TARIFF AND CUSTOMS CODE

Basis of dutiable value (1989, 2005, 2008)

Q: What are the bases for and purposes of computing customs duties and VAT? (2008 Bar)

A: The tax base for the customs duties is the transaction value while for VAT purposes, the tax base is the
value used in computing customs duties plus customs duties, excise taxes and other charges incident to
importation. [Section 107 (A), NIRC] These taxes on importation must be paid to the Bureau of Customs
before the Authority to Release Imported Goods will be issued by the BIR. (Revenue Regulations No. 16-
2005)

SPECIAL DUTIES Dumping Duties (1995, 1997, 2005)

Q: Under the Tariff and Customs Code, what are: a. dumping duties

A: Dumping duties are special duties imposed by the Secretary of Finance upon recommendation of the
Tariff Commission when it is found that the price of the imported articles is deliberately or continually
fixed at less than the fair market value or cost of production, and the importation would cause or likely
cause an injury to local industries engaged in the manufacture or production of the same or similar articles
or prevent their establishment.

Countervailing Duties (1995,1997, 2005)

Q: Under the Tariff and Customs Code, what are: a. xxx b. countervailing duties

A: Countervailing duties are special duties imposed by the Secretary of Finance upon prior investigation
and report of the Tariff Commission to offset an excise or inland revenue tax upon articles of the same
class manufactured at home or subsidies to foreign producers or manufacturers by their respective
governments.

Marking duties (1995, 1997)

Q: Under the Tariff and Customs Code, what are: a. xxx b. xxx c. marking duties

A: Marking duties are special duties equivalent to 5% ad valorem imposed on articles not properly marked.
These are collected by the Commissioner of Customs except when the improperly marked articles are
exported or destroyed under customs supervision and prior to final liquidation of the corresponding entry.
These duties are designed to prevent possible deception of the customers.

Discriminatory duties (1995, 1997)

Q: Under the Tariff and Customs Code, what are: a. xxx b. xxx c. xxx d. discriminatory duties

A: Discriminatory duties are special duties collected in an amount not exceeding 100% ad valorem,
imposed by the President of the Philippines against goods of a foreign country which discriminates against
Philippine commerce or against goods coming from the Philippines and shipped to a foreign country.

FLEXIBLE TARIFF CLAUSE (1991, 2001)

Q: What do you understand by the term “flexible tariff clause" as used in the Tariff and Customs Code?
(1991 Bar)

A: The term "flexible tariff clause "refers to the power of the President upon recommendation of the
NEDA to increase, reduce or remove existing protective tariff rates of import duty, but in no case shall be
higher than 100% ad valorem, to establish import quota or to ban importation of any commodity as may

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be necessary and to impose additional duty on all import not exceeding 10% ad valorem whenever
necessary. (Sec. 102, CMTA)

Q: In view of the unfavorable balance of payment condition and the increasing budget deficit, the
President of the Philippines. upon recommendation of the National Economic and Development
Authority, issues during a recess of Congress an Executive Order imposing an additional duty on all imports
at the rate of ten (10%) percent ad valorem. The Executive Order also provides that the same shall take
effect immediately. Ricardo San Miguel, an importer, questions the legality of the Executive Order on the
grounds that only Congress has the authority to fix the rates of import duties and, in any event, such an
Executive Order can take effect only thirty (30) days after promulgation and the President has no authority
to shorten said period. Are the objections of Mr. San Miguel tenable? (2001 Bar)

A: No. Under the Flexible Tariff clause, any order issued by the President pursuant to the provision shall
take effect thirty (30) days after promulgation, except in the imposition or additional duty not exceeding
ten (10) percent ad valorem which shall take effect at the discretion of the President. [Section 1608 (d),
CMTA]

BEGINNING AND ENDING OF IMPORTATION (1995, 2015)

Q: Under the Tariff and Customs Code, as amended, when does importation begin and when is it deemed
terminated? (2015 Bar)

A: Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with
intention to unload therein. (Sec. 103, 1st par., CMTA) Importation is deemed terminated upon payment
of the duties, taxes and other charges due upon the articles or secured to be paid at a port of entry and
the legal permit for withdrawal shall have been granted [Sec. 103 (a), CMTA], or in case said articles are
free of duties, taxes and other charges, until they have legally left the jurisdiction of Customs. [Sec. 103
(b),

Baby Frank Notes – Customs & Tariff

Revised Kyoto Convention:

Customs – government service responsible for the administration of customs law, collection of duties and
taxes and application of other laws and regulations pertaining to exportation, importation and other
movement or storage of goods.

Customs Law – statutory and regulatory provisions relating to importation, exportation, movement, or
storage of goods and any regulations made by customs under their statutory power, administration and
enforcement which are specifically charged to customs.

Philippine Law:

Customs Law – the Tariff and Customs law (CMTA) including its implementing rules and regulations and
other laws enforced by the Bureau of Customs or within its jurisdiction.

