered stores

CAO 03-2021 covers the following:

  • Stores for use or consumption by the passenger and crew on board vessels or aircraft engaged in foreign trade, whether or not sold;
  • Stores carried by vessels or aircraft docking or landing at one or more ports or airports in the customs territory, for use or consumption on board during the stay of said vessels or aircraft at such intermediate ports or airports and during her voyage or its flights between such ports or airports, or while the vessel is undergoing repairs in a dock or shipyard;
  • Stores for sale to the passengers and crew of vessels or aircraft with a view to being landed, which are either on board upon arrival or are taken on board during the stay in the customs territory of vessels or aircraft used, or intended to be used, in international traffic for the transport of persons for remuneration or for the industrial or commercial transport of goods, whether or not for remuneration;
  • Supplies which are necessary for vessels or aircraft in their voyage or its flight outside the Philippines, including those goods transferred from a customs bonded warehouse (CBW) to an aircraft or vessel.

Under CAO 03-2021, customs treatment of stores should apply uniformly, regardless of the country of registration or ownership of vessels or aircraft. BOC should devise a uniform format for the store list to be provided by the airline or shipping line operators upon entry and departure of the vessel or aircraft.

Stores classified as regulated goods must comply with requirements of the concerned regulatory agency. Prohibited goods and restricted goods will not be allowed as stores.

All transfers of stores to another vessel or aircraft assigned to an international route should be covered by a transfer note. Also commonly referred to as boat note, a transfer note is a document that accompanies the transfer of stores and serves as a proof of delivery or receipt of the articles at its intended destination duly acknowledged on its face by the customs officer.

Tax and duties exemption

Stores exempt from duties and taxes are:

  • Stores which are carried in a vessel or aircraft arriving in the customs territory provided that they remain on board.
  • Stores for consumption by the passengers and the crew imported as provisions on international express vessels or aircraft, provided such goods are purchased only in the countries crossed by the vessels and aircraft, and any duties and taxes chargeable on such goods are paid in the country where they were purchased.
  • Stores necessary for the operation and maintenance of vessels or aircraft which are on board these means of transport while in the customs territory, provided they remain on board while in the customs territory.
  • Stores for use during the stay of a vessel in the customs territory in such quantities as the customs territory deems reasonable with due regard to the number of passengers and the crew and to the length of the stay of the vessel or aircraft in the customs territory.
  • Stores for use by the crew while the vessel is undergoing repairs in a dock or shipyard, provided that, during the duration of stay in a dock or shipyard is considered reasonable.

Conditionally free importations

Meanwhile, conditionally free importations by persons engaged in international shipping or air transport operations include supplies for use or consumption of the passengers or its crew on board the vessel or aircraft as sea or air stores in its voyage or flight outside the Philippines, including goods transferred from a CBW in any customs district to any vessel or aircraft engaged in foreign trade; and goods purchased abroad for sale on board a vessel or aircraft as saloon stores or air store supplies.

Any surplus or excess of such vessel or aircraft supplies arriving from foreign ports or airports will be dutiable.

Conditionallyfree importations made by Philippine-registered or foreign shipping lines or airlines engaged in international operations which do not operate a CBW may be exempt from payment of duties and taxes provided a tax exemption indorsement (TEI) together with other documentary requirements are filed with BOC.

Conditionally free importations made by Philippine-registered or foreign shipping lines or airlines engaged in international operations that operate a CBW will no longer require a TEI.

Stores unconsumed by the passengers of vessels or aircraft during the voyage or flight will be returned to the CBW for inventory and/or final exportation. Unconsumed stores remaining in the CBW beyond the period prescribed for storage will be deemed abandoned and be disposed of.

An ICT-enabled system should be established and maintained by the operator of the CBW and be made accessible online to customs officers for customs control.

Penalties for violations

Violations against CAO 03-2021 committed by any person, officer, or employee will be penalized in accordance with the CMTA and other applicable penal provisions.

For breaking of seal placed by a customs officer in any vessel or aircraft or its compartment, box, trunk, or other package of goods on board, the owner, operator, or agent of the vessel or aircraft will be liable with the following fines:

  • First offense – P100,000 for each broken or destroyed seal
  • Second offense – P200,000 for each broken or destroyed sea
  • Third offense or more – P300,000 for each broken or destroyed seal

Breaking of lock or fastening placed by a customs officer in a part of the vessel or aircraft will mean a fine of P300,000 per broken or destroyed lock or fastening device. Lastly, the unauthorized breaking of seals in stores in CBWs comes with a fine of P300,000 for each broken or removed customs seal or other fastening or mark.

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