Rules on customs fines for goods declaration errors outlined

The Bureau of Customs (BOC) has issued new fines and surcharges for clerical errors, misdeclaration, misclassification, and undervaluation.

Customs Administrative Order (CAO) No. 01-2020 covers all goods declarations on exportation or importation, whether the goods are for consumption, warehousing, or admission.

CAO 01-2020 amends or repeals guidelines for imposing surcharges under CAOs 01-2014 and 06-2014, and other issuances inconsistent with its provisions.

The new order implements and clarifies Section 108 (Penalties for Errors in Goods Declaration) and Section 1400 (Misdeclaration, Misclassification, Undervaluation in Goods Declaration) of the Customs Modernization and Tariff Act (CMTA).

According to the book Understanding International Trade, Tariff and Customs written by former BOC deputy commissioner Atty. Agaton Teodoro Uvero, Section 108 is a new provision which seems in conflict with some penalty clauses provided in Section 1400; the latter provides for excessive penalties based on presumption of fraud and without qualification as to whether the error is committed inadvertently or attended by fraud or gross negligence.

The fine to discourage repetition of clerical errors is P5,000 for every clerical error determined to have been committed in the covering goods declaration upon its lodgement. The fine is without prejudice to additional fines or penalties being imposed for other inadvertent errors discovered in the goods declaration after release from Customs.

Errors may be clerical when they are inadvertent, which may include misspelling and/or incorrect input of data while drafting, copying or transposing a document such as consignee(s)’ name, importing vessel or aircraft, port of departure, port of destination and date of arrival, the number and/or marks of packages, the quantity, the nature and correct commodity description of the goods, its value set forth in a proper invoice, packing list and such other information as may be required by rules and regulations, provided that it is not attendant with fraud and not due to gross negligence.

BOC will impose a surcharge equivalent to 250% of the duty and tax due on the goods where the resulting discrepancy in duties and taxes to be paid between what is legally determined upon assessment and what is declared arose from misdeclaration, misclassification, or undervaluation. Provided, that the discrepancy in duty and tax to be paid between what is legally determined upon assessment by the port and what is declared is 10% of more.

Instances for the declaration of the 250% surcharge include misdeclaration as to quantity, quality, description, weight, and measurement of goods; undervaluation; and misclassification.

When the misdeclaration or undervaluation is intentional or fraudulent, in addition to the seizure of subject goods, a surcharge will be imposed equivalent to 500% of the duties and taxes due.

Misdeclaration, misclassification, or undervaluation is considered intentional or fraudulent when false or altered document is submitted, false statements or information is knowingly made, or other similar instances.

No surcharge will be imposed on goods in the following circumstances:

• the discrepancy between the duty to be paid as legally determined upon assessment and what is declared is less than 10%, without prejudice to Section 4.2 of CAO 01-2020
• the declared tariff heading is rejected in a formal customs dispute settlement process involving difficult or highly technical question of tariff classification, or when the tariff classification declaration relied on an official government ruling
• the declared value is rejected as a result of an official ruling or decision under the customs dispute settlement process involving difficult or highly technical question relating to the application of customs valuation rules
• the misdeclaration, misclassification, or undervaluation was subjected to timely amendment and was corrected prior to final assessment or examination of the goods pursuant to Section 408 (Lodgement and Amendment of Goods Declaration) of the CMTA.

A discrepancy amounting to more than 30% of the duty and tax to be paid between what is legally determined and what is declared will constitute prima facie evidence of fraud in case of misdeclaration, misclassification, or undervaluation.

Such misdeclared, misclassified, and undervalued goods will be subject to seizure proceedings pursuant to Section 1113 (Property Subject to Seizure and Forfeiture) of the CMTA.

Violations of CAO 01-2020 committed by any person, officer or employee of BOC will be penalized in accordance with Title XIV (Offenses and Penalties) of the CMTA and other applicable penal laws and provisions. – Roumina Pablo