Such as:

 NIRC – Imported goods may be subject to VAT (excise taxes)

 RA8752 – Anti-Dumping Law
 RA8751 - Countervailing Act
 BSP Rules and Regulations on Imports

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  RA8800 – Safeguard Measures Act
 ASEAN Agreements on Trade

Laws governing Tariffs and Customs in PH:

1) RA10863 (CMTA) – principally

2) RA8800
3) RA8751
4) RA8752

Customs Duties – name given to taxes on the importation / exportation of commodities

Customs Duties – tariff / tax assessed upon merchandise imported from or exported to other countries
-(Nestle vs. CA, July 6, 2001)

Tariff – customs duties, toll, rate of customs duties, list of articles subject to duties

Customs Duties vs. Tariffs – synonymous, used interchangeably

Different Kinds of Tariffs / Customs Duties (In General)

1. Export Tariff – levied/ collected on traditional export products

2. Import Tariff – levied on articles imported from any country upon importation in PH even though
previously exported from PH.

Different Kinds of Import Customs Duties

1. Regular Tariffs / Customs Duties – taxes that are imposed/ assessed upon merchandise imported
from or exported to a foreign country to raise revenue
2. Special Tariff / Customs Duties – additional import duties imposed on certain imported articles
under certain conditions and for specific purposes

Under CMTA, also known as Trade Remedy Measures like Anti-Dumping Duty , Countervailing
duties and Safeguard Measures Act

Importation – act of bringing goods from a foreign territory into Philippine Territory whether for
consumption, warehousing or admission.

Goods – Articles, wares, merchandise and any other items which are subject of importation / exportation

Articles – (old Tariff Code) goods, wares, merchandise which in general may be subject of importation and
exportation

Commissioner of Customs vs. Capistrano, 6/30/1960

-US Dollars and other foreign currency are “articles”

Bastida vs. CIR

-Philippine peso if attempted to be smuggled out of the Philippines may be called “articles”
-checks and money orders are “articles”

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When Importation Begins and Terminates?

Section 103:
Begun: when carrying vessel or aircraft enters PH territory with intent to unload.
Terminated:
a) Goods or articles subject to duties and taxes and other charges have been fully paid or at least
secured to be paid at the port of entry and legal permit to withdraw has been granted.
b) If goods are not subject to duties and taxes and other charges, when goods have legally left the
jurisdiction of the BOC.

Importance: Application of customs law / jurisdiction of the BOC. Goods are subject ot seizure and
forfeiture if still within the jurisdiction of the BOC.

Q: What if partially paid only?

A: Even with permit to withdraw, no termination of importation ---- “Collector of Customs vs. Torres”

Q: When do Tariff and Customs Laws apply?

A: From the moment importation is begun and legally (valid grant of withdrawal permit) terminated.

Sec 104:

GR: All goods when imported to the Philippines, including goods previously exported, shall be subject to
duties upon importation.

XPN: As provided by the CMTA and other laws.

Kinds of Importation (Sections 115 – 120):

1. Free Importation / Exportation (Duty Free) – (Section 116)

3 Kinds:
a) Absolutely Duty – Free
b) Relief Consignment (Sec 120-121)
c) Conditionally taxed and duty exempt importation (Sec 800)

2. Regulated Importation and Exportation (Section 117)

3. Prohibited Importation and Exportation (Section 118)
Kinds:
a) Absolutely prohibited
b) Restricted or qualifiedly prohibited

4. Importation and Exportation subject to duties/ taxes (Dutiable Importation) (Section 104)

GR: No exemption whatsoever from payment of duties.

XPN:

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 1. CMTA (Section 800 aa)
2. Granted to government agencies etc with existing contracts with foreign countries requiring
exemption
3. International institution/ associations/ organizations granted under special laws/ agreements
4. Those that maybe granted by the President with the recommendation of NEDA in the interest of
national development

Free Importation / Exportation (Duty Free)

Section 116:
GR: No need to secure import/ export permits, clearance or licenses
XPN: As provided by law.

Section 121 (Duty Free)

-Relief consignment imported during state of calamity intended for specific calamity areas

Section 423
-Importations with de minimis value, FOB of FCA not more than 10k (Freight on Board / Freight Carrier
Act)

Section 815
-Goods admitted in free zones

Section 820
-Goods carried in an aircraft, trains, vessels for consumption

Conditionally Free Importation

-Importations exempt from Duties, taxes and _____ if requirements provided by regulations are complied
with.
-should not be transferred by importer or lese transferee will be subject to Duties, Taxes and Fees
-In case of non-payment, in case transferred:
a) Considered as fraudulent practice against CMTA
b) imported goods subject to forfeiture and seizure

To be exempt:
1) Subject to the compliance with rules and regulations to be exempt
2) Used as intended
XPN (Purpose other than intended but not considered fraudulent and not subject to seizure):
1. In case of sale, pursuant to a judicial order
2. Liquidation of the estate of the decedent
** under both circumstances, DFT must be paid.

