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New Rules for Customs Assessment Disputes

THE Bureau of Customs (BoC) recently issued new rules gover-ning assessment disputes (valuation and classification issues) brought before the Valuation and Classification Review Committee (VCRC) as originally provided under Customs Memorandum Order (CMO) No. 37-2001, which implemented Customs Administrative Order (CAO) 5-2001. Issued on March 15, 2006, CMO 7-2006 established a Central Valuation and Classification Review and Ruling Committee (CVCRRC) mainly to provide a mechanism for the review of VCRC resolutions and to provide rulings, opinions or policy guidelines upon the request of importers pertaining to application of customs valuation and classification rules. Valuation and Classification Disputes. In general, 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 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. The VCRC Mechanism. In case customs rejects the invoice price of the imported article, the importer may raise the issue before the VCRC of the port (collection district) concerned. Where the “valuation” screen under the Automated Customs Operations System (ACOS) hits the imported article, the importer will have to post a cash bond prior to release of the imported article. If the issue is raised by customs based on other reference values of identical or similar goods, the importer does not have to post a cash bond. At the VCRC, the importer will be required to submit a position paper as well as relevant documents to support the declared price to customs. As far as the VCRC is concerned, it will have to satisfy itself that the declared price satisfies all the conditions as provided under Method 1 of the Transaction Value system. In case there is legal or technical basis to reject the declared price, the VCRC will have to adopt the reference value of identical or similar goods.VCRC Hearings. What exactly happens at the VCRC?

To illustrate, the VCRC Notice of Hearing from the Manila International Container Port (MICP) will notify an importer to appear before the committee and require the following:

  1. Submit a position paper outlining the chronological order of events from the beginning of the negotiation up to the conclusion with corresponding proof of what transpired during the transaction (e.g. letter, e-mail, offers, confirmation, bank documents, etc.
  2. Submit a list of name of officials and employees involved in the transaction (e.g. purchasing officer, finance officials, etc.)Failure to respond to the notice or to submit the requirements will result in the waiver of the importer to present his evidence or arguments before the VCRC. Consequently, the committee will decide on the case based on the documents at hand. The decision of the VCRC, if favorable to the importer, shall be final and immediately executory, without the need for review by any higher office or body. In case the decision is unfavorable, the importer may either file a formal protest pursuant to Section 2308, TCCP, as amended (CMO 27-99, as amended by CMO 27-99-A) or in the alternative, file an appeal with the Commissioner of Customs within 15 days from receipt of the adverse VCRC decisions. Automatic Review of VCRC Rulings.

The above rules have now been amended by CMO 7-2006. Under said CMO, the CVCRRC, headed by the Commissioner, shall now automatically review or take cognizance of the following cases:

  1. VCRC cases filed after effective date of CMO 7-2006 and pending for three calendar months from filing;
  2. VCRC cases pending for 6 months prior to effective date of CMO 7-2006;
  3. VCRC rulings favorable to the importer or adverse to the governments, except those rulings issued prior to the effective date of CMO 7-2006;
  4. Appeals from the VCRC rulings filed within 15 days;
  5. Review of the Commissioner of Customs, motu propio or upon written request by any office or unit of the customs organization; and
  6. Request by importers for customs valuation or tariff classification rulings or opinions or policy guidelines pertaining to the application of the Transaction Value system or the AHTN involving no actual importation or involving shipments that are the subject of an ongoing post entry audit. Additional Procedures, Shorter Process. By and large, additional procedures have been provided for the resolution of customs and valuation disputes. The main purpose for the new rules, however, is to provide uniformity and consistency in the VCRC rulings, and to accordingly expedite the resolution of cases with the VCRC.

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 and 


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