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CUSTOMS

MODERNIZATIO
N AND TARIFF
ACT
RONIE E. SUGAROL
Lecturer
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BUREAU OF CUSTOMS Functions:

The Bureau shall exercise the following powers, functions,


and duties:
●Assessment and collection of customs revenues from
imported goods and other dues, fees, charges, fines and
penalties accruing under the CMTA;
●Simplification and harmonization of customs procedures
to facilitate movement of goods in international trade;
●Border control to prevent entry of smuggled goods;
●Prevention and suppression of smuggling and other
customs fraud;
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BUREAU OF CUSTOMS Functions:

●Facilitation and security of international trade and


commerce through an informed compliance program;
●Supervision and control over the entrance and clearance
of vessels and aircraft engaged in foreign commerce; 
●Supervision and control over the handling of foreign
mails arriving in the Philippines for the purpose of
collecting revenues and preventing the entry of
contraband;
●Supervision and control on all import and export
cargoes, landed or stored in piers, airports, terminal
facilities, including container yards and freight stations
for the protection of government revenue and prevention
of entry of contraband;
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BUREAU OF CUSTOMS Functions:

●Conduct a compensation study with the end view of


developing and recommending to the President a
competitive compensation and remuneration system to
attract and retain highly qualified personnel, while
ensuring that the Bureau remains financially sound and
sustainable;
●Exercise of exclusive original jurisdiction over forfeiture
cases; and
●Exercise such other powers and perform such other
functions as may be necessary to carry out its duties and
functions under the CMTA, these Rules and Regulations,
and all other relevant laws related to customs
administration, or as may be required by the Secretary of
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TARIFF COMMISSION

●Functions:
1. Adjudicate cases on the application of trade remedies
against imports;
2. Study the impact of tariff policies and programs on
national competitiveness and consumer welfare in line
with the economic objectives of the government;
3. Administer the Philippine tariff schedules and tariff
nomenclatures;
4. Issue advance rulings on classification of imported goods
and render rulings on disputes over tariff classification of
goods pursuant section 1100 of CMTA, except in cases
involving goods on which the Commission has provided
advance ruling on tariff classification;
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TARIFF COMMISSION

●Functions:
5. Provide the President and Congress with independent
analysis, information, and technical support on matters
related to tariff and non-tariff measures affecting Philippine
industries and exports for policy guidance;
6. Analyze the nature and compensation, and classification
of goods according to tariff commodity classification and
heading number for customs and other related purposes,
which information shall be furnished to the NEDA, DTI, DA,
DOF, DENR, and BSP;
7. Review the trade agreements for negotiation and trade
agreements entered into by the Philippines and make
recommendations, if necessary, on the consistency of the
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TARIFF COMMISSION

●Functions:
8. Conduct public consultations and public hearings pursuant
to its functions; and
9. Deputize or delegate, to appropriate government agency
its function of rendering rulings on disputes over tariff
classification of goods, until the plantilla positions necessary
for undertaking such function have been approved and filled-
up: Provided, that such delegation of function shall not
extend beyond three (3) years from the effectivity of the Act.
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TARIFF VS. CUSTOMS

TARIFF CUSTOMS
● denotes the list or ● denotes all customary
schedule of tolls or dues paid by
commodities with the merchants upon
particular duties or commodities on their
charges upon each way to and from the
noted. markets.
MODERN CUSTOMS TARIFF – are a systematic
arrangement of customs duties levied on goods when
they cross the boarder of a political
unit.
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PURPOSES OF TARIFF

●Revenue Tariff – whose rate of duty are relatively


low so that goods may be readily imported and duties
easily collected.
●Protective Tariff – whose rates are relatively high
to keep certain imports out of the domestic market
or to raise domestic price on certain imports so that
they may be manufactured at home.
●Bargaining Tariff – whose schedules includes rates
designed primarily for bargaining purposes or which
contain some general provision for the imposition of
higher duties upon product of countries whose tariff
policies are considered unsatisfactory or unfair.
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KINDS OF TARIFFS or CUSTOMS DUTIES