Examples of Conditionally Free:

1) Aquatic Products (AP):

Requirements:
a) Caught/ gathered by vessel of Philippine registry
b) AP brought in PH by same vessel which gathered the AP
c) AP must not have been landed in foreign territory
d) If landed, only for transshipment without having been advanced in condition
*Mere drying and salting of fish is not considered as advancement

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 **If AP already canned, subject to import duties / fees / taxes

2) Equipments
Requirements:
a) For use in the salvage of vessels / aircrafts
b) Not available in the Philippines
c) Identified at the time of importation
d) Putting up of a security worth 100% of Duties, Taxes and Charges either for:
i) Export of equipment after use
ii) Duties and Taxes to be paid within 6 months from date of goods declaration
(if not exported after use)

3) Cost of Repairs upon vessels / aircrafts

Requirements:
a) Repair done in foreign country
b) Vessel/ aircraft of Philippine Registry (documented / registered/ licensed)
c) Adequate facilities for repair not available in the Philippines
=or=
Compelled by stress of weather / other casualty during regular course of voyage / flight

4) Goods brought in the Philippines for Repair, Processing or Reconditioning to be RE-EXPORTED

upon completion
Requirement: Put up security equivalent to 100% DTC on imported goods

5) Medals, badges, cups and other small goods

- Bestowed as trophies or prizes received / accepted as honorary distinction

6) Personal and household effects of residents returning from abroad

*P & HE exported: (Brought out of the country upon departure)
a) Personal and household effects owned by residents returning from abroad
b) Personal and household effects must have been declared and listed before departure
c) Identified under oath before the District Collector of Customs before leaving the Philippines
 Includes household appliances, jewelry, precious stones and other goods of luxury
 If household appliances, jewelry, precious stones and other goods of luxury are improved
abroad, the increment in the value will be subject to Duties , Taxes and Charges

*P & HE purchased abroad:

Personal and household effects including wearing apparel, goods of personal adornment, toilet
goods, instruments related to one’s profession and analogous personal or household effects
purchased in foreign country, necessary, appropriate and normally used for their comfort and
convenience during their stay abroad
(Does not include luxury items, vehicles, watercrafts, aircrafts, animals purchased in foreign country –
Dutiable)

Returning Residents – Filipino Nationals who have stayed in a foreign country for at least 6 months
Personal and Household Effects will be tax and duty -free exempt if:
 Not in commercial quantities
 Not for barter, sale or for hire
 Limited to the FCA or FOB value of:
 350k, stayed @ foreign country for at least 10yrs, have not availed of this
privilege w/in 10 yrs prior to returning resident’s arrival;

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  250k, stayed @ foreign country for at least 5 but not more than 10yrs, have not
availed of this privilege w/in 5yrs prior to returning resident’s arrival;
 150k, stayed @ foreign country for a period less than 5 yrs, have not availed of
this privilege w/in 6 months prior to returning resident’s arrival

** Item 6 must either: 1) accompany the returning residents ; 2) arriving within reasonable time not
exceeding 60 days after owner’s arrival.

For OFWs ( Tax and Duty Free):

Personal and Household effects are taxes and duty free provided:
A. Home appliances and other other durables
B. One of every kind
C. Once in the calendar year
D. Accompanying them in their return or w/in a reasonable time of 60 days from date of
arrival
E. Presentation of original passport at point of entry
F. Excess in quantities, subject to Duties , Taxes and Charges
G. Excess in FCA value of P150k is taxable

7) Residents of the Philippines, OFWs and other Filipinos while residing abroad, are allowed to bring
in or send “Balikbayan Box” containing only personal and Household effects only, not in
commercial quantities (etc), FCA value not exceeding 150k, not more than 3x in a calendar year

OFW – A Filipino who is a holder of a valid passport issued by DFA, certified by the
DOLE or POEA for employment purposes, covering all Filipinos working in a foreign
country under employment contracts.
8) Wearing apparels, goods for personal adornment, toilet goods, portable tools and
instruments and theatrical costumes of travelers/ tourists:

Conditions:
A) Goods must accompany the importer, if not must arrive in the Philippines within a
reasobale time (6 mos)
B) Necessary for wear and use based on the nature of journey
C) Cannot include those intended for other persons
D) BOC may require the traveler/ tourist to furnish a security or make a written
commitment that the goods will be exported within 3 mos (extendable for another 3
mos) from filing of the declaration or that he will pay the taxes and duties due thereon
(100% of ascertained duties, taxes and other charges)

9) Personal and Household Effects and vehicles belonging to Foreign Consultants / Experts
hired by or rendering service to the government (including their staff, personnel and
families accompanying them)

Conditions:
a) Importer is FC / E, their staff, personnel and family of FC/E.
b) Must accompany importers upon arrival or follow within a reasonable time
c) Must be in quantity and in kind necessary and suitable to the profession, rank or
position of the person importing the same
d) Goods must be for their own use, not for barter, sale or hire

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 e) Written commitment or security

10) Goods , professional instruments, implements of tools of trade, occupation or

employment
11) Goods exclusively for public entertainment and for display in public expositions
-includes devises for projecting pictures, parts and appurtenances thereon

Requirements:
a) Identified, examined and appraised upon importation
b) Giving of security in an amount equal to 100% of the ascertained duties, taxes and
other charges thereon , conditioned for exportation thereof or payment of the
corresponding DTCs
c) DTC Payable within 3 mos from date of acceptance of goods declaration , extendible
for another 3 mos if scientific/ technical films not to be exhibited for profit.

