Warehouse Operations Management Handout No. 3 PDF

NAME: _____________________________________________ COURSE/ Yr. & Sec.:_________________________________ TEACHER: SHERYL S. SABEDA, LPT. 1 INTRODUCTION This handout will focus on Establishment and Supervision of Customs Bonded Warehouses. The General Provis...

NAME: _____________________________________________ COURSE/ Yr. & Sec.:_________________________________ TEACHER: SHERYL S. SABEDA, LPT. 1 INTRODUCTION This handout will focus on Establishment and Supervision of Customs Bonded Warehouses. The General Provision is based on Customs Administrative Order (CAO) No.13-2019 – Customs Bonded Warehouse. The given exercises are deliberately chosen to motivate the student’s interests in learning process and to inculcate in them the significance of warehouses in customs industry. OBJECTIVES At the end of the discussion, you will be able to: Familiarize with the rules and regulation for the establishment, operation, supervision and control of customs bonded warehouses Identify the duty of District Collector in Customs Bonded Warehouse Identify the significance of warehouses in customs industry DEFINITION OF TERMS Customs Bond – is a contract that is given to ensure the performance of an obligation imposed by the law or regulation. A bond is like an insurance policy that guarantees payment to the Bureau of Customs if a required act is not performed. It allows importers to take possession of their goods before all Customs formalities are completed. It also allows a carrier to move goods under bond from one place to another before those goods are actually entered for consumption with duties and taxes paid. Customs Bonded Warehouse (CBW) - shall refer to a warehouse facility 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 for the manufacture into finished products for export or storage for the account of authorized end users or clients. Customs Bonded Warehouse Operator – is a natural or juridical person who has a duly approved license to operate a CBW issued by the BOC. Customs Facilities and Warehouses- shall refer to facilities for temporary storage of goods established and authorized by the Bureau. 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. Customs Territory- shall refer to areas in the Philippines where customs and tariff laws may be enforced. 2 Garments and Textile Imports Services (GTIS) – The government agency attached to the Department of Trade and Industry mandated to assist the BOC in granting license to be an operator or to be a member or subcontractor of a warehouse facility involved in the manufacture of garments or textiles for export. Goods – shall refer to articles, wares, merchandise and any other items which are subject of importation or exportation. 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, Lodgement- shall refer to the registration of a goods declaration with the Bureau. Phividec Industrial Authority (PIA) - was created on August 13, 1974 through Presidential Decree No. 538, as amended, to carry out the policy of the Government to encourage, promote and sustain the economic and social growth of the country. Likewise, it created the PHIVIDEC Industrial Areas which shall be proclaimed, designated and specified by Presidential Proclamations. The 3,000-hectare PHIVIDEC Industrial Estate in Misamis Oriental (PIE-MO), covering 13 barangays in the Municipalities of Tagoloan and Villanueva, is the first Industrial Area that is embarked for the PHIVIDEC IA. Philippine Ports Authority (PPA) - is a government-owned and controlled corporation under the Department of Transportation as an attached agency. It is responsible for financing, management and operations of public ports throughout the Philippines, except the port of Cebu, which is under the Cebu Ports Authority. 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. Subic Bay Metropolitan Authority (SMBA) - is a governmental agency of the Philippine government. The agency has played a significant part in the development of the Subic Bay Freeport and the Special Economic Zone into a self-sustainable area that promotes the industrial, commercial, investment, and financial areas of trade in the zone as well as in the country of the Philippines itself. Supplies – refer to imported consumable and disposable indirect materials that are needed in the maintenance, operation and production of a CBMW. Such materials are not included in the formula of manufacture of the finished products and are not duty/tax-free unless authorized by the BOI or exempted by the DOF. Warehouse – any enclosed structure used for storage is a warehouse. 3 ESTABLISHMENT AND SUPERVISION OF CUSTOMS BONDED WAREHOUSES Establishment of Customs Warehouses. When the business of the port and trade requires such facilities, the District Collector subject to the approval of the Commissioner shall designate and establish warehouses for use as public and private bonded warehouses, yards, or for other special purposes. Supervision and Control over Customs Warehouses. All such warehouses and facilities, incluidng their expansion, extensions and additional facilities shall be subject to the supervision and control of the District Collector, who shall impose such conditions as may be deemed necessary for the protection of the revenue and of goods stored therein. In the exercise of the District Collector’s supervisory functions herein and in the Bureau’s implementation on CBW/CFW CMTA provisions, existing contracts of private operators with appropriate government agency or regulator, such as, but not limited to, the PPA, SBMA, and Phividec Industrial Authority (PIA) and their respective authorities and powers already granted by law pertinent to such contracts, shall not be impaired or adversely affected. RULES IN THE OPERATION OF CBW Goods manufactured in whole or in part of imported materials, and intended for exportation, may be made and manufactured in a bonded manufacturing warehouse subject to the following conditions: 1. The manufacturer shall file sufficient security for the faithful observance of all laws, rules and regulations applicable thereto; 2. The application for the establishment of bonded warehouses must be made in writing and filed with the customs officer, describing the premises, the location, and capacity of the same, and the purpose of which the building is to be used; 3. From the receipt of the application, the customs officer shall examine the premises, evaluate its location, construction, and means provided for the safekeeping of the goods; 4. The customs officer may authorize the establishment of the customs bonded warehouse, and accept a bond for its operation and maintenance if the applicant was compliant with the prescribed requirements; and, 5. The operator of the bonded warehouse shall pay an annual supervision fee in an amount to be fixed