Republic Act No. 10863 "Customs Modernization and Tariff Act (CMTA)" (Title 3-4)

TITLE III

CUSTOMS JURISDICTION AND CUSTOMS CONTROL

CHAPTER 1

CUSTOMS JURISDICTION

Section 300. Customs Jurisdiction. – For the effective implementation of this Act, the Bureau shall exercise jurisdiction over all seas within Philippine territory and all coasts, ports, airports, harbors, bays, rivers and inland waters whether navigable or not from the sea and any means of conveyance.

The Bureau shall pursue imported goods subject to seizure during its transport by land, water and air and shall exercise jurisdiction as may be necessary for the effective enforcement of this Act. When a vessel or aircraft becomes subject to seizure for violation of this Act, a pursuit of such vessel or aircraft which began within the territorial waters or air space may continue beyond the same, and the vessel or aircraft may be seized in the high seas or international air space.

CHAPTER 2

CUSTOMS CONTROL

Section 301. Customs Control Over Goods. – All goods, including means of transport, entering or leaving the customs territory, regardless of whether they are liable to duties and taxes, shall be subject to customs control to ensure compliance with this Act.

In the application of customs control, the Bureau shall employ audit-based controls and risk management systems, use automation to the fullest extent possible, and adopt a compliance measurement strategy to support risk management.

The Bureau shall seek to cooperate and conclude mutual administrative assistance agreements with other customs administrations to enhance customs control. The Bureau shall consult, coordinate, and cooperate with other government regulatory agencies, free zones authorities, and the customs stakeholders, in general, to enhance customs control.

Section 302. Enforcement of Port Regulation of the Bureau of Quarantine. – Customs officials and employees shall cooperate with the quarantine authorities in the enforcement of the port quarantine regulations promulgated by the Bureau of Quarantine and shall give effect to the same insofar as connected with matters of shipping and navigation.

Section 303. Control Over Premises Used for Customs Purposes. – The Bureau shall, for customs purposes, have exclusive control, direction and management of customs offices, facilities, warehouses, ports, airports, wharves, infrastructure and other premises in the Customs Districts, in all cases without prejudice to the general police powers of the local government units (LGUs), the Philippine Coast Guard and of law enforcement agencies in the exercise of their respective functions.

Section 304. Power of the President to Subject Premises to Customs Jurisdiction. – When public interest requires, the President may, by executive order, declare any public wharf, landing place, infrastructure, street or land, in any port of entry under the jurisdiction of the Bureau as may be necessary, for customs purposes and/or to authorize a port or terminal operator to transfer overstaying cargoes in an inland depot or terminal.

Section 305. Trespass or Obstruction of Customs Premises. – No person shall enter or obstruct a customs office, warehouse, port, airport, wharf, or other premises under the control of the Bureau without prior authority, including the streets or alleys where these faculties are located.

Section 306. Special Surveillance for the Protection of Customs Revenue and Prevention of Smuggling. – The Bureau shall conduct surveillance on vessels or aircrafts entering Philippine territory and on imported goods entering the customs office: Provided, That the function of the Philippine Coast Guard to prevent and suppress the illegal entry of these goods, smuggling and other forms of customs fraud and violations of maritime law and its proper surveillance of vessels entering and/or leaving Philippine territory as provided in Republic Act No. 9993, otherwise known as the "Philippine Coast Guard Law of 2009", shall continue to be in force

Section 307. Temporary Storage of Goods. – Subject to the rules and regulations to be issued by the Secretary of Finance, the Commissioner shall establish a system for temporary storage of imports prior to goods declaration in case of abandoned or overstaying-goods.

TITLE IV

IMPORT CLEARANCE AND FORMALITIES

CHAPTER 1

GOODS DECLARATION

Section 400. Goods to be Imported through Customs Office. – All goods imported into the Philippines shall be entered through a customs office at a port of entry, or may be admitted to or removed from a free zone as defined in this Act, as the case may be.