** If for profit, proceeds for confiscation, with penalty to the importer

12) Goods brought by Foreign Film Producers, also photographic and cinematographic films

Goods:
Conditions:
a) Goods brought in PH by foreign film producer
b) Goods are directly and exclusively used for making and recording of motion picture films on
location in the Philippines
c) Duly identified, examined and appraised upon importation
d) Security (100% of ascertained duties, taxes and other charges)

Photographic and cinematographic films

Conditions:
a) Undeveloped
b) Exposed outside the Philippines by resident Filipino Citizen or by producing company of
Philippine Registry
c) Principal Actors/ Artists are Filipinos
d) Importer executes an affidavit identifying the films to have been previously exported from PH

13) Importations for official use of foreign embassies, legations and other agencies of foreign
government
Conditions:
a) Importer must be: foreign embassy, foreign legations, other foreign government
b) Goods must hab=ve been imported for official use
c) Foreign government must accord similar/ like privileges to corresponding PH Government
agencies

 Goods for personal or family use of the members and attaches of foreign embassies, legations
consular offices and other representatives of foreign government
Conditions:
a) Imported into PH by aforementioned importers
b) Accorded under special agreement between the Philippine Government and countries they
represent
c) Privileges granted upon the instruction of Secretary of Finance upon the request of DFA

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14) Goods donated to or for the account of the Philippine Government
Conditions:
a) Donated to or for the account of the Philippines
b) If for Relief Organization, should be not for profit
c) For free distribution to the needy
d) Certified by the DSWD, DEPED, DOH

Sample: Donation to the Philippine Red Cross of 500 boxes of medical supplies and an ambulance.
Answer: 500 boxes of medical supplies – duty free
Ambulance – dutiable (cannot be distributed to the needy)

15) Containers, holders, other similar receptacles of any material including kraft paper bags for locally
manufactured cement for export

Conditions:
a) Readily identifiable and resusable
b) Identified, examined and appraised
c) Security (100%) within 6 mos from acceptance of goods declaration

Regulated Importation / Exportation

GR: Can be imported / exported provided there are licenses, clearances etc.

Export Declaration
Import Declaration – submitted at the time of arrival / later, before release from customs
(not in all cases)

CMTA does not mention what are regulated importations. Regulated Importations can
be found in regulations and other government issuances.

Restricted Importations (Qualifiedly Prohibited)

Goods/ articles/ substances which are not as a rule allowed to be imported / exported,
except if authorized by law or regualtions.

Section 1190 (old code)

Restriction also applies to the transit of goods (Section 102rr)

Transit – refers to the customs procedure under which goods, in its original form, are
transported under customs control from one customs office to another, or to a free zone.

Prohibited Importation (absolutely prohibited) – under all circumstances

- Goods, articles or substances which are prohibited to be exported/ imported in the
Philippines

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 BAR Q: (Enumerate at least 5 Prohibited Importations)

o Written or printed article in any form containing any matter advocating or inciting
treason, rebellion, insurrection or sedition against the Government of the
Philippines, of forcible resistance to any law of the Philippines, or containing any
threat to take the life of or inflict bodily harm upon any person in the Philippines.

o Written or printed articles, photographs, engravings, lithographs, objects,

paintings, drawings or other representation of an obscene or immoral character.

o Articles, instruments, drugs and substances designed, intended or adapted for

preventing human conception or producing unlawful abortion, or any printed
matter which advertises or describes or gives directly or indirectly information
where, how or by whom human conception is prevented or unlawful abortion
produced.

o Any article manufactured in whole or in part of gold silver or other precious metal,
or alloys thereof, the stamps brands or marks of which do not indicate the actual
fineness or quality of said metals or alloys.

o Any adulterated or misbranded article of food or any adulterated or misbranded

drug in violation of the provisions of the "Food and Drugs Act."

o Goods, articles which infringe rights against Intellectual Property Law

Sanctions: Subject to forfeiture / seizure

Manner of Disposition:
GR: Destroyed
XPN:
Any article manufactured in whole or in part of gold silver or other precious metal, or alloys
thereof, the stamps brands or marks of which do not indicate the actual fineness or quality of
said metals or alloys -- Turned over to BSP

Dutiable Importations
-Goods which may be imported / exported subject to the payment of Duties, Taxes and Charges

What is the rate? How much?