1. Regular Tariffs or Regular Customs


Duties – taxes that are imposed or
assessed upon merchandise from or
exported to, a foreign country, for the
purpose of raising revenues.
2. Special Tariffs or Special Customs
Duties – are additional import duties
imposed on specific kinds of imported
articles under certain conditions and for a
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KINDS OF REGULAR CUSTOMS
DUTIES
1. Specific Duty – is one levied on goods
according to their weight, gauge or other
measurement or quantity as so much per
kilogram, liter, pair, piece etc.
2. Ad Valorem – is a Latin phrase meaning
‘according to value’ of imported articles expressed
in percentage.
3. Alternate Duty – is one containing specific
rate and an alternative ad valorem rate levied
upon a single commodity whichever is higher.
4. Compound or mixed – is one combining both
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TYPES OF SPECIAL DUTIES

1. Anti-dumping Duty – refers to a special duty


imposed on the importation of a product,
commodity or article of commerce into the
Philippines at less than its normal value when
destined for domestic consumption in the
exporting country, which is the difference
between the export price and the normal value
of such product, commodity or article. (R.A.
8752)
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TYPES OF SPECIAL DUTIES

2. Countervailing Duty – Whenever any product,


commodity or article of commerce is granted directly or
indirectly by the government in the country of origin or
exportation, any kind or form of specific subsidy upon the
production, manufacture or exportation of such product,
commodity or article, and the importation of such
subsidized material injury to a domestic industry or has
materially retarded the growth or prevents the
establishment of a domestic industry as determined by
the Tariff Commission, the Secretary of Trade and
Industry in case of non-agricultural product, or the
Secretary of Agriculture in the case of agricultural
product shall issue a department order imposing
countervailing duty equal to the ascertained amount of
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TYPES OF SPECIAL DUTIES

3. Safeguard Duty – a special duty


impose to protect domestic
industries and producers from
increased imports which inflict or
could inflict serious injury on them.
(RA 8800)
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TYPES OF SPECIAL DUTIES

4. Discriminatory or Retaliatory Duty – this is a


duty impose against foreign countries retaliating
Philippine products. 100% ad val. (CMTA Sec.714)

5. Marking Duty - a duty impose to imported


goods from foreign countries by failure to mark
their packages and or container. (e.g. country of
origin) (CMTA Sec. 710)
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TAX distinguished from TARIFF

1. As to Nature
A tax is an all embracing term
to include various kinds of enforced
contributions imposed upon persons
for the attainment of public
purposes WHILE a tariff should be
understood to mean a kind of tax
imposed on articles which are trade
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TAX distinguished from TARIFF

2. As to IMPOSING AUTHORITY
A tax may be levied by the
national government or local
government units WHILE a tariff is
always levied by the national
government.
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TAX distinguished from TARIFF

3. As to SUBJECT of OBJECT
A tax may be levied upon
domestic or imported products
WHILE a tariff is generally imposed
only upon imported or exported
articles.
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TAX distinguished from TARIFF

4. As to COLLECTING AGENCY
A tax is usually collected either
by the Bureau of Internal Revenue
or a treasurer of a local government
unit WHILE tariffs are collected by
the Bureau of Customs.
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IMPORTATION

The act of bringing in of


goods from a foreign
territory into the
Philippine territory,
whether for consumption,
warehousing or admission.
21
Under Actual Importation we
categorized into two (2):
●Consumption – means imported goods that
are brought into the Philippine territory for
domestic use.
●Warehousing – means that the imported
goods that are brought into the Philippines are
to placed on a structure called bonded
warehouse which is under customs control. OR
●Admission – refers to the act of bringing
imported goods directly or through transit into
a free zone.
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TYPES of IMPORTATION

1. Free Importation – unless


otherwise provided by law or
regulation, all goods may be freely
imported into and exported from
the Philippines without need for
import and export permits,
clearances or licenses. (CMTA Sec. 116)
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TYPES of IMPORTATION

2. Regulated Importation – goods


which are subject to regulation shall
be imported only after securing the
necessary goods declaration,
clearances, licenses, and any other
requirements, prior to importation.
(CMTA Sec. 117)
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TYPES of IMPORTATION

3. Prohibited Importation – those


banned importation of which goods are
prohibited especially those inciting
treason, goods inducing abortion,
adulterated or misbranded goods, goods
or films which are obscene or immoral,
goods with precious metals that do not
indicate fineness and goods infringing
upon intellectual property. (CMTA Sec. 118)
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TYPES of IMPORTATION

4. Restricted Importation –
prohibited, except when authorized
by law or regulations such a
dynamites, gunpowder, gambling
outfits, lottery or sweepstakes
tickets, marijuana, opium or coca
leaves. (CMTA Sec. 119)
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What is Entry under CMTA?