Section 401. Importations Subject to Goods Declaration. – Unless otherwise provided for in this Act, all imported goods shall be subject to the lodgement of a goods declaration. A goods declaration may be for consumption, for customs bonded warehousing, for admission, for conditional importation, or for customs transit.

Section 402. Goods Declaration for Consumption. – All goods declaration for consumption shall be cleared through a formal entry process except for the following goods which shall be cleared through an informal entry process:

(a) Goods of a commercial nature with Free on Board (FOB) or Free Carrier At (FCA) value of less than fifty thousand pesos (P50,000.00). Every three (3) years after the effectivity of this Act, the Secretary of Finance shall adjust this amount as provided herein to its present value, using the Consumer Price Index (CPI) as published by the PSA; and

(b) Personal and household effects or goods, not in commercial quantity, imported in a passenger's baggage or mail.

The Commissioner may adjust the value of goods of commercial nature that shall be cleared through an informal entry process without prejudice to the periodic adjustment period in subparagraph (a) of this section.

All importations entered through a formal entry process shall be covered by a letter of credit or any verifiable commercial document evidencing payment or in cases where there is no sale for export, by any commercial document indicating the commercial value of the goods.

Section 403. Provisional Goods Declaration. – Where the declarant does not have all the information or supporting documents required to complete the goods declaration, the lodging of a provisional goods declaration may be allowed: Provided, That it substantially contains the necessary information required by the Bureau and the declarant undertakes to complete the information or submit the supporting documents within forty-five (45) days from the filing of the provisional goods declaration, which period may be extended by the Bureau for another forty-five (45) days for valid reasons.

If the Bureau accepts a provisional goods declaration, the duty treatment of the goods shall not be different from that of goods with complete declaration. 'I Goods under a provisional goods declaration may be released upon posting of any required security equivalent to the amount ascertained to be the applicable duties and taxes.

Section 404. Owner of Imported Goods. – All goods imported into the Philippines shall be deemed to be the property of the consignee or the holder of the bill of lading, airway bill or other equivalent transport document if duly endorsed by the consignee therein, or, if consigned to order, duly endorsed by the consignor. The underwriters of abandoned goods and the salvors of goods saved from wreck at sea, coast, or in any area of the Philippines, may be regarded as the consignees. SEC. 405. Liability of Importer for Duties and Taxes. – Unless relieved by laws or regulations, the liability for duties, taxes, fees, and other charges attached to importation constitutes a personal debt due and demandable against the importer in favor of the government and shall be discharged only upon payment of duties, taxes, fees and other charges. It also constitutes alien on the imported goods which may be enforced while such goods are under customs' custody.

Section 406. Importations by the Government. – Except those provided for in Section 800 of this Act, all importations by the government for its own use or that of its subordinate branches or instrumentalities, or corporations, agencies or instrumentalities owned or controlled by the government, shall be subject to the duties, taxes, fees and other charges under this Act.

Section 407. Goods Declaration and Period of Filing. – As far as practicable, the format of the goods declaration shall conform with international standards. The data required in the goods declaration shall be limited to such particulars that are deemed necessary for the assessment and collection of duties and taxes, the compilation of statistics and compliance with this Act. The Bureau shall require the electronic lodgement of the goods declaration.

The Bureau shall only require supporting documents necessary for customs control to ensure that all requirements of the law have been complied with. Translation of supporting documents shall not be required except when necessary.

Goods declaration must be lodged within fifteen (15) days from the date of discharge of the last package from the vessel or aircraft. The period to file the goods declaration may, upon request, be extended on valid grounds for another fifteen (15) days: Provided, That the request is made before the expiration of the original period within which to file the goods declaration: Provided, however, That the period of the lodgement of the goods declaration maybe adjusted by the Commissioner.

Section 408. Lodgement and Amendment of Goods Declaration. – The Bureau shall permit the electronic lodgement of the goods declaration at any designated customs office. The Bureau shall, for valid reason and under terms and conditions provided by regulation, permit the declarant to amend the goods declaration that has already been lodged: Provided, That the request to amend the goods declaration, together with the intended amendments, must be received prior to final assessment or examination of the goods.