- Section 1611

Duties Classification under Section 104, PD1464 (Old Customs and Tariff Code),
Book 1, Title 1 – Import Duties
Book 1, Title 3 – Export Tariff / Duties

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What duties will apply to dutiable goods?

1) Regular Tariffs / regular customs duties – duties imposed on import/ export goods for
the purpose of raising revenues
2) Special Customs Duties / special Tariffs – imposed to serve as protective barriers to
prevent entry of goods that will compete prejudicially with locally manufactured goods
- Also called “Protective Tariffs”

*High tariff rates for the export of Raw Materials so that it will be manufactured locally.

Kinds of Regular Customs Duties:

1) Ad Valorem – computed on the basis of the value of the imported / exported goods
- Requires assessment to determine the dutiable value of the goods
2) Specific – the computation is based on the unit of measure ( ie: per Kg / m3 / metric tons)
3) Mixed / Compound – the computation is based on value and unit of measure (ie: 10% ad
valorem + P100 / kg)
4) Alternative – amount of duty is either based on the value or unit of measure (ie:
whichever is higher)

*Under the old Tariff and Customs Code, alternative, mixed and compound are not found

Special Customs Tariffs – duties imposed in addition to the regular customs duties under certain
conditions to protect local consumers, local manufacturers, Philippine products from undue
competition by foreign made products.

IMPORT CLEARANCE & FORMALITIES:

Lodgement – refers to the registration of a goods declaration with the Bureau.

Goods Declaration – a statement made in the manner prescribed by the Bureau and other
appropriate agencies by which the persons concerned indicate the procedure to be observed in
the application for the entry or admission of imported goods and the particulars of which the
customs administration shall require

*All imported goods shall be subject to the lodgement of a goods declaration, unless otherwise
provided.

Q: What kind of importations are required to have Goods Declaration?

A: Section 401:
Goods declaration for:
 consumption
 customs bonded warehousing
 admission
 conditional importation
 customs transit

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Q: Who are deemed “owners of imported goods”?
A: Section 404:
All goods imported to the Philippines are deemed to be the property of:
 Consignee
 Holder of the bill of lading, AWB (if duly endorsed by the consignee or consignor if
consigned to order)
 Underwriters of abandoned goods
 Salvors of goods saved from wreck at sea, coast or any area of the Philippines

Steps / Procedures to be Followed:

1) Lodgement of goods
2) Examination and appraisal
3) Assessment
4) Liquidation and Payment
5) Release

Entry of Imported Goods (Section 102r)

Entry
- refers to the act, documentation and process of bringing imported goods into the
customs territory, including goods coming from free zones.
- The filing and acceptance of specified goods declaration together with other
documents required by laws and regulations

Q: Who will file?

A: (Section 106)
The declarant who can be the following:
1) Importer (holder of the BL)
2) Exporter (owner of goods to be exported/ shipped -out)
3) Customs Broker ( acting under the authority of the importer/ holder of BL)
4) Agent or Attorney-in-fact of the holder of BL

*if importer is a juridical person, it may authorize a responsible officer of the company to sign the
goods declaration as declarant in its behalf
**declarant is primary responsible for the correctness of the goods declaration, if made by a
customs broker, the customs broker is responsible

*Payment (of duties and taxes) is the responsibility of the declarant/ importer

After lodgement comes entry

Types of Entry:
1) For Consumption – entry is intended for immediate release, subject to the payment of
the DTC

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 2) For Warehousing:
a. Goods are entered for purposes of placing it in customs bonded warehouse
b. Imported Goods is for constructive warehousing for transport to other parts of the
Philippines after examination and appraisal
c. For constructive warehousing for immediate importation

GR: All goods declaration for consumption shall be cleared through formal entry process.
XPNs: (use Informal entry process)
1. Goods of commercial nature with FOB/ FCA value less than P50k
2. Personal and Household effects not in commercial quantities but imported through
passengers baggage or mail
*Add’l Requirement – FEP : Importation must be covered by a letter of credit or any verifiable
commercial document evidencing payment

Q: Can there be a lodging of a provisional goods declaration / incomplete goods declaration?

A: (Section 403)

Yes, provided:
1.provisional goods declaration substantially contains the necessary information as required by
BOC
2. importer undertakes to complete goods declaration within 45 days (extendible for another 45
days)

Treatment:
*Provisional / incomplete goods declaration is treated in the same manner as those with complete
goods declaration
*maybe released upon posting of required security equivalent to the amount ascertained as
applicable duties and taxes.

Q: When is Lodgement required?

