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Northern Mindanao exporters request consideration for fines imposed on clerical errors
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Stakeholders find fines for clerical errors ‘impractical’, ‘excessive’
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Exporters seek return of approval for export declaration cancellation to collection districts instead of AOCG deputy commissioner’s office
A group of exporters and two big companies in Northern Mindanao are asking the Bureau of Customs (BOC) for some leeway—even possible exemption—from fines for clerical errors made in export declarations.
Philippine Exporters Confederation, Inc. (PHILEXPORT) Region 10A acting managing director Valerie Ramos-Lasmarias, in making the group’s appeal, said the group is asking for “some leeway or consideration to our exporters, especially during this time of the pandemic where labor is reduced and production is slow.”
Lasmarias in a September 18 letter of appeal to BOC-Cagayan de Oro district collector John Simon, pointed out it is difficult to comply with BOC’s Customs Administrative Order (CAO) No. 01-2020 due to the nature of production and the actual export conditions exporters work under.
She said the group understands that implementing CAO No. 01-2020, the new policy on clerical errors, “has been proven to prevent fraudulent import/export transactions,” while also contributing to the bureau’s “documentation efficiency.”
But “some exporters of certain products are experiencing its impracticality when applied in actual export conditions,” said Lasmarias.
“Our exporters are even lucky they still have Purchase Orders. This is of great help to our economy,” she added.
CAO 01-2020, issued last March, outlines BOC’s new fines and surcharges for clerical errors, misdeclaration, misclassification, and undervaluation.
Since it was implemented together with Customs Memorandum Order (CMO) 49-2019, stakeholders have been requesting for the policy’s temporary suspension over reports that importers and customs brokers are being penalized with the P5,000 fine for every violation.
READ: Groups seek suspension of ‘arbitrary’ BOC fine on clerical errors
RELATED: BOC denies arbitrary adoption of rules on clerical errors
CMO 49-2019, issued last year, orders the mandatory filling in of Box No. 41 (Supplemental Units) in the lodgment of goods declaration in BOC’s Electronic-to-Mobile System.
The P5,000 fee is deemed excessive by stakeholders, citing Section 108 of the Customs Modernization and Tariff Act (CMTA). The section states that BOC should not impose substantial penalties for errors committed inadvertently and without fraudulent intent or gross negligence, provided that to discourage repetition of such errors, “a penalty may be imposed but shall not be excessive.”
In a BOC webinar on October 10, BOC Prosecution and Litigation Division acting chief Atty. Julito Doria acknowledged the provision of Section 108, but also noted that “what is excessive is relative.”
He added “these fines pertain to the imposition of penalties as decided by the management to ensure that the customs clearance processes are being taken seriously by the importers.”
Exporters of certain goods said it is hard to comply with CAO 01-2020 due to the nature of production and actual export procedures; such conditions necessitate making changes in export declarations, except that these changes are considered by BOC as clerical error.
For lumber exports, Lasmarias said the actual cargo weight per container can only be determined upon gate-in at the port or origin.
“While this is happening, the documentation specialists will simultaneously make an educated estimate of the cargo’s weight. While the estimated cargo weights usually coincide with the actual weights, chances of variances in the final declaration [do] occur, even for kiln dried lumber,” she explained.
Similarly, bamboo slats would sometimes fail quality standards (e.g., slats succumb to mold infection while in storage and prior to loading) and must be removed. This affects total weight, which means the final option in the declaration is the registered weight upon gate-in at the port of origin. And since these export products still require stuffing inspection and x-ray, Lasmarias said documents have to be submitted prior to weigh-in at the port of origin.
She noted final weight issues are also common among charcoal and activate carbon exports.
In the case iron ore exports, the production of the quantity is not final or exact, and has a tolerance of +/- 10%.
Banks are another concern because while exporters auto-debit their PAS5 accounts, some banks still do manual debit instead of auto debit, which further delays the export declaration approval process. PAS5 (Project Abstract Secure 5) is a system that enables 24/7 host-to-host interface with banks and BOC’s Online Release System.