Entry – refers to the act,


documentation and process of
bringing goods into the customs
territory, including goods coming
from free zones. [CMTA Sect 102 (r)]
27
What is Free Zone under CMTA?

Free Zone –refers to special economic


zones registered with the Philippine
Economic Zone Authority (PEZA) under
RA No. 7916, as amended, duly
chartered or as legislated special
economic zones and freeport zones and
such other freeports as established or
may be created by law. [CMTA Sect 102 (w)]
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Types of Entry

1. Formal Entry – entry that has


commercial value of more than
FOB/FCA Php10, 000.00.
2. Informal Entry – entry that the
customs operations officer will be
responsible for the processing of goods
declaration with the value of less than
FOB/FCA Php10,000.00.
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Types of Formal Entry

1. Consumption Entry – an entry


requires immediate release for domestic
consumption.
2. Warehousing Entry – an entry
requires security of imported goods
before it will be release from the
customs custody.
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Elements of Dutiable Value (Php)

Cost USD$
Insurance USD$
Freight USD$
Other charges USD$
Dutiable Value (USD$)
X Rate of Exchange
Dutiable Value in Php
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Basis of Customs Duties:

Dutiable Value in Php


X Rate of duty (AHTN)
Customs Duty
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Elements of Landed Cost and VAT

Dutiable Value Php


Customs Duty
Bank Charge (if under L/C)
Brokerage Fee
Arrastre Charge (seaport)
Wharfage Due (seaport)
Customs Documentary
Stamp
Import Processing Fee
Landed Cost Php
+ Excise Tax (if subject to excise
tax)
VAT Base
X VAT rate (12%)
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Total Amount Due to the Government
(TADG)
Customs Duty
VAT
Import Processing Fee
Customs Documentary Stamp
Excise tax (if required)
Container Security Fee (if containerized)
TADG Php
34
CONCEPT OF VALUE
Commercial transaction:
- Meeting of minds between buyer and seller (Contract)

Customs purposes:
- Determined by law: Sec. 700 - 706, CMTA
- WTO Valuation System: Part of the law of the land.
PRINCIPLES IN DETERMINING DUTIABLE VALUE
35

UNDER WTO VALUATION AGREEMENT (WVA)


There is a need for a fair, uniform, and neutral system for
valuation of goods for customs purposes that precludes the
use of arbitrary or fictitious DV.
2. The basis for valuation of goods for customs purposes
should, to the greatest extent possible, be the transaction
value of the goods being valued
3. The DV should be based on simple and equitable criteria
consistent with commercial practices and that valuation
procedures should be of general application without
distinction between sources of supply, and
4. Valuation procedures should not be used to combat
dumping.
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STANDARDS IN WTO VALUATION
AGREEMENT
Sequential Application of Valuation Methods
- The methods of valuations are set out in a sequential
order of application. The primary methods for customs
valuation is the Transaction value and imported goods
are to be valued in accordance with the provisions of
this method whenever the conditions prescribed for its
use are fulfilled.
- Exception to the rule:
Method 4 and 5 can be interchanged upon application
by the importer with the Commissioner.
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BASIS OF DUTIABLE VALUE
1. Method 1 – Transaction Value
2. Method 2 – transaction Value of Identical
Goods
3. Method 3 – transaction Value of Similar Goods
4. Method 4 – Deductive Value
5. Method 5 – Computed Value
6. Method 6 – Fallback Value
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SEQUENTIAL RULE
Valuation methods to be applied sequentially i.e. Methods
1 to 6.

- Except: Method 4 and 5 which may be


interchanged upon the request of importer but if
Commissioner finds it impossible to use Method 5
then Method 4 is used. (CAO 4-2004)
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Method I – Transaction Value
Method 1: Transaction Value is the primary basis of DV

Transaction Value shall be the price actually paid or payable


for the goods when sold for export to the Philippines
adjusted in accordance with the provisions under CMTA.

