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FOR many years and until the present, the management of customs operations – releasing goods from customs custody – has always been outsourced to customs brokerage firms or logistics companies. For importers, customs operation has always been considered from a logistics perspective and not from a compliance perspective.

The advent of the post-entry audit and the recent issuance by customs of Audit Notification Letters (ANLs) to numerous companies has brought about concerns on the level of compliance of importers and the level of technical competence of customs brokers. A lot of times, importers are faced with difficult issues with customs and customs brokers are required to handle the same. While some of the problems may be resolved through the normal procedures, a lot of times the problem may result in serious concerns that may end in the seizure or forfeiture of the imported articles.

On many occasions, we have seen how the problem of the importer, while complicated as it is, has been exacerbated by the lack of technical competence of the customs broker staff not only in analyzing the problem but also in finding the correct remedy to solve the particular concern. As a result of mismanagement of customs issues, we regularly see importers transferring from their existing customs broker to another broker.

We have outlined below some of the basic administrative procedures that customs brokers and importers normally avail to resolve customs issues.

Customs Administrative Procedures. In general, customs administrative procedures refer to laws, rules and regulations applicable to customs cases and issues and may be categorized as follows:

  1. Abandonment
  2. Valuation and Classification Disputes
  3. Protest and Payment under Protest
  4. Seizure and Forfeiture
  5. Additional Assessment
  6. Compliance Audit

Abandonment Proceeding. Under Section 1801 of the Tariff and Customs Code of the Philippines (TCCP), there are three instances of abandonment:

  1. When there is express and written notice to abandon from the importer;
  2. When there is failure to file entry within 30 days from discharge from the vessel; and
  3. When there is failure to claim the importation after the filing of an import entry within 15 days from date of posting of Notice to Claim such importation.

When a shipment is declared “abandoned” by customs, a common remedy is to file a request to lift the order of abandonment on any of the following grounds: (1) 30 days has not lapsed (30th day is a non-working day); (2) there is lack of notice of abandonment; and (3) there is lack of Notice to Claim the importation.

A preventive measure for the importer is to file a written notice with the District Collector of the importer’s intent to file entry and release goods prior to the lapse of the 30-day period. A word of caution though – some ports do not allow this practice.

Valuation and Classification Disputes. When valuation or classification issues are raised against a particular shipment (either by the customs computer system or by the appraiser/ examiner), an importer has two options. One, the importer may raise the issue before the Valuation and Classification Review Committee (VCRC) of the port concerned. Another option would be the payment under protest of the amount of duties and taxes additionally assessed. The VCRC process is an internal customs procedure at the level of the Collection District. A protest or payment under protest, on the other hand, is a process that will require the importer securing the final approval of the Secretary of Finance. A VCRC case is theoretically easier to handle than a protest for two main reasons: (1) an importer can secure a cash refund on the amount under dispute through the VCRC mechanism while a protest, if favorably decided, can only result in a cash refund; and (2) a VCRC case is decided solely by the District Collector while a protest will have to be processed through the numerous offices of customs and finance department.

Protest and Payment under Protest. We have mentioned above that protest and payment under protest is available when a shipment is subject to valuation or classification issues. In addition, this procedure may also apply to other circumstances when there is legal doubt as to the assessment or additional assessment being made by customs. For example, there might be issues as to the effectivity date of the executive order providing a lower tariff rate, in which case, an importer may have to pay under protest. As mentioned above, a protest is a tedious process requiring appearance in various offices (e.g. law division, district collector, legal service, office of the commissioner, finance department). In addition, the issuance of the tax credit certificate will require too much documentation and clearances. As a general advice, an importer should always avail of the remedy under the VCRC system before going through the protest process.

Our next article will discuss the procedures when filing a protest and other customs administrative procedures such as seizure and forfeitures, and additional assessments.

The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs & Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. He was also Bureau of Customs Deputy Commissioner for Assessment and Operations Coordinating Group (2013-2016). For questions, please email at agatonuvero@yahoo.com and agatonuvero@customstrade.asia 

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