Big producers seek exemption
Two big manufacturers in the region, Del Monte Philippines, Inc. (DMP) and Pilipinas Kao, Inc., in separate position papers to BOC this month also sought exemption from the policy.
DMP pointed out it “cannot fall under misdeclaration, misclassification, nor under valuation because our exports are exempt from duties.”
However, since the company files two export declarations for the same customer/filing, DMP’s action is deemed as correcting “clerical errors” and therefore subject to fines under CAO 01-2020.
DMP explained that it files the first export declaration, a pre-lodged declaration filled with best estimates of data to serve as an Authority to Load, because actual shipment data will only be available after containers are stuffed, sealed, and brought to the port. The second and final export declaration is filed when the actual shipment data from the invoice is generated after the shipment has been brought to the port.
DMP noted that doing these two filings is not “correcting errors but actualizing data that were still estimates at the time of the first filing.”
DMP said that since it has five changes in every final lodgment, it will be paying P25,000 per export declaration, which means an average of almost P9 million a month since they re-file 350 export declarations a month.
Pilipinas Kao also said changes to its export declarations “are necessary adjustments not at all arising from any deliberate attempt or otherwise (inadvertence) as these entries are determined to be correct and not in error at that time of lodgment.” It noted the adjustments are due to varying business conditions such as cargo handling and measuring factors, which are beyond its control.
A margin for discrepancy
PHILEXPORT 10A is requesting BOC to consider a 10% tolerable margin for weight. It noted that under CMTA’s Section 1414 (Discrepancy Between Actual and Declared Weight of Manifested Goods), if the gross weight of goods or package described in the manifest or bill of lading exceeds the declared weight by more than 10%, and such discrepancy was due to the negligence of the master or pilot-in-command, the owner, employee, operator or agent of the importing vessel or aircraft shall be liable for a fine of not more than 20% of the value of the package or goods in respect to which the deficiency exists.
PHILEXPORT 10A also suggests creating criteria to determine if a clerical error is honest or deliberate, and the criteria would include details, goods descriptions spelling, volume (pieces and cu.m values), and customs value (dollar), which could also fall under the 10% margin rule.
Another suggestion is to “ladderize” penalties into three categories. The first modification will be allowed; second modification will be fined with P2,000; and the third modification will be slapped with a P5,000 fine.
DMP, for its part, is asking for exporters’ exemption from CAO 01-2020 since it “appears that the CAO is directed (at) importers rather than exporters because we have no reason to misdeclare, misclassify, nor under value our exports.”
“It just happens that we share with importers the same access point and form when we do our filings in BOC’s computer system,” DMP pointed out.
If exemption is not possible, DMP is requesting that exporters be allowed two filings for the same customers/shipment, without penalties.
Similarly, Pilipinas Kao is also requesting making adjustments on entries without fine, “based on varying business considerations…”
The company also recommends reducing fines “to a reasonable amount ranging from Php500 to Php1,000 or in the alternative, compute fine per export declaration.”
In addition, the company seeks suspension of the order pending review and revision.
Aside from CAO 01-2020, exporters are appealing that cancellations of export declarations be allowed in collection districts, instead of in the AOCG deputy commissioner’s office in Manila in accordance with AOCG Memo 164-2020 issued last September.
AOCG Memo 164-2020 requires that all single administrative document (SAD) cancellation forms after complete staff work from the collection district should be forwarded to the AOCG deputy commissioner’s office for approval.
In a position paper dated October 21, PHIELXPORT 10A said such procedure “will further burden the BOC Central Office, incur longer processing time resulting to additional costs to exporters like demurrage and may cause port congestion.”
It added that the new policy is in contrast with Republic Act No. 110321 (Ease of Doing Business and Efficient Government Service Delivery Act of 2018), which aims to streamline current systems and procedures of government services. – Roumina Pablo