TV= PAPP + mandatory additions – permissible


deductions

- But certain conditions must be fulfilled: sale for


export; acceptable restrictions; proceeds for
subsequent sale.
40
Price Actually Paid or Payable
(PAPP)
1. The total payment made or to be made by the buyer to or
for the benefit of the seller for the imported goods.
2. The payment need not necessarily take the form of
transfer of a money
- Payment may be made by way of L/C or negotiable
instruments
3. Payment may be directly or indirectly.
4. Refers to the price for the imported goods.
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MANDATORY ADDITIONS
Conditions before adjustments can be made:
1. To the extent that they are incurred by the buyer,
2. Provided there is objective and quantifiable data to
form the basis of adjustment, and
3. If such value has not been included in the price
actually paid or payable.
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MANDATORY ADDITIONS
1. Commissions and brokerage fees (except buying commissions)
- Commissions and brokerage fees include selling commission
which are paid by the seller to his agent in promotion and
sale of his products.
- Selling commission may take the form of an indentor’s
commission, selling agent‘s commission, or manufacturer’s
representative commission.
- The terms brokerage fees refer to a commission paid to a
broker who arranges the transaction between a seller and a
buyer. Such may be paid by the seller or the buyer or by both
the seller and the buyer. This normally applies to th e
commodities market. It does not refer to the customs broker’s
professional fees in customs clearance paid by the importer
which is considered a post importation expense.
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MANDATORY ADDITIONS
- Buying commissions are fees paid by an importer to
the importer’s agent for the service of representing the
importer abroad in the purchase of the goods being
valued.
2. Cost of containers which are treated as being one for
Customs purposes with the goods in question.
3. Cost of packing, whether for labor or materials.
4. Assists
- The value, apportioned as appropriate, of certain
where such goods and services are supplied directly or
indirectly by the buyer free of charge or at a reduced
cost for use in connection with the production and sale
for export of the imported goods, to the extent that
such value has not been incorporated in the PAPP.
44
MANDATORY ADDITIONS
Types of Assist:
a. materials, components, parts and similar items incorporated
in the imported goods;
b. tools; dies; moulds and similar items used in the production of
imported goods;
c. materials consumed in the production of the imported goods;
and
d. engineering, development, artwork, design work and plans
and sketches undertaken elsewhere than in the Philippines
and necessary for the production of imported goods.

Two (2) factors involved in the apportionment of elements:


1. The value of the elements itself.
2. The way in which that value is to be apportioned to the
imported goods.
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MANDATORY ADDITIONS
5. Royalties and license fees related to the goods being valued
that the buyer must pay, either directly or indirectly, as a
condition of sale of the goods to the buyer, to the extent
that such royalties and license fees are not included in the
PAPP.
- The royalties and license fees may include, among other
things, payments in respect to patents, trade marks
and copyrights. However, the charges for the right to
reproduce the imported goods in the Philippines shall
not be added to the PAPP for the imported goods in
determining the DV.
- Payments made by the buyer for the right to distribute
or resell the imported goods shall not be added to the
PAPP for the imported goods if such payments are not
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MANDATORY ADDITIONS
6. The value of any part of the proceeds of any subsequent
resale, disposal or use of the imported goods that accrues
directly or indirectly to the seller;
- e.g.: when the contract of sale between buyer and seller
states that a certain percentage of the sales proceeds of
an imported article is remitted to the seller.
7. The cost of transport of the imported goods from the
port of exportation to the port of entry in the
Philippines; loading, unloading and handling charges
associated with the transport of the imported goods from
the country of exportation to the port of entry in the
Philippines;
47
MANDATORY ADDITIONS
8. The cost of insurance.
- For purposes of the determination of insurance as
component of DV reference is to be made to the
provisions of CMO 22-2007.
- The word insurance means those charges for insurance
for the goods during the transportation, loading,
unloading and handling. WCO Advisory Opinion 13.1
states that the word “insurance” should be interpreted
as referring solely to insurance costs incurred for the
goods during the transport of the imported goods to
the port or place of destination.
48
POST IMPORTATION CHARGES
The DV must not include the following charges or costs, if
they are distinguished from the PAPP for the goods:
a. Charges for construction, erection, assembly,
maintenance or technical assistance, undertaken after
importation on imported goods such as industrial
plant, machinery or equipment;
b. Cost of transport after importation;
c. Duties, taxes and other charges paid for the
importation goods.
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METHOD TWO – TRANSACTION
VALUE OF IDENTICAL GOODS
If the dutiable value cannot be determined under method one,
the dutiable value shall be the transaction value of identical
goods sold for export to the Philippines and exported at or
about the same time as the goods being valued.

