CAO 01-2022 Customs Administrative Order (PDF)

CAO 01-2022 Introduction. This Customs Administrative Order (CAO) implements Sections 301 and 303, Chapter 2, Title III,and Sections 801 to 813, Chapter 2, Title VIII, in relation to Section 204 and other relevant sections of Republic Act No. 10863, otherwise known as the CustomsModernization and Ta...

CAO 01-2022 Introduction. This Customs Administrative Order (CAO) implements Sections 301 and 303, Chapter 2, Title III,and Sections 801 to 813, Chapter 2, Title VIII, in relation to Section 204 and other relevant sections of Republic Act No. 10863, otherwise known as the CustomsModernization and Tariff Act (CMTA), and consolidates all existing CAOs dealing on Customs BondedWarehouses (CBWs). Section 1. Scope. This CAO applies to all types of CBWslisted in the CMTA and those that may be created by theSecretary of Finance, upon the recommendation of theCommissioner pursuant to Section 803 of the CMTA Section 2. Objectives. 2.1. To provide the guidelines for the establishment,operation, supervision, and control of CBWs; 2.2. To protect revenue through the institution of safeguard and control measures over CBWs; 2.3. To define the rights and corresponding obligations of operators of CBWs accredited sub-contractors and members; 2.4. To improve the level of compliance of CBW operators with customs warehousing laws and regulations and provide penalties for non-compliance; 2.5. To establish, develop and implement a CBW raw materials management system making full use of information and communications technology and more transparent procedures which would aid the Bureau in the monitoring, supervision and control of CBW operations; and 2.6. To align Customs regulations on CBWs with international standards and best practices Section 3. Definition of Terms. For purposes of this CAO, the following terms are defined accordingly: 3.1. Accessories — shall refer to goods which are neither raw materials nor supplies which enhance the finishedproducts to be exported. 3.2. Accountable Officer — shall refer to a responsibleofficial of the CBW named and designated by the operator as the person, other than himself, answerable and liable to the Bureau for all the operational aspects of the warehouse. 3.3. Accredited Client/End-User — shall refer to a natural or juridical person authorized by the Bureau to be a client/end-user of Industry-specific CBW (ICBW). 3.4. Accredited Client-Exporter — shall refer to client-exporters accredited by the Bureau to receivefinished goods manufactured by MCBWs to be used in their registered export activities. 3.5. Airlines Customs Bonded Warehouse and Airlines Catering Customs Bonded Warehouse — shall refer to an Industry-Specific Customs Bonded Warehouses (ICBW) where supplies, spare parts, in-flight duty-free items and such other goods necessary for the reasonable requirements of the aircraft, its crew and passengers are restored. 3.6. Alert Order — shall refer to a written Order issued by the Commissioner, District Collector!, or other customs officers authorized in writing by theCommissioner after the Lodgement of GoodsDeclaration and before their actual release from customs custody, on the basis of derogatory information regarding possible non-compliance with the CMTA and other laws, rules and regulations enforced by the Bureau. 3.7. Authority to Operate — shall refer to the authority given by the Bureau allowing persons, natural or juridical, to establish and operate a CBW. 3.8. Authority to Transfer or Sell (ATS) — shall refer to the document issued by the District Collector allowing transfer or sale of imported raw materials, semi-finishedproducts, or finished products to another CBW Client-Exporter, Client/End-User, or Freeport Zone Locator for subsequent export. Transfers to subcontractors or members of CCBW shall be covered by Authority to Transfer only. 3.9. Automated Inventory Management System (AIMS)—shall refer to the automated system to be adopted by the CBW operator as a tool to determine and monitor the stock inventory of imported raw materials from the time of its entry into the CBW up to liquidation of the covering warehousing entry.3.10. Automated Bonds Management System (ABMS) —shall refer to the automated system to be utilized by theBureau as a tool in the effective monitoring and cancellation of bonds for the liquidation of raw materials/entries, 3.11. Bureau — shall refer to the Bureau of Customs. 3.12. Certificate of Authority to Operate — shall refer to the document signed by the Commissioner of Customs and issued by the Bureau to persons, natural or juridical,duly authorized to operate a CBW, to be an accredited member, accredited subcontractor or accredited client/end-user stating its name, authority (license)number, exact office and warehouse address, date of grant and expiry of authority and type of the approved warehouse, renewable every three (3) years, after proper reevaluation and favorable recommendation by the CBWC. 3.13. Certificate of Identification (CI) — shall refer to the document certifying that the finished products to be exported is from a particular warehousing entry, andalso to determine whether or not a particular entry is partially or fully consumed. 