Section 409. Advance Lodgement and Clearance. – The Bureau may provide for the lodgement and clearance of goods declaration and supporting documents prior to the arrival of the goods under such terms and conditions as may be provided by rules and regulations to be promulgated under this Act.

Section 410. Entry of Goods in Part for Consumption and in Part for Warehousing. – Goods declaration covered by one bill of lading or airway bill over goods which are meant in part for consumption and in part for warehousing may be both entered simultaneously for release at the port of entry.

Section 411. Contents of Goods Declaration. – Goods declaration shall contain the names of the consignee, importing vessel or aircraft port of departure, port of destination and date of arrival, the number and marks of packages, or the quantity, if in bulk, the nature and correct commodity description of the goods contained therein, its value as set forth in a proper invoice, and such other information as may be required by rules and regulations. Where the declarant does not have all the information required to make the goods declaration, a provisional or incomplete goods declaration shall, for certain cases and for reasons deemed valid by the Bureau, be allowed to be lodged: Provided, That it contains the particulars deemed necessary by the Bureau for the acceptance of the entry filed and that the declarant undertakes to complete it within forty-five (45) days from the filing of the provisional goods declaration in accordance with Section 403 of this Act

Section 412. Statements to be Provided in the Goods Declaration. – No entry of imported goods shall be allowed unless the goods declaration has been lodged with the Bureau. The goods declaration shall, under penalties of falsification or perjury, contain the following statements:

(a) The invoice and goods declaration contain an accurate and faithful account of the prices paid or payable for the goods and other adjustments to the price actually paid or payable, and that nothing has been omitted therefrom or concealed whereby the government of the Republic of the Philippines might be defrauded of any part of the duties and taxes lawfully due on the goods; and

(b) To the best of the declarant's information and belief, all the invoices and bills of lading or airway bills relating to the goods are the only ones in existence relating to the importation in question, and that these documents are in the same state as when they were received by the declarant, and the declaration thereon are in all respects genuine and true.

Goods declaration shall be submitted electronically pursuant to Republic Act No. 8792, otherwise known as the "Electronic Commerce Act of 2000". Such declarations when printed and certified by a competent customs officer as a faithful reproduction of the electronic submission shall be considered as actionable documents for purposes of prosecuting a declarant if the declarations are found to be fraudulent.

Section 413. Description of Goods. – Under such terms and conditions prescribed under the rules and regulations, the description of the goods in the goods declaration must be sufficient and specific in detail to enable the goods to be identified for customs valuation, statistical purposes, and classification to the appropriate tariff heading and subheading in the currency of the invoice, and in such other particulars necessary for the proper assessment and collection of duties and taxes. The quantity and value of each of the several classes of goods shall be separately declared according to their respective headings or subheadings and the totals of each heading or subheading shall be duly shown.

Section 414. Commercial and Noncommercial Invoice. – Commercial invoice of imported goods shall contain the following:

(a) The agreed price paid or to be p aid for the goods;

(b) The adjustments to the price paid or to be paid as defined in Section 701(1) of this Act, if not yet included in the invoice, as may be applicable;

(c) The names of the buyer, seller, and the time and place of sale;

(d) The port of entry;

(e) A sufficient description to enable the accurate identification of goods for tariff classification, customs valuation, and statistical purposes, indicating the correct commodity description, in customary term or commercial designation, the grade or quality, numbers, marks or symbols under which they are sold by the seller or manufacturer, together with the marks and number of packages in which the goods are packed;

(f) The quantities in the weights or measures of the goods shipped; and

(g) Any other fact deemed necessary for the proper examination, customs valuation, and tariff classification of the goods as may be prescribed by rules and regulations.

To the extent possible, the above requirements shall also apply to goods imported but not covered by sale, such as goods on consignment or lease, samples, or donations, covered by a consignment, pro forma invoice, or other noncommercial invoice.