Time frame of “exported at or about the same time”


- Exportation of the identical goods 45 days before or after
the date of B/L or AWBL of the goods being valued

Definition of identical imported goods:


a. The same in all respects including physical characteristics,
quality and reputation;
b. Produced by the producer of the goods being valued;
c. Produced in the same country as the goods being valued.
50
METHOD TWO – TRANSACTION
VALUE OF IDENTICAL GOODS
§ The definition of identical goods excludes:
- Imported goods for which engineering, development,
artwork, design work and plans and sketches is undertaken
in the Philippines and provided by t h e b u y e r t o t h e
producer of the goods free of charge or at a reduced cost.
§ Where there are no identical goods produced by the same
person in the country of production of the goods being valued,
identical goods produced by a different person in the same
country may be taken into account.
§ Minor differences in appearance would not preclude good
which otherwise conform to the definition from being
regarded as identical.
51
METHOD TWO – TRANSACTION
VALUE OF IDENTICAL GOODS
§ If no sale of identical goods at the same commercial level and
is substantially the same quantity as the goods being valued is
found, the TV of identical goods sold at a different commercial
level and/or in different quantity may be utilized. Such TV of
identical goods shall be adjusted upwards or downwards to
account for demonstrated differences between the goods
being valued and the identical goods, to take account of:
- Commercial level differences
- Quantity differences
- Significant differences for transportation costs due to
variances in the mode and/or distance of transport.
52
METHOD THREE – TRANSACTION
VALUE OF SIMILAR GOODS
§ Similar goods are defined as goods which, although not alike in
all respects-
a. have like characteristics and like components materials;
b. Are capable of performing the same functions as the goods
being valued;
c. Are commercially interchangeable with the goods being
valued;
d. Are produced in the same country of the goods being
valued;
e. Are produced by the producer of the goods being valued;

§ Same adjustment and conditions as Method 2.


53
METHOD FOUR – DEDUCTIVE
VALUE
§ By this method, the DV is determined on the basis of sales in the
Philippines of the goods being valued or of identical or similar
imported goods, less certain specified expenses resulting from the
importation and sale of the goods.

The sales in the Philippines must meet the following conditions:


a. The imported goods or identical or similar imported goods have
been sold in the Philippines in the same condition as imported;
b. Sales of the imported goods being valued or of identical or
similar goods have taken place at or about the same time of the
beings valued.
c. The purchaser must not be related to the importer from whom
he buys such goods; and
d. The purchaser in the Philippines must not have supplied assists,
either directly or indirectly.
54
METHOD FOUR – DEDUCTIVE
VALUE
§ A deductive value is determined by a deduction from the established
price per unit for the aggregate of the following elements:
a. Commissions generally earned on a unit basis in connection with
sales in the Philippines for goods of the same class or kind; or
b. Additions usually made for profit and general expenses in
connection with sales in the Philippines for goods of the same class
or kind;
c. The usual costs of transport and insurance and associated costs
incurred within the Philippines; and
d. The customs duties and other national taxes payable in the
Philippines by reason of the importation or sale of goods.
55
METHOD FOUR – DEDUCTIVE
VALUE
§ The term “unit price” means the price at which the greatest number
of units is sold in sales to persons who are not related to the persons
from whom they buy such goods at the first commercial level after
importation at which sales takes place.

§ Any sale in the Philippines to a person who supplies directly or


indirectly free of charge or at reduced cost for use in connection with
the production and sale for export of the imported goods any of the
elements should not be taken into account in establishing the unit
price for the purposes of this Method.