3.14. Certificate of Importer Accreditation — shall refer to the document issued by the Bureau to an entity registered as importer and recognized to electronically lodge goods declaration in the Bureau’s existing registration system. 3.15. Certificate of Inspection and Loading (CIL) — shall refer to the document issued by the Bureau certifying the conduct of inspection over the cargo for export and its actual loading on the exporting carrier. 3.16. Client-Exporter — shall refer to a natural or juridical person engaged in the manufacture or export of products utilizing goods, raw materials, accessories and packing materials sourced from a CBW and members subject to the condition that finished products shall be exported within the period prescribed by existing laws and regulations 3.17. Client Profile Registration System (CPRS) — shall refer to the system of registration provided for Bureau stakeholders adopted under Customs MemorandumOrder (CMO) No. 39-2008. 3.18. Compliance Rate System (CRS) — shall refer to a procedure to be adopted by the Bureau in assessing the degree of compliance of a warehouse operator with relevant CBW rules and regulations and in taking any action on the CBW’'s Authority to Operate or any extension thereof. The CRS shall be developed by the Bureau subject to review by the Department of Finance (DOF) and consultation with concerned stakeholders. CRS may be applied to accredited members of CCBWsand accredited subcontractors. 3.19. Customs Bonded Warehouse (CBW) — shall refer to a warehouse authorized/licensed by the Bureau to import, receive, and store, without payment of duties and taxes and under bond, goods, raw materials,accessories and packing materials either formanufacture into finished products for export or storage for the account of accredited exporter/client. 3.20. Customs Bonded Warehouse Committee (CBWC)— shall refer to the committee created to act on applications for the establishment and operation of CBW, renewal of Authority to Operate CBWs, application as member of a CCBW, application as subcontractor of a CBW and other related matters pertaining to the operation of a CBW. 3.21. Customs Bonded Warehouse Operator — shall refer to a natural or juridical person who has a duly approved Authority to Operate a CBW issued by the Bureau. For CCBWs, CBW operator shall refer to the mother warehouse. 3.22. Customs Premises — shall include customs offices, facilities, warehouses, ports, airports, wharves,infrastructure and other premises over which the Bureau shall have exclusive control, direction, and management for customs purposes. 3.23. Diversion — shall refer to a violation of customs law committed when an imported material entered through the warehousing scheme and destined for transit to a particular CBW, Free Zone locator/enterprise, or from the CBW to the port or airport for exportation, is brought to some place other than its intended destination. 3.24. Entry — shall refer to the act, documentation, and process of bringing imported goods into the customs territory, including goods coming from the Free Zones. 3.25. Examination and Storage Area — shall refer to an area of a CCBW and ICBW with sufficient space for examination and storage of goods. 3.26. Exportation — shall refer to the act, documentation, and process of bringing goods out of Philippine Territory. 3.27. Extension Warehouse — shall refer to a separate warehouse authorized by the Bureau to form part of an already existing CBW to optimize capacity and efficiencyin its operations. 3.28. Free Zone — shall refer to special economic zones registered with the Philippine Economic Zone Authority (PEZA) under Republic Act No. 7916, as amended, duly chartered or legislated special economic zones and free ports such as ClarkFreeport Zone; Poro Point Freeport Zone; John HaySpecial Economic Zone and Subic Bay Freeport Zone under Republic Act No. 7227, as amended by Republic ActNo. 9400; the Aurora Special Economic Zone underRepublic Act No. 9490, as amended; the Cagayan SpecialEconomic Zone and Freeport under Republic Act No.7922; the Zamboanga City Special Economic Zone underRepublic 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. 3.29. Formula of Manufacture (FOM) — shall refer to the formula of conversion issued by the Industrial Technology Development Institute (ITDI) to the CBW operator and members, determining the raw material usage and wastages of a particular finished product for export and subsequent liquidation. 3.30. Garments and Textile Industry Development Office (GTIDO) — shall refer to the government agency attached to theDepartment of Trade and Industry mandated to assist the Bureau in granting authority to an operator or to be a member or subcontractor of a warehouse involved in the manufacture of garments or textile for export. 3.31. Goods — shall refer to articles, wares, merchandise and any other items which are subject of importation or exportation. 3.32. Goods Declaration — shall refer to 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. 3.33. Importation — shall refer to the act of bringing in of goods from a foreign territory into Philippine territory, whether for consumption, warehousing, oradmission. 3.34. Liquidation of Raw Materials — shall refer to the process of accounting the usage of bonded raw materials, including wastages, in the manufacture of finished products for export as against the importation by CBWs of raw materials using the FOM. 3.35. Lodgement — shall refer to the registration of a goods declaration with the Bureau. 