A: Goods declaration must be lodged within 15 days from the date of discharge of the last
package from vessel or aircraft (extendible for another 15 days on valid grounds, request made before
the expiration of original period)

Section 408
*Electronic lodgement of Goods Declarations are permitted at designated customs offices
*Amendment to the Goods Declaration already lodged may be had provided:
1) for valid reason
2) following the terms and conditions provided by regulations
3) request to amend GD and intended amendments received prior to final assessment or
examination of goods

Q: Can there be lodgement before arrival (Section 409)

A: Yes. Rules and regualtions to be promulgated

Section 412: No entry before lodgement.

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Split Entry for Imported Goods (Section 410)
- Allowed
- Partially for consumption and partially for warehousing
- Both may be entered simultaneously

Postal Items (Section 438) – importation through postal items / mails

- By filing a special declaration form with supporting documents

When separate goods declaration is necessary:

1. In the case of goods where value fall within the level determined to be taxable by the
Commissioner
2. Prohibited and regulated goods
3. Goods the exportation of which must be certified
4. Goods under a customs procedure other than for consumption

After LODGEMENT and ENTRY, comes the EXAMINATION OF IMPORTED GOODS:

Basic – Physical examination is required

- X-ray examination through facilities can be done for packages/ containers

When made?

Section 419, Examined immediately after lodgement of goods declaration. Priority is given to live
animals, perishable goods and other goods requiring immediate examination.

How?

In an Expeditious manner, even adopt non-instrusive manner (x-ray machines)

When is physical exam required?

Answer:
1) Directed by the commissioner of customs
2) If imported goods is subject to an alert order
3) If imported goods are electronically selected for physical exam
4) If there are issued or controversies regarding goods declaration and entry process
5) If importer/ declarant requests for physical exam

When may goods be exempted from physical examination?

Answer:
1) Importation of goods of authorized economic operators
2) Imported goods is under existing trade facilitation

Duties in making examination:

1) Examiner must determine that packages are in accordance with good declaration lodged
with BOC
2) Take a sample of the imported goods
3) Issue receipts for samples taken

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 4) Examiner reports to the Collector of Customs if imported goods were declared correctly
(value / quantity/ measurement/ weight)
5) Examiner must determine if goods were imported contrary to law.

After EXAMINATION comes ASSESSMENT:

Principal Functions of Customs Officer Tasked to Assess Imported Goods (Section 424):
1. Make a classification of items / goods imported
2. Determine the value (transaction value…)
3. Determine duties, taxes and other charges applicable
4. Submit assessment report to the District Collector of Customs

Tentative Assessment of Goods (Sections 425 / 426)

Grounds:
1. If duties and taxes initially assessed are disputed by importer
- If dispute is already decided upon, assessment shall be completed upon final
readjustment
- Protests involving valuation, rules of origin, other customs issues/ reasons
2. Provisional goods declaration
- When the importer has not yet submitted the complete documents for the completion
of the goods declaration.
- Can goods subject to a provisional declaration be released?
- YES. Post a security sufficient to cover the applicable duties and taxes.

Processes involved in the Computation:

1. Classification to appropriate tariff headings (21)
-Harmonized Commodity Description (International Standard)

2. Determination of the value of the goods

3. Value determined multiplied by rate applicable based on classification

Q: If appraisal / classification is finally passed upon and approved by the District Collector of
Customs, can the classification be modified still?
A: Section 427
GR: Cannot anymore be further modified.
XPN:
1) Within one year after payment, in case of a Statement of Error as approved by District
Collector
2) Within 15 days after payment, upon request of the Collector of Customs for re-appraisal
or reclassification (initial appraisal / classification deemed to be low)
3) Request for re-classification / re-appraisal due to timely protest by interested party
4) Upon demand by the Commissioner of Customs after completion of compliance audit

Section 428 – Assessment of Duty on less than the Entered Value

GR: Assessment is based on entered value
XPN: Upon instruction / direction of the Commissioner under the following circumstances:
1) Entered value is greater than dutiable value

reyes.abigail.tianela // customs and tariffs

 2) Goods were entered at high value to meet increases made by appraiser pending re-
appraisement
3) Lower assessment is sustained by final decision
4) importer’s action was done in good faith after due diligence and inquiry

Section 429 – Finality of Assessment

- After 15 days from receipt of notice of assessment by the importer or consignee

Section 430 – Period of Limitation

- Assessment becomes conclusive upon all parties, 3 years from final payment if
without fraud/ without protest.

Liquidation:
1) Final computation and ascertainment of Duties, Taxes and Charges by the District
Collector of Customs (DCC)based on reports given to the DCC from the examination,
appraisal, assessment and DCC’s own findings.
2) Includes payment of Duties, Taxes and charges due from the imported goods

2 Kinds of Liquidation:

1) Tentative Liquidation
- If there is still future action (re-classification / re-assessment/ re-computation)
required to determine the Duties, Taxes and Charges.
- Subject to final adjustment within 6 mos from date of tentative liquidation

2) Final Liquidation
a) If all required procedure covering entry up to assessment of Duties, taxes and charges
have been accomplished and approved by the DCC, or if not Imported goods are
cleared as duty-free;
b) Payment of the Duties, taxes and charges
c) Release of imported goods from Customs

Q: Who are primarily liable for the payment of the DTC (Duties , Taxes, Fees and Other Charges)?
A: the Importer / Owner of the imported goods

Nature of the Liability of Importer / Owner:

-Unless relieved by laws and regulations, the owner / importer has a personal debt to the
government for the Duties, Taxes, Fees and Other Charges, discharged only after the payment
of the DTC, and constitutes as a lien on the imported goods when within the custody of the
BOC.