§ The “general expenses” include the direct and indirect costs of


marketing the goods in question.
56
METHOD FOUR – DEDUCTIVE
VALUE
§ It should be noted that “profit and general expenses” as a whole. The
figure for the purposes of this deduction should be determined on the
basis of information supplied by or on behalf of the importer unless
the importer’s figures are inconsistent with those obtained in sales in
the country of importation of imported goods of the same class or
kind. Where the importer’s figure are inconsistent with such figures,
the amount for profit and general expenses may be based upon
relevant information other than that supplied by or on behalf of the
importer.

§ Local taxes payable by reason of the sale of the goods for which a
deduction is not made shall be deducted as general expenses.
57
METHOD FOUR – DEDUCTIVE
VALUE
§ In determining either the commissions or the usual profits and
general expenses the question whether certain goods are “of
the same class or kind” as other goods must be determined on
a case-to-case basis by reference to the circumstances involved.

§ Sales in the Phils. of the narrowest group or range of


imported goods of the same class or kind, which includes the
goods being valued, for which the necessary information can
be provided, should be examined.

§ For purposes of this Method, “goods of the same class or kind”


includes goods imported from the same country as the goods
being valued as well as goods imported from other countries.
58
METHOD FOUR – DEDUCTIVE
VALUE
§ If no sales of imported goods or of identical or similar
imported goods took place at or about the time of importation
of the goods being valued, it is permitted to use sales of the
imported goods or identical or similar imported goods, sold in
the Phils. in the same condition as imported, at the earliest
date after importation of the goods being valued but before
the expiration of 90 days after such importation.

§ The “earliest date” shall be date by which sales of the


imported goods or identical or similar imported goods are
made in sufficient quantity to establish the unit price.
59
METHOD FOUR – DEDUCTIVE
VALUE
§ If there are no sales of identical or similar imported goods in the
condition as imported that meet all the above the requirements, the
importer may choose to use sales of imported goods being valued after
further processing.
- deduction made for the value added by further processing shall be
based on objective and quantifiable data relating to the cost of such
work. Accepted industry formulas, recipes, methods of construction,
and other industry practices would form the basis of calculations.
- this method would normally applicable when, as a result of the
further processing, the imported goods lose their identity. However,
there can be instances where, although the identity of the imported
goods is lost, the value added by the processing can be determined
accurately without unreasonable difficulty.
60
METHOD FIVE – COMPUTED
VALUE
§ Under this method, the DV is determined on the basis of the cost of
production of the goods being valued, plus an amount for profit and
general expenses usually reflected in sales from the country of
exportation of goods of the same class or kind.

§ Value is determined based on information available outside of the


Phils., i.e. from foreign supplies.

§ In most cases the producer of the goods will be outside the jurisdiction
of the authorities of the Philippines.

§ The use computed value method will generally be limited to those


cases where the buyer and seller are related, and the producer is
prepared to supply to the authorities of the Phils. the necessary
costing and to provide facilities for any subsequent verification which
may be necessary.
61
METHOD FIVE – COMPUTED
VALUE
§ The DV may be calculated as follows:
1. materials employed in producing the imported goods;
2. Fabrication, production or other processing costs for the imported
goods (direct and indirect labor, factory overheads)
3. Cost of containers which are treated as being one for Customs
purposes with the goods in question;
4. Cost of packing, whether for labor or materials;
5. Assist (apportioned in a reasonable manner in accordance with
GAAP); and
6. engineering, development, artwork, design work and plans and
sketches undertaken in the Philippines and charged to producer.
7. Add amount for profit and general expenses equal to that usually
reflected in the sale of goods of the same class or kind as the goods
being valued which are made by producers in the country of
exportation for export to the Philippines;
62
METHOD FIVE – COMPUTED
VALUE
8. Add the cost of transport, loading and unloading and
handling charges, insurance and related charges to the port
or place of entry in the Philippines.

§ The Collector of Customs shall not require or compel any


p e r s o n n o t r e s idin g in t h e P h ilip p in e s t o p r o du c e f o r
examination, or to allow access to , any account or other
record for the purposes of determining a computed value.
However, information supplied by the producer of goods for
the purpose of determining the DV may be verified in another
country with the agreement of the producer and provided
they will give sufficient advance notice to the government of
the country in question and the latter does not object to the
investigation.
63
METHOD SIX – FALLBACK VALUE
§ When the DV cannot be determined under
any of the previous methods of valuation, it
shall be determined by using other reasonable
means consistent with the principles and
general provisions of GATT 1994, the WVA,
and on the basis of data available in the
Philippines.