Section 415. Mode of Payment and Terms of Trade. – Subject to existing laws and rules on foreign currency exchange, the internationally accepted standards and practices on the mode of payment or remittance covering import and export transactions, including standards developed by international trading bodies such as the International Chamber of Commerce (ICC) on trading terms (incoterms) and on international letters of credit such as the Uniform Customs and Practice for Documentary Credits (UCPDC), shall be recognized.

Section 416. Examination of Samples. – Customs officers shall see to it that representative samples taken during examination shall be properly receipted for and retained within a reasonable period of time. The quantity and value of the samples taken shall be noted in the specified box of goods declaration or electronic form. Such samples shall be duly labeled as will definitely identify them with the importation for which they are taken.

Section 417. Forwarding of Cargo and Remains of Wrecked Vessel or Aircraft. – When vessels or aircrafts are wrecked within the Philippines, the original owners or consignees of the cargo, or by its underwriters, in ease of abandonment, may seek approval from the Bureau to forward the goods saved from the wreck to the ports of destination without going through, the customs office in the district in which the goods were cast ashore or unloaded. Upon approval, the goods may be forwarded with particular manifests and duly certified by a customs officer in charge of the goods.

The owner of the vessel or aircraft may be permitted to export the remains of the wreck upon proper examination and inspection. The remains of a wrecked vessel shall include not only its hull and rigging, but also all sea stores, goods and equipment, such as sails, ropes and chain anchors.

Section 418. Derelicts and Goods from Abandoned Wrecks. – Derelicts and all goods recovered from sea or from abandoned wrecks shall be under the jurisdiction of the port where the goods arrive, and shall be retained in the custody of the Bureau. If not claimed by the owner, underwriter or salvor, the same shall be deemed as property of the government.

When such goods are brought into port by lighters or other craft, each vessel shall submit a manifest of their respective cargo.

The customs officer nearest the scene of the wreck shall take charge of the goods saved and shall give immediate notice to the District Collector or the nearest customs office.

In order to prevent any attempt to commit fraud, the District Collector shall be represented at the salvage of the cargo by customs officers who shall examine and receive the inventory made on the cargo.

Derelicts and goods salvaged from foreign vessels or aircrafts recovered from sea or wreck are prima facie dutiable and may be entered for consumption or warehousing. If claimed to be of Philippine production, and consequently conditionally duty-free, proof must be submitted as in ordinary cases of reimportation of goods. Foreign goods landed from a vessel or aircraft in distress is dutiable if sold or disposed of in the Philippines.

Before any goods taken from a recent wreck are admitted to the customs territory, the same shall be appraised, and the owner or importer shall have the same right to appeal as in ordinary importation.

No part of a Philippine vessel or aircraft or its equipment, wrecked either in Philippine or foreign waters, shall be subject to duty.

CHAPTER 2

EXAMINATION OF GOODS

Section 419. Examination of Goods. – Examination of goods, when required by the Bureau, shall be conducted immediately after the goods declaration has been lodged. Priority in the examination shall be given to live animals, perishable goods and other goods requiring immediate examination.

Whenever necessary, a system of coordination and joint examination of goods shall be established by the Bureau and other regulatory agencies under existing laws and regulations.

As a general rule, the Bureau may examine the goods in the presence of the declarant or an authorized representative. Examination of the goods in the absence of the declarant or authorized representative may be allowed in exceptional circumstance and for valid and justifiable grounds, as may be defined by regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner. The Bureau may require the declarant to be present or to be represented at the examination of the goods or to render any assistance necessary to facilitate the examination.

The Bureau shall take samples of the goods only when needed to establish the tariff description and value of goods declared, or to ensure compliance with this Act. Samples drawn shall be as minimal as possible.

Section 420. Conditions for Examination. – Pursuant to internationally accepted standards, the Bureau may adopt nonintrusive examination of goods, such as the use of x-ray machines.