by the Commissioner. TYPES OF CUSTOMS BONDED WAREHOUSES Customs bonded warehouses may be classified as either: 4 1. Manufacturing Customs Bonded Warehouse (MCBW). It is a warehouse facility established for the manufacture of products utilizing raw materials or components that are imported duty and tax-free conditioned on the exportation of the finished products within the period prescribed herein (CAO-13-2019) or withdrawal for domestic consumption upon payment of duties and taxes. Manufacturing customs bonded warehouse may be of the following types: a. Miscellaneous Customs Bonded Warehouse. It is a warehouse facility established and duly authorized to import, receive, and store, duty and tax free and under bond, raw materials, accessories, packaging and packing materials for products and commodities not covered under any specific industry, for manufacture into finished products for export within a specified period. b. Garments and Textile Manufacturing Bonded Warehouse (GTMBW). It is a warehouse facility established and jointly issued by the Bureau and GTIDO to import, receive, and store duty and tax free and under bond, raw materials, accessories, packaging and packing materials for the manufacture of garments or textiles for export within a specified period. c. Customs Common Bonded Warehouse. It is a warehouse facility established and duly authorized by the Bureau alone and jointly with GTIDO, in case of garments industry, to import, receive, store, duty free and under bond, raw materials, accessories, packaging and packing materials for the account of its accredited members for manufacture into finished products for export. d. Industry-Specific Bonded Warehouse. It is a warehouse facility duly licensed by the BOC to import under bond and under its name and account, raw materials (except fibers, yarns, fabrics and accessories for the manufacture of garments) for storage and subsequent sale and transfer to the following where these shall be manufactured into export products: i. Licensed client exporter; ii. MCBW; or iii. PEZA or Freeport locator e. Private Bonded Manufacturing Warehouse (PvtBMW). It is a warehouse facility licensed by the Bureau to import, receive and store goods for production for export, or for domestic consumption the withdrawal of which shall be made only upon payment of duties and taxes other charges due. 2. Bonded Non- Manufacturing Warehouse (BNMW). It is a facility where goods are stored duty-and tax-free conditioned on the eventual withdrawal of the goods for consumption, or for export, or for transit, or for any other clearance regime, within the period prescribed, such as: a. Public bonded warehouse. It is a warehouse facility duly authorized to receive and store general cargoes for exportation, transfer to another CBW, free zones, or for local consumption, in the same state when the cargoes were imported, Goods for local 5  consumption shall only be withdrawn upon payment of the assessed duties, taxes and other charges. b. Private bonded warehouse. It is a warehouse facility duly authorized to import, receive and store goods intended for domestic consumption, withdrawal of which shall be made only upon payment of the corresponding duties, taxes and other charges. c. Airlines Customs Bonded Warehouse and Airlines Catering Customs Bonded Warehouse. It is a special type CBW which stores supplies, spare parts, in-flight duty- free items and such other goods necessary for the reasonable requirements of the aircraft, its crew and passengers. d. Multinational Regional Bonded Warehouse. It is a warehouse facility licensed by the BOI 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 consumer’s satisfaction, mounting and/or packaging, into its 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. TYPES OF CUSTOMS FACILITIES AND WAREHOUSES Customs Facilities and Warehouses (CFW) refers to facilities for temporary storage of goods established and authorized by the Bureau pursuant to Title VIII, Chapter 2 of the CMTA. These include: a. Container yard. It is a facility duly authorized to accept and store container vans, loaded or empty, intended for international shipping for storage within the period allowed under applicable customs laws, rules, and regulations. Container yard may be established either within the seaport or off-dock, as may be allowed under customs laws, rules, and regulations. b. Container freight station. It is a facility duly authorized to accept and store containers loaded with consolidated shipments, for temporary storage, examination, stripping, stuffing, and other related activities as may be allowed under customs laws, rules, and regulations. A container freight station may be established either within the seaport or off-dock as may be allowed under customs laws, rules, and regulations. c. Seaport warehouses. It is a customs facility established within the seaport premises or off-dock for purposes of storage, examination, stripping, or safekeeping of imported goods. d. Airport warehouses. It is a customs facility established within the airport premises or off-terminal for purposes of storage, examination, stripping, or safekeeping of imported goods. 6 Creation and Dissolution of CBW The Secretary of Finance may, upon the recommendation of the Commissioner, create or dissolve certain types of warehouses subject to consultation with the National Economic Development Authority (NEDA) and the Department of Trade and Industry (DTI), and based on prevailing economic circumstances. Issuance of Authority to Operate The Bureau shall be responsible for the issuance of an Authority to Operate CBW’s including the imposition of requirements for their establishment and operation, setting forth the rights and obligations of operators, and the penalties and sanctions for violations of these rules. 7  WAREHOUSE OPERATION MANAGMENT ACTIVITY Handout No.3 NAME: _______________________________ COURSE/ Yr. & Sec. _____________________ Answer the following questions: (5 points each) 1. Compare and Contrast: How do the different types of Customs Bonded Warehouses (MCBW, BNMW, and CFW) differ in terms of their purpose, goods handled, and regulatory requirements? 2. How do the different types of Customs Bonded Warehouses (MCBW, BNMW, and CFW) differ in terms of their purpose, goods handled, and regulatory requirements? Differentiate by using a chart. 8 3. If the Secretary of Finance receives a recommendation from the Commissioner to dissolve a specific type of Customs Bonded Warehouse (CBW), what steps are typically taken before a final decision is made according to the provided information? 4. What are the conditions and steps that a manufacturer needs to follow in order to establish and operate a bonded manufacturing warehouse for goods manufactured using imported materials intended for exportation, according to the provided rules? 9