§ If the importer so requests, he shall be


informed in writing of the DV determined
under Method 6 and the method used to
64
METHOD SIX – FALLBACK VALUE
● No dutiable value shall be determined under Method Six on the basis
of:
1. The selling price in the Philippines of goods produced in the
Philippines;
2. A system that provides for the acceptance for customs purposes of
the higher of two alternative values;
3. The price of goods in the domestic market of the country of
exportation; 
4. The cost of production, other than computed values, that have been
determined for identical or similar goods in accordance with
Method Five hereof;
5. T h e p r i c e o f g o o d s f o r e x p o r t t o a c o u n t r y o t h e r t h a n t h e
Philippines;
6. Minimum customs value; or
7. Arbitrary or fictitious values.
65
METHOD SIX – FALLBACK VALUE
●DV determined under the provisions of Method 6 should, to
the greatest extent possible, be based on previously determined
DV.

●The methods of valuation to be employed under method 6


should be those laid down in Method 1 thru Method 5, but a
reasonable flexibility in the applications of such methods would
be in conformity with the aims and provisions of Method 6.
66
METHOD SIX – FALLBACK VALUE
● Some examples of reasonable flexibility are as follows:
Identical goods
- the requirement that the identical goods should be exported at or
about the same time as the goods being valued could flexibly
interpreted:
- identical imported goods produced in a country other than the
country of exportation of the goods being valued could be basis for
customs valuation; DV of identical imported goods already
determined under the provisions of Methods 4 and 5 could be
used.
Similar goods
- the requirement that the similar goods should be exported at or
about the same time as the goods being valued could flexibly
interpreted:
- similar imported goods produced in a country other than the
country of exportation of the goods being valued could be basis for
67
METHOD SIX – FALLBACK VALUE
● Some examples of reasonable flexibility are as follows:
Deductive Method
- the requirement that the goods should have been sold in the
“condition as imported” could flexibly interpreted:
- the 90 days requirement could be administered flexibly.
68
IMPORT PROCEDURES:
1. Preliminary Processes:
a. Verification of status of goods
b. Inquiry on product pricing and terms
c. Apply for a Letter of Credit with opening bank (if necessary)
d. Negotiation between opening bank and negotiating bank (if necessary)
e. Approval by the foreign seller
2. Completion of import documentation requirements
a. Bill of Lading/Airway Bill
b. Commercial Invoice
c. Packing List
d. Import Clearance
e. Certificate of Origin (if required)
f. Supplemental Declaration on Valuation
3. Actual shipment of goods to the port of destination
4. Submission of documents at the port of entry
6. Release of the imported goods
69
IMPORT CLEARANCE PROCEDURES:

1.Goods Declaration
2.Examination of Documents and
Goods
3.Assessment and Release
70
What is Goods Declaration?

Goods Declaration – refers 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. [CMTA Sec.
71
What is Lodgement?

Lodgement – refers to the registration of


a goods declaration with the Bureau.
[CMTA Sec. 102 (dd)]
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Goods Declaration

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 the case may be. (CMTA Sec. 400)

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. (CMTA Sec. 401)
73
Goods Declaration

Goods declaration must be lodged within fifteen


(15) days from the date of discharge from 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 may be adjusted by the Commissioner.
(CMTA Sec. 407 par.3)
74
Clearance Scheme:
For clearance purposes, goods passes through either of these
lanes:
a. Super Green Lanes – for qualified importers or extremely
low risk to provide immediate clearance.
b. Green Lanes – low-risk shipment, generally not subject
to documentary review or physical inspection but is
covered by a post-audit review.
c. Yellow Lanes – moderate risk shipment, goes through
documentary review but no physical inspection; for new
importers and those with no record of any violations.
d. Red Lanes – high risk shipment, goes through
documentary review and physical inspection; for
importers with questionable track record.
75
Computations: (VAT under
importation)
76

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