Section 431 – Delivery to Importer (Release of Imported Goods)

Requisites:
1) Duties, Taxes, Fees and Other Charges must have been paid or secured to be paid

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 2) All pertinent laws, regulations are complied with

Release of Imported Goods prior to the release of results of (when laboratory analysis is
required)
*detailed technical
*expert advice
-may be done after posting of security by the declarant

Section 432 – Release of Goods to holders of BL/ AWB

-Customs officer not liable for the release of goods to the consignee or lawful holder of BL/AWB
UNLESS customs officer has knowledge on the defect / irregularity in the negotiation of the
goods.

Section 433: Release of goods w/o Production of BL/AWB

Requirement for the Release of Imported Goods:
1. Released to the consignee, or
2. Holder of BL/ AWB, BL/ AWB to be submitted to the BOC

XPN: Written order by the carrier or agent of the vessel with copy of the BL/ AWB
Release of Imported Goods prior to the payment of duties, taxes, fees and other charges
- Accredited air cargo operator
- Posting of sufficient security

Section 434: Release of goods upon order of Importer

-if released to persons other than the Importer/ consignee upon the order of Importer/
Consignee, Importer / Consignee are not released from liability
XPN: person to whom it was released assumed the liability therefor.

Section 435: Withholding Release

-District Collector of Customs shall withhold the release of imported goods when:
1) Unsatisfied lien for freight, lighterage or general average*
2) lawful order of the court

*General Average – (Article 811 of the Code of Commerce) Damages and expenses which are deliberately caused on
the vessel and or its cargo or both, to save the vessel, the cargo or both from real known risk (ie. Jettisoned cargo)

Section 1000 – Post Clearance Audit

- Audit and examination of records within 3 years from the date of final payment of
Duties, Taxes, Fees and Other Charges or customs clearance.
- Records include statements , declarations, documents and electronically generated
or machine readable data

Purposes:
1) Ascertain correctness of Goods Declaration
2) Determine liability for Duties, Taxes, Fees and Other Charges
3) Determine liability for fines

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Rights of the Examiner / Auditor:
1) Given by the Importer/ Customs Broker full and free access to premises where records
are kept
2) Person in charge of the premises to provide facilities and assistance for the effective
performance

If Denied (legal effects):

1) May invoke the aid of the Regional Trial Court (Contempt)
2) Creates presumption of inaccuracy in the transaction value
3) Constitute grounds for re-assessment
4) Criminal and administrative sanctions
5) Suspension of the delivery / release of imported goods of importer

Section 500 – Export Declaration (exempt or not)

Requirements:
1) Declared in a competent customs office
2) Conform to export standards grade established by the government
3) Packaging: labeled and marked in accordance with related laws and regulations
4) Export Declaration may not be granted if the mentioned requirements are not complied
with
5) Certificate of Origin

Export Declaration
- Lodgement can either be MANUAL or ELECTRONIC

Certificate of Origin
- Certifies that the goods originated from the country it purports to come from
- “A product of the Philippines”

Q: Who are authorized to Issue a Certificate of Origin?

A:
1) Bureau of Customs
2) Any other designated government agencies
-PE Zone Authority – for products processed in the Eco Zone
-DTI-
-DA -
3) Exporter (Self Certification; should be accredited by Gov’t Agency)

Section 1608 – Flexible Clause on Import*

- Refers to the power granted to the President upon the recommendation of NEDA to
increase, reduce, or remove existing protective tariff rates of import duty which
should not be higher than 100% ad valorem
- Establish import quotas or ban import of commodities
- Impose additional duty on all imports not exceeding 10% ad valorem when necessary

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 - Modify the forms of duty whether ad valorem or specific

*Only when Congress is not in session

- withdrawable by the Congress by mere RESOLUTION
-In the interest of GENERAL WELFARE and National Security
-Purpose is to provide an instrument for a quick adjustment of Tariff to adopt to changing
conditions and to give sufficient protection to local industries
-Effectivity:
GR: takes effect 30 days after promulgation
XPN: Order imposing additional duty at the discretion of the President

Garcia vs. Executive

211 SCRA227
- “SC ruled that the standard of General Welfare is not limited to the protection of local
industries but may include protection of local consumers”

Special Tariffs/ Customs Duties – imposed in addition to regular duties, only if circumstances
warrant.
Types:
1) Safeguard Measure
2) Anti-Dumping Duty
3) Countervailing Duty
4) Discriminatory Duty
5) Retaliatory Duty

Section 712: Safeguard Duty

-adoption of the provisions of RA8800 – Safeguard Measures Act
-Emergency measures include tariffs, tariff rate quotas, quantitative restrictions on importation
of product into the country to protect domestic industries and producers from increased imports
which could inflict serious injury on them.