Physical examination of the goods shall be conducted when:

(a) It is directed by the Commissioner on account of a derogatory information;

(b) The goods are subject to an Alert Order issued by competent authority;

(c) The goods are electronically selected for physical examination;

(d) There are issues and controversies surrounding the goods declaration and the import clearance process; or

(e) The importer or declarant requests for the examination of the goods.

The Commissioner may exempt from physical examination the goods of authorized economic operators or of those provided for under any existing trade facilitation program of the Bureau.

Physical examination, when required, shall be conducted in an expeditious manner.

Section 421. Duties of Customs Officer Tasked to Examine the Imported Goods. – In the examination, classification, and valuation of the goods, the customs officer shall:

(a) Determine whether the packages for examination and their contents are in accordance with the goods declaration, invoice and other pertinent documents;

(b) Take samples of the imported goods for examination or laboratory analysis when necessary;

(c) Issue a receipt for a sample taken and retained during examination; and

(d) Report whether the goods have been correctly declared as to value, quantity, measurement, weight, tariff classification and not imported contrary to law.

Failure on the part of the customs officer to perform the above duties shall be penalized according to Section 1431 of Title XIV of this Act.

Section 422. Customs Expenses Constituting Charges on Goods. – The cost of examination shall be for the account of the importer or exporter, subject to proper accounting and documentation. All expenses incurred by the Bureau for the handling or storage of goods and other necessary operations shall be chargeable against the goods, and shall constitute a lien thereon.

CHAPTER 3

ASSESSMENT AND RELEASE

Section 423. Determination of the De Minimis Value. – No duties and taxes shall be collected on goods with an FOB or FCA value often thousand pesos (P10,000.00) or below. The Secretary of Finance shall adjust the de minimis value as provided herein every three (3) years after the effectivity of this Act. The value herein stated shall be adjusted to its present value using the CPI, as published by the PSA.

Section 424. Duty of Customs Officer Tasked to Assess Imported Goods. – For purposes of assessing duties and taxes on imported goods, the customs officer shall classify, value, and determine the duties and taxes to be paid. The customs officer shall prepare and submit an assessment report as established under this Act.

Section 425. Tentative Assessment of Goods Subject to Dispute Settlement. – Assessment shall be deemed tentative if the duties and taxes initially assessed are disputed by the importer. The assessment shall be completed upon final readjustment based on the tariff ruling in case of classification dispute, or the final resolution of the protest case involving valuation, rules of origin, and other customs issues.

The District Collector may allow the release of the imported goods under tentative assessment upon the posting of sufficient security to cover the applicable duties and taxes equivalent to the amount that is disputed.

Section 426. Tentative Assessment of Provisional Goods Declaration. – Assessment of a provisional goods declaration shall be deemed tentative and such assessment shall be completed upon final readjustment and submission by the declarant of the additional information or documentation required to complete the declaration within the period provided in Section 403 of this Act.

Section 427. Readjustment of Appraisal, Classification or Return. – Such appraisal, classification or return, as finally passed upon and approved or modified by the District Collector, shall not be altered or modified in any manner, except:

(1) Within one (1) year after payment of the duties, upon statement of error in conformity with Section 912 of this Act, as approved by the District Collector;

(2) Within fifteen (15) days after such payment, upon request for reappraisal or reclassification addressed to the Commissioner by the District Collector, if the appraisal or classification is deemed to be low;

(3) Upon request for reappraisal and/or reclassification, in the form of a timely protest addressed to the District Collector by the interested party if the latter should be dissatisfied with the appraisal or return; or

(4) Upon demand by the Commissioner after the completion of compliance audit in accordance with the provisions of this Act.

Section 428. Assessment of Duty on Less Than Entered Value. – Duty shall not be assessed in any case upon an amount less than the entered value, unless by direction of the Commissioner in cases when the importer certifies at the time of entry that the entered value is higher than the dutiable value and that the goods are so entered in order to meet increases made by the appraiser in similar cases then pending re-appraisement; and the lower assessment shall be allowed only when the importer's contention is sustained by a final decision, and shall appear that such action of the importer was taken in good faith after due diligence and inquiry.

