Customs1 Module 2 Guide to Tariff and Customs Laws 2016 PDF

Customs1 Module 2   Signed into law on REPUBLIC ACT NO. 10863 30 May 2016 “AN ACT MODERNIZING THE CUSTOMS AND  By former President TARIFF ADMINISTRATION” Benigno S. Aquino, III. “The passage of the CMTA seeks to transform the Bu...

Customs1 Module 2   Signed into law on REPUBLIC ACT NO. 10863 30 May 2016 “AN ACT MODERNIZING THE CUSTOMS AND  By former President TARIFF ADMINISTRATION” Benigno S. Aquino, III. “The passage of the CMTA seeks to transform the Bureau of Customs into a modern and efficient organization at par with global standard, shifting its focus from revenue generation to trade facilitation in accordance with the Philippines commitment under the Revised Kyoto Convention (RKC) to improve the ease of international trade by simplifying import and export procedures. Generally, this will entail various planned upgrade in the Bureau such as the full electronic processing of all documents, forms and receipts, alongside streamlining methods for the examination and valuation of imports and exports. It will also provide heavier and more stringent penalties for those who persist in violating its provisions.” (Former Customs Commissioner, Alberto D. Lina)  Customs, RKC definition. “Customs” means the Government Service which is responsible for the administration of Customs law and the collection of duties and taxes and which also has the responsibility for the application of other laws and regulations regarding the importation, exportation, movement or storage of goods. (RKC, Chapter 2 E6./F10)  Customs law, RKC definition. “Customs law” means the statutory and regulatory provisions relating to the importation, exportation, movement or storage of goods, administration and enforcement of which are specifically charged to the Customs, and any regulations made by Customs under their statutory powers. (RKC, General Annex. Chapter 2. E10/F18.)  Tariff, defined. Generally, tariff is the tax that is imposed and made payable upon wares, articles, merchandise that are imported into or exported from a specific State. In the alternative, it means customs duties, toll, or tribute payable upon merchandise to the general government. Tariff, which is synonymous to customs duties, means the taxes imposed on articles that are imported into or exported from a country.  Sources of the CMTA. The sources are: 1. The Tariff and Customs Code of the Philippines (TCCP); and 2. The Revised Kyoto Convention (RKC)   Revised Kyoto Convention (RKC) The Revised Kyoto Convention is the World Customs Organization (WCO) International Convention on the Simplification and Harmonization of Customs Procedures. The RKC is widely regarded as the blueprint for modern and efficient Customs Procedure in the 21st century. If implemented, it will provide international commerce with predictability and efficiency required by modern trade. Under the RKC, each Contracting Party undertakes to promote the simplification and harmonization of Customs procedures and, to that end, to conform, in accordance with the provision of this Convention, to the Standards, Transitional Standards and Recommended Practice in the Annexes to this Convention. However, nothing shall prevent the Contracting Parties from granting facilities greater than those provided for therein, and each Contracting Party is recommended to grant such greater facilities as extensively as possible. (RKC, Chapter II, Article 2). Sec. 101. Declaration of Policy. — It is hereby declared the policy of the State to protect and enhance government revenue,institute fair and transparent customsand tariff management that will efficiently facilitate international trade,prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff administration.Towards this end, the State shall: (b) Adopt clear and (c) Establish a regime of (a) Develop and implement transparent customs transparency of and accessibility programs for the rules, regulations, to customs information, customs laws, rules, regulations, continuous enhancement policies and administrative policies, of customs systems and procedures, consistent procedures and practices, in order processes that will with international to ensure informed and diligent harmonize customs standards and compliance with customs procedures; practices and procedures by customs best stakeholders; practices; Sec. 101. Declaration of Policy. — It is hereby declared the policy of the State to protect and enhance government revenue,institute fair and transparent customsand tariff management that will efficiently facilitate international trade,prevent and curtail any form of customs fraud and illegal acts, and modernize customs and tariff administration.Towards this end, the State shall: (d) Consult, (e) Provide a fair and (f) Employ modern practices in coordinate and expeditious customs administration and utilize cooperate with other administrative and information and communications technology in the implementation of government agencies judicial appellate customs functions; and (g) Institute professionalism and meritocracy in and the private sector remedy for customs customs tax administration by in implementing and related grievances attracting and retaining competent and capable customs officers and developing customs and matters; personnel to enforce the provisions of policy; this Act.  (a) Abatement refers to the reduction or Sec. 102. diminution, in whole or in Definition of part, of duties and taxes where payment has not Terms. - As been made. used in this Act: Sec. 904. to Sec. 911, CMTA. Under the RKC, the equivalent term for “abatement” is “remission”  (b)Actual or Outright Exportation refers to the customs procedure applicable to goods which, being in free circulation, leave the Philippine Sec. 102. territory and are intended to remain permanently outside it. Definition of Kinds of exportation: 1. Actual or Outright Exportation – Terms. - As goods physically leave the Philippines without any intention to used in this Act: return it. 2. Constructive or Implied Exportation – goods do not leave the Philippines but are paid for in acceptable foreign currency. These are sales to residents that are paid for in foreign currency acceptable to the Bangko Sentral ng Pilipinas.  (c)Admission refers to the act of bringing imported goodsdirectly or through transit into a free zone. Sec. 102. -Sec. 814. to Sec. 817, CMTA. -The definition emphasized that the Definition of Bureau of Customs has jurisdiction over imported goods which are Terms. - As destined for admission even if brought directly therein or used in this Act: discharged at a port of entry for transitto the free zones. The jurisdiction pertainsto the enforcement authority of the Bureauand not on the power of assessment and collection of duties and taxes.  (d)Airway Bill (AWB) refers to a transport document for airfreight used by airlines and international freight forwarders which specify Sec. 102. the holder or consignee of the bill who has the right to claim Definition of delivery of the goods when they arrive at the port of destination. It Terms. - As is a contract of carriage that includescarrier conditions, such as used in this Act: limitsof liability and claims procedures. In addition, it contains transport instructions to airlinesand carriers, a description of the goods, and applicable transportation charges.  (e)Appeal refers to the remedy by which a person who is aggrieved or adversely affectedby any action, decision,order, or omissionof the Bureau, seeks redressbefore the Bureau,the Secretary of Finance, or competent court, as the case may be. Sec. 102. Sec. 1126. to Sec. 1128, CMTA. Kinds of Appeal: Definition of 1. Administrative Appeal. The remedy by which a person who is aggrieved or adversely affected by any action, decision, order, or omission of subordinate Terms. - As Bureau of Customs officers such as Collectors, seeks redress beforea superior administrative authority such as the Commissioner of Customs,or the used in this Act: Secretary of Finance, as the case may be. 2. Judicial Appeal. The remedy by which a person who is aggrieved or adversely affected by any action,decision, order, or omission of a superioradministrative authority such as the Commissioner of Customs, or the Secretary of Finance, or Agriculture, or Trade and Industry as the case may be, seeks redress to a superior court such as the Court of Tax Appeals divisionor en banc thence, to the Supreme Court, Sec. 102. (f)Assessment refers to the process of determining the Definition of amount of duties and taxes Terms. - As and other charges due on imported and exported goods. used in this Act: Sec. 423. to Sec. 429, CMTA.  (g)Authorized Economic Operator(AEO) Sec. 102. refers to the importer,exporter, customs broker,forwarder, freight forwarder, transport provider, and any otherentity duly Definition of accredited by the Bureaubased on the World CustomsOrganization (WCO) Terms. - As Frameworkof Standards to Secure and Facilitate GlobalTrade, the RevisedKyoto Convention (RKC), the WCO Supply Chain used in this Act: Management Guidelines and the various national best practices to promote trade facilitation and to provide a seamless movement of goods across borders through secure international trade supply chains with the use of risk management and modern technology. -Sec. 1227. to Sec. 1128, CMTA.  (h)Bill of Lading (B/L) refers to a transport Sec. 102. documentissued by shippinglines, carriers and international freight forwarders or non-vessel operating common carrier for Definition of water-borne freight. The holder or consignee of the bill has the right to claim Terms. - As delivery of the goods at the port of destination. It is a contract of carriage that includes earnerconditions, such as limits used in this Act: of liability and claims procedures. In addition, it contains transport instructions to shipping lines and carriers, a description of the goods, and applicable transportation charges. Sec. 102. (i)Bureau refers to the Definition of Bureau of Customs. oSec. 200. to Sec. 205, Terms. - As CMTA. used in this Act:  (j)Carrier refers to the person actually Sec. 102. transporting goods or in charge of or responsible for the operation of the Definition of means of transport such as airlines, shipping lines, freight forwarders, Terms. - As cargo consolidators, non-vessel operating common carriers and other used in this Act: international transport