Limitations:
1. Safeguard Measures are not applied to product originating from developing countries if
its share in total Philippine import is less than 3%
2. The developing country with less than 3% share collectively account for not more than
9% of Philippine imports of product concerned.

Kinds:
1) General Safeguard (Sec 5)
- Increase in quantities as to be substantial cause of serious injury
2) Special Safeguard
- Additional special safeguard duty on agricultural product is imposed if cumulative
volume of agricultural product in a given year exceeds trigger volume (volume test)
or actual CIF import price of agricultural product is less than its trigger price (price
test)
- If Non-Agricultural products, application of Safeguard Measure is in the interest of
public

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FACTS TO BE ESTABLISHED (Section 6) # 1-3
1. Increased import quantities
2. Existence of serious injury / threat to domestic industry
3. Causal link between increased import quantities and serious injury or threat

Section 31 of SMA – Prohibits concurrent recourse to general and specific safeguard measures

ANTI – DUMPING DUTY (RA 8752)

2 General Purposes of imposition:

1) Protect domestic enterprises against unfair foreign competition / foreign trade practice
2) To strengthen and make responsive…

Nature:
- A special duty
- Imposed on importation of goods causing / threatening to cause material injury to a
domestic industry or will materially retard the domestic industry producing similar
product

*RA8752 allows TC (?) the discretion whether to recommend or not the imposition of Anti-Dumping Duty even if
all conditions are present

Q: Who imposes the Anti-Dumping Duty?

A: Secretary of DTI – Non-agricultural products
Secretary of DA – Agricultural Products

Q: How much?
A: Equal to the margin of dumping of the imported goods

Q: Can it be imposed lesser than the margin?

A: Yes. RA8752 allows.

Q: How long will Anti-Dumping Duty be imposed?

A: Not longer than 5 years from date of imposition

Q: Are there exceptions to the 5 year imposition?

A: Longer than 5 yrs if it will likely lead to a RECURRENCE

Q: What is the remedy of the Importer against the imposition of Anti-Dumping Duty?
A: Appeal to the Court of Tax Appeals within 30 days from receipt by the importer of the final
ruling imposing anti-dumping duty.

Q: Will the appeal suspend/ stop the collection of the Anti-Dumping Duty (ADD)?
A: No, it will not stop/ hold in abeyance the collection of ADD.

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Section 713 - COUNTERVAILING DUTY
- Adoption of the provisions of RA8751

Countervailing Duty
- Goods imported are granted directly or indirectly by the government or country of
origin of any form or specific subsidy upon production, manufacture and importation

- Results to material injury or will materially retard domestic industry

- Imposed by the Secretaries of DTI (Non-Agri) and DA (Agri)

- Effective within 5 years from imposition/ last review of countervailing duty, may be
extended if it continues or has tendency to recur

- Importer’s remedy is to file an appeal with the CTA within 30 days from receipt of final
ruling imposing the countervailing duty

- Amount of countervailing duty imposed is the ascertained amount of subsidy

granted to the imported goods

- Other goods similarly situated may also be the subject of a countervailing duty

Section 710 – Marking of Imported Goods and Containers (Marking Duty)

- If no markings, notify the imported to comply within 30 days from notice
- Failure or refusal to comply:
1) Release is withheld
2) Considered as abandonment
- Subject to a marking duty of 5% of dutiable value
- Deemed to have accrued upon importation
- An ordinary customs duty
- Imposed by the Commissioner of Customs
- Remedies of importer:
1) Protest
2) Re-export
3) Destroy imported goods

Exceptions to Marking Requirements: (Memorize)

1. Good are incapable of being marked
2. Goods cannot be marked prior to shipment to PH without injury
3. Marking the goods prior to shipment is economically prohibitive (expensive)
4. Marking on the container of the goods reasonably indicate origin of goods
5. Goods are crude substances
6. Goods are intended for use by importer and not intended for sale
7. Goods are intended to be processed by importer or for his account
8. Ultimate purchaser of the goods must necessarily know the origin of the goods by reason
of their character even if not marked
9. Goods were produced more than 20 years prior to importation to PH
10. Marking the goods after importation is economically prohibitive and failure to mark the
goods is not done to avoid compliance to marking requirement

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Discriminatory / Retaliatory Duty
-imposed in addition to regular duty
-imposed on goods coming from countries which discriminates against Philippine Product or
products carried by Philippine aircrafts/ vessels
- imposed on goods coming from countries which discriminates against Philippine Commerce

reyes.abigail.tianela // customs and tariffs