Section 429. Final Assessment. – Assessment shall be deemed final fifteen (15) days after receipt of the notice of assessment by the importer or consignee.

Section 430. Period of Limitation. – In the absence of fraud and when the goods have been finally assessed and released, the assessment shall be conclusive upon all parties three (3) years from the date of final payment of duties and taxes, or upon completion of the post clearance audit.

Section 431. Release of Goods after Payment of Duties and Taxes. – Goods declared shall be released when duties and taxes and other lawful charges have been paid or secured and all the pertinent laws, rules and regulations have been complied with.

When the Bureau requires laboratory analysis of samples, detailed technical documents or expert advice, it may release the goods before the results of such examination are known after posting of sufficient security by the declarant.

Section 432. Release of Goods to the Holder of Bill of Lading or Airway Bill. – Any customs officer who releases goods to the consignee or lawful holder of the bill of lading or airway bill shall not be liable for any defect or irregularity in its negotiation unless the customs officer has notice of the defect or irregularity.

Section 433. Release of Goods Without Production, of Bill of Lading or Airway Bill. – No customs officer shall release goods to any person without the submission of the bill of lading or airway bill covering the goods, except on written order of the carrier or agent of the vessel or aircraft, in which case neither the government nor the customs officer shall be held liable for any damage arising from wrongful release of the goods: Provided, That when the release of goods is made against such written order, the customs officer shall require the submission of a copy of the bill.

Section 434. Release of Goods Upon Order of Importer. – An importer may issue a written authorization for the release of goods stored in a bonded warehouse to another person. Such authorization shall not relieve the importer from liability for the duties, taxes and other charges due on the goods unless the person to whom the release was authorized assumes such liability.

Section 435. Withholding Release Pending Satisfaction of Lien. – When the District Collector is duly notified through a lawful order of a competent court of a Hen for freight, lighterage or general average upon any imported goods, the District Collector shall withhold the release of the goods unless the claim has been paid or secured. In case of disagreement, the District Collector may release the goods after payment of the freight and lighterage due on the quantity or weight landed as actually determined.

Section 436. Fine or Surcharge on Goods. – Goods subject to any fine or surcharge shall be released only after the payment of the fine or surcharge.

CHAPTER 4

SPECIAL PROCEDURES

Section 437. Traveler and Passenger Baggage. – The Bureau shall provide simplified customs procedure for traveler and baggage processing based on international agreements and customs best practices.

Travelers shall be permitted to export goods for commercial pm-poses, subject to compliance with the necessary export formalities and payment of export duties, taxes and charges, if any.

Section 438. Postal Item or Mail. – Postal item or mail shall include letter-post and parcels, as described in international practices and agreements, such as the Acts of the Universal Postal Union (AUPU), currently in force.

A simplified procedure shall be used in the clearance of postal item or mail, including the collection of the applicable duties and taxes on such items or goods.

When all the information required by the customs are available in the special declaration form for postal items as provided in the AUPU or similar international agreements, the special declaration form and supporting documents shall be the goods declaration. However, a separate goods declaration shall be required for the following:

(a) Goods whose value fall within the level that the Commissioner has determined to be taxable and thus must be covered by a goods declaration;

(b) Prohibited and regulated goods;

(c) Goods, the exportation of which must be certified; and

(d) Imported goods under a customs procedure other than for consumption. '

Section 439. Express Shipment. – The Bureau shall provide simplified customs procedures based on international standards and customs best practices for air shipments considered as time-sensitive and requiring pre-arrival clearance. Express shipments of accredited air express cargo operators may be released prior to the payment of the duty, tax and other charges upon posting of a sufficient security.

Section 440. Establishment of Advance Customs Clearance and Control Program. – The Bureau may establish and implement a voluntary program on advance customs clearance and control on containerized cargoes. The details of the voluntary advance customs clearance shall be subject to the rules and regulations to be issued by the Bureau after conducting the necessary public hearings and consultations with the concerned sectors.