operators. o Sec. 1201. to Sec. 1225, CMTA. Sec. 102. (k)Clearance refers to the completion of customs and other government Definition of formalities necessary to allow goods to enter for consumption, Terms. - As warehousing, transit or transshipment, or to be exported or used in this Act: placed under another customsprocedure. Sec. 102. (k)Clearance refers to the completion of customs and other government Definition of formalities necessary to allow goods to enter for consumption, Terms. - As warehousing, transit or transshipment, or to be exported or used in this Act: placed under another customs procedure. Sec. 102. (l)Commission refers to the Definition of TariffCommission. Sec. 1600 to1607, CMTA. Terms. - As used in this Act:  (m)Conditional Importation refers to the customs procedure known under the RKC as temporary admission in which Sec. 102. certain goods can be brought into a customs territory Definition of conditionally relieved, totally or Terms. - As partially, from payment of import duties and taxes; such goods used in this Act: must be imported for a specific purpose and must be intended for re-exportation within a specified period and without having undergone any substantial change except due to normal depreciation.  (n)Customs Broker refers to any person who is a bona fide holder of a valid Certificate of Sec. 102. Registration/Professional Identification Card issued by the Definition of Professional Regulatory Board Terms. - As and Professional Regulation Commission pursuant to used in this Act: Republic Act No. 9280, as amended, otherwise known as the "Customs Brokers Act of 2004". o Sec. 106, Sec. 107, Sec. 1200, CMTA. Sec. 102. (o)Customs Office refers to any customs administrative unit that Definition of is competent and authorized to performall or any of the Terms. - As functions enumeratedunder customs and tariff laws. used in this Act:  (p)Customs Officer, as distinguished from a clerk or employee, refers to a person Sec. 102. whose duty, not being clerical or manual in nature, involves the Definition of exercise of discretion in performing the function of the Terms. - As Bureau. It may also refer to an employee authorized to perform used in this Act: a specific function of the Bureau as provided in this Act. (q)Customs Territory refers to areas in the Philippines where customs and tariff laws may be enforced.  (r)Entry refers to the act, documentation and process of bringing imported goods into the customs territory, including Sec. 102. goods coming from free zones. Definition of (s)Exportation refers to the act, documentation, and process of bringing goods out of Philippine territory. Terms. - As (t)Export Declaration refers to a used in this Act: statement made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the procedure to be observed for taking out or causing to be taken out any exported goods and the particulars of which the customs administration shall require.  (u)Flexible Clause refer to the power of the President upon recommendation of the NationalEconomic and Development Authority (NEDA): (1) to increase, reduce or remove Sec. 102. existing protective tariff rates of import duty, but in no case shall be higher than Definition of one hundred percent (100%) ad valorem; (2) to establish import quota or to ban Terms. - As importation of any commodity as may be necessary; and (3) to impose additional duty on all import not exceeding ten used in this Act: percent (10%) ad valorem, whenever necessary. o Sec. 1608, CMTA. (v)Foreign Exporter refers to one whose name appears on documentation attesting to the export of the product to the Philippines regardless of the manufacturer's name in the invoice.  (w)Free Zone refers to special economic zones registered with the Philippine Economic Zone Authority (PEZA) under Sec. 102. Republic Act No. 7916, as amended, duly chartered or legislated special economic zones and freeports such as Clark Freeport Definition of Zone; Poro Point Freeport Zone; John Hay Special Economic Zone and Subic Bay Terms. - As Freeport Zone under Republic Act No. 7227, as amended by Republic Act No. 9400; the Aurora Special Economic Zone used in this Act: under Republic Act No. 9490, as amended; the Cagayan Special Economic Zone and Freeport under Republic Act No. 7922; the Zamboanga City Special Economic Zone under Republic Act No. 7903; the Freeport Area of Bataan under Republic Act No. 9728; and such other freeports as established or may be created by law. -Sec. 814 to 817, CMTA.  (x)Goods refer to articles, wares, merchandise and any other items which are subject of importation or exportation. Sec. 102. oSec. 104, CMTA. (y)Goods Declaration refers to a statement Definition of made in the manner prescribed by the Bureau and other appropriate agencies, by which the persons concerned indicate the Terms. - As procedure to be observed in the application for the entry or admission of imported used in this Act: goods and the particulars of which the customs administration shall require. (z)Importation refers to the act of bringing in of goods from a foreign territory into Philippine territory, whether for consumption, warehousing, or admission as defined in this Act.  (aa) Freight Forwarder refers to a local entity that acts as a cargo intermediary and facilitates transport of goods on behalf of its client without Sec. 102. assuming the role of a carrier, which can also perform other forwarding Definition of services, such as booking cargo space, negotiating freight rates, preparing Terms. - As documents, advancing freight payments, providing packing/crating, used in this Act: trucking, and warehousing, engaging as an agent/representative of a foreign non-vessel operating as a common carrier/cargo consolidator named in a master bill of lading as consignee of a consolidated shipment, and other related undertakings.  (bb) International Freight Forwarder refers to persons responsible for the assembly and consolidation of shipments into single lot, and Sec. 102. assuming, in most cases, the full responsibility for the international transport of such shipment Definition of from point of receipt to the point of destination. Terms. - As (cc) Jurisdictional Control refers to the power and rights of the Bureau in exercising supervision and police authority over all seas within the used in this Act: jurisdiction of the Philippine territory and overall coasts, ports, airports, harbors, bays, rivers, and inland waters whether navigable or not from the sea. o Sec. 103, Sec. 300 -301, CMTA  (dd) Lodgement refers to the registration, of a goods declaration with the Bureau; Sec. 102. (ee) Non-Vessel Operating Common Carrier (NVOCC) refers to an entity, which may or may not Definition of own or operate a vessel that provides a point-to- point service which may include several modes of transport and/or undertakes group age of less Terms. - As container load (LCL) shipments and issues the corresponding transport document. used in this Act: (ff) Outright Smuggling refers to an act of importing goods into the country without complete customs prescribed importation documents, or without being cleared by customs or other regulatory government agencies, for the purpose of evading payment of prescribed taxes, duties and other government charges.  (gg) Perishable Good refers to goods liable to perish or goods that depreciate greatly in value while stored or which cannot be kept without great disproportionate Sec. 102. expense, which may be proceeded to, advertised and sold at auction upon notice if deemed reasonable. Definition of (hh) Port of Entry refers to a domestic port open to both domestic and international trade, including Terms. - As principal ports of entry and subports of entry. A principal port of entry is the chief port of entry of the Customs District wherein it is situated and is the used in this Act: permanent station of the District Collector of such port. Subports of entry are under the administrative jurisdiction of the District Collector of the principal port of entry of the Customs District. Port of entry as used in this Act shall include airport of entry.  (ii) Port of Discharge, also called Port of Unloading, refers to a place where a vessel, ship, aircraft or train unloads its shipments, from where they will be dispatched to their respective consignees Sec. 102. (jj) Re-exportation means exportation of goods which have been imported; Definition of (kk) Release of Goods refers to the action by Terms. - As the Bureau to permit goods undergoing clearance to be placed at the disposal of the party concerned; used in this Act: (ll) Refund refers to the return, in whole or in part, of duties and taxes paid on goods; (mm) Security refers to any form of guaranty, such as a surety bond, cash bond, standby letter of credit or irrevocable letter of credit, which ensures the satisfaction of an obligation to the Bureau.  (nn) Smuggling refers to the fraudulent act of importing any goods into the Philippines, or the act of assisting in Sec. 102. receiving, concealing, buying, selling, disposing or transporting such goods, Definition of with full knowledge that the same has been fraudulently imported, or the Terms. - As fraudulent exportation of goods. Goods referred to under this definition shall be used in this Act: known as smuggled goods. (oo) Taxes refer to all taxes, fees and charges imposed under this Act and the National Internal Revenue Code (NIRC) of 1997, as amended, and collected by the Bureau.  (pp) Technical Smuggling refers to the act of importing goods into the country by means of fraudulent, falsified or erroneous declaration of the goods to its nature, kind, quality, quantity Sec. 102. or weight, for the purpose of reducing or avoiding payment of prescribed taxes, duties Definition of and other charges. (qq) Tentative Release refers to a case where Terms. - As the assessment is disputed and pending review, an importer may put up a cash bond equivalent used in this Act: to the duties and taxes due on goods before the importer can obtain the release of said goods. (rr) 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. o Sec. 600-602, CMTA.  (ss) Transshipment refers to the customs procedure under which goods are transferred under customs control from the importing means of transport to the exporting means of transport within the Sec. 102. area of one customs office, which is the office of both importation and exportation. Definition of Sec. 603-604, CMTA. (tt) Traveler refers to any person who Terms. - As temporarily enters the territory of a country in which he or she does not normally reside used in this Act: (non-resident), or who leaves that territory, and any person who leaves the territory of a country in which he or she normally resides (departing resident) or who returns to that territory (returning resident); and (uu) Third Party refers to any person who deals directly with the Bureau, for and on behalf of another person, relating to the SEC. 103. When Importation Begins and Deemed Terminated. – Importation begins when the carrying vessel or aircraft enters the Philippine territory with the intention to unload therein. Importation is deemed terminated when: (a) The duties, taxes and other charges due upon the goods have been paid or secured to be paid, at the port of entry unless the goods are free from duties, taxes and other charges and legal permit for withdrawal has been granted: or (b) In case the goods are deemed free of duties, taxes and other charges, the goods have legally left the jurisdiction of the Bureau. *Importance of knowing when importation begins and deemed terminated. -Tariff and CustomsLaws are appliedonly after importation has begun but before importation is terminated. - Thus, the jurisdiction of the Bureau of Customs over articles, wares, merchandise and other items which are subject to importation, attaches only after importation has begun, which is retained up to the time that importation is deemed terminated. “Importation” refers to the act of bringing in of goods from a foreign territory into the Philippine territory whether for consumption, warehousing, or admission as defined in this Act. [CMTA Sec. 102 (z)]  * Alternative definitions of importation: 1)Importation consists of bringing an article into the country from the outside. Importation is complete when the taxable dutiable commodity is brought within the limits of the port of entry. 2)Importation takes place when merchandise is brought into the customs territory of the Philippine with the intention of unloading the same port. Exception: Transit cargo entered for immediate exportation. 3)The importation is not the making of entry of goods into the customhouse, but merely the bringing them into port, and the importation is complete before the entry into the Customs House.  TYPES OF IMPORTATION 1) Actual Importation – refers to the goods being brought into Philippine Territory from a foreign territory. This is the type of importation referred to in CMTA, Section 103. a) Consumption The term means imported goods that are brought into the Philippine territory for domestic use. Under RKC, the equivalent term for “consumption” is “home use”. Thus, “clearance for home use” means the customs procedure which provides that imported goods enter into free circulation in the Customs Territory upon the payment of any import duties and taxes, chargeable and the accomplishment of all the necessary Customs formalities. [RKC, Specific Annex B, Chapter 1 E1/F2]. “Goods in free circulation” means goods which may be disposed of without any Customs restrictions. b) Warehousing The term means that the imported goods that are brought into the Philippines are to be placed on a structure called bonded warehouse which is under customs control.  TYPES OF IMPORTATION 2)Constructive Importation – refers to purchase of goods from free zones, bonded warehouses and other transactions falling under constructive exportation under the CMTA, Sec. 102 (b) – actual or outright exportation. The “Jurisdiction of the Philippines” for customs purposesis the CUSTOMS TERRITORY. a)Customs Territory [RKC Definition] – means the territory by which the Customs law of a Contracting Partyapplies. b)Territory over which the Bureau of Customs would have jurisdiction – It is the contiguous zone that extends up to 12 nautical miles from the territorial sea. Although technically, not part of the territory of the State, the coastal state may exercise limited jurisdiction over the contiguous zone, to prevent infringement of: (1) Customs, (2) Fiscal (3) Immigration; and (4) Sanitary Laws [United Nations Convention on the Law of the Seas (UNCLOS)]. Territorial Sea, coverage. The belt of the sea located between the coast and the territorial waters of the coastal state on the one hand, and the high seas on the other, extending up to twelve nautical miles from the baselines, in the case of archipelagic states (UNCLOS).   c)Customs Territory, defined under the PEZA Law. The national territory of the Philippines outside of the proclaimed boundaries of the ECOZONESexcept areas specifically declared by other laws and/or presidential proclamations tohave the statusof special economiczones and/or freeports.[R.A. No. 7916, IRR Sec.2(g)] d)Customs Territory, defined under R.A. No. 7227. The portionof the Philippines outside the Subic FreeportZone where the Tariff and Customs Code of the Philippines and other nationaltariff and customslaws are in force and effect [R.A. No. 7227, IRR Sec.3(n)] e)Separate Customs Territory, defined. These are areas in the Philippine territory referred to in the CMTA as freezones. [CMTA Sec. 814 to 817] ANY QUESTION?