3.36. Member — shall refer to an entity accredited to operate under an existing CCBW established for the manufacture of products using imported duty and tax-free raw materials or components subject to the condition that finished products shall be exported within the period prescribed by existing laws and regulations.Members may either be accredited by the Bureau alone or jointly with the GTIDO in case of entities engaged in the manufacture of garments. 3.37. Multinational Regional Bonded Warehouse — shall refer to an Industry-Specific CBW authorized by the Board of Investments (BOT) in proper cases, to serve as the supply depot for the storage, deposit, safe-keeping of spare parts components, semi-finished products and raw materials including the packing,covering, putting-up, marking, labeling, cutting or altering to customer's satisfaction, mounting and/or packaging into kits or marketable lots thereof to fill up transactions and sales made by its officers of parent companies and to serving as a storage of goods purchase locally by the home office of the multinational for export abroad under the supervision of the Bureau. 3.38. Multi-Purpose Declaration — shall refer to a customs single administrative document accomplished by the importer, or his duly licensed broker, under oath and submitted to the Bureau for purposes of declaring and identifying among others the nature of the article/s being imported, its value, volume, weight, and any relevant description thereof, whether entered through consumption or through warehousing which will assist the Bureau in assessing the taxes and duties due on the imported article. 3.39. Perishable Goods — shall refer to goods liable to perish such as agricultural products, flavorings, chemicals with maximum shelf life of six (6) months or other similar items. 3.40. Physical Security Feature — shall refer to a system to secure and monitor premises, storage and production areas of CBWs including the safety of personnel. 3.41. Raw Material Liquidation System (RMLS) — shall refer to an automated system to be adopted and utilized by the Bureau in determining the volume and value of the raw materials exported and subject for liquidation, including the duties and taxes due on the allowableresidues/wastages/by-products and other portion of the imported article/s, entered through warehousing, no longer usable for the manufacture of the goods to be exported. 3.42. Security — shall refer 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 of Customs. 3.43. Semi-finished products — shall refer to imported raw materials or goods that have undergone processing which shall be used in the further manufacture of finished products for export. They are also termed as “intermediate products.” 3.44. Sub-contractor — shall refer to a person or company accredited by the Bureau, and GTIDO in case of garments, to undertake or perform, for a definite period, certain manufacturing operations or activities incidental to the manufacture of bonded raw materials into finished products in behalf of a CBW and members in cases where the latter’s facilities are insufficient to address its immediate requirements or due to lack of material time to meet export commitments. 3.45. Supplies — shall refer to imported consumable and disposable indirect materials that are needed in the maintenance, operation and production of the MCBW.Such materials are not included in FOM of the finishedproducts and are not duty/tax-free unless authorized by the BOI or exempted by the DOF. 3.46. Transfer Note — shall refer to a customs document that accompanies the transfer or transit underguard of bonded imported goods to a Free Zone locator/enterprise or to another CBW and serves as proof of delivery or receipt of the goods at its intended destination duly acknowledged on its face by the Collector of Customs or his duly authorized representative. It is also Commonly referred to as a “boatnote”. 3.47. Transit — shall refer to the customs procedure under which goods are transported under customs control from one customs office to another or to a FreeZone locator/enterprise. 3.48. Unauthorized Repacking — shall refer to the act of fraudulent concealment, removal, or repacking merchandise in any CBW; or fraudulent alteration,defacement, or obliteration of any markings or numbers placed upon packages deposited in such warehouse, or aiding or abetting any such acts. 3.49. Unauthorized Withdrawal — shall refer to the withdrawal of any material/goods stored in a CBW without the duly processed withdrawal or requisition slip, or the substitution of materials or finished products with local materials or goods. Unauthorized withdrawal shall also include the act of directly transferring the imported materials to an Accredited Member or Subcontractor without passing through the physical facility of the CBW, or the transfer of such materials to a non-accredited member or subcontractor. 3.50. Wastage Valuation Data Base (WVDB) — shall refer to a bank of information and reference values which shall be utilized by the Bureau in assessing the taxes and duties due on the allowable residue/wastage/by-products or other portion of the imported article/s which can no longer be used for the manufacture of the goods to be exported.