Customs commissioner Isidro Lapeña on Friday said the Bureau of Customs (BOC) has not given absolute clearance to Hyundai Asia Resources Inc. (HARI) on its Philippine imports of knocked down (KD) units, which has been the subject of an investigation by another government agency.
In a press statement, Lapeña said the BOC has taken note of the Board of Investments’ (BOI) decision to suspend HARI’s Certificates of Registration in the Motor Vehicle Development Program (MVDP) under Executive Order No. 156.
EO 156 provides for a comprehensive industrial policy and guidelines for MVDP.
Article 1, Section 1.2 of EO 156 requires “that the assembly of motor vehicles shall be in CKD condition only”. MVDP participants shall also “engage into which shall involve at least the basic processes of assembly operation such as welding, painting, trimmings, final assembly, and quality testing to produce completely-built up (CBU) motor vehicles”.
The BOI earlier conducted a probe on HARI operations and found the company in violation of the terms of its registration and was importing semi-knocked down (SKD) kits instead of completely knocked down (CKD) parts and components.
As a registered MVDP participant, HARI pays a one percent duty for CKD importations.
With the cancellation, BOI ordered HARI to refund VAT and customs duties waived in the amount of more than P1 billion.
In its letter to the BOC, the BOI said HARI’s registration is suspended pending compliance with two conditions, one of which is the “refund of tax and duty differential between the CBU and knock down parts and components on all importations pursuant to EO 156.”
BOI said the actual amount of refund, mode of settlement and period for payment shall be determined by the BOC.
“On our part, we will pursue what is advantageous to the government. We will conduct post-entry audit of its importation to determine the actual refund to be paid to the government,” Lapeña said.