Question & AnswerQ&A (BC CUSTOMS MEMORANDUM ORDER NO. 22-2007)
The main objectives are to consolidate all relevant Customs laws and regulations on Insurance and Freight Charges, ensure proper duties and taxes are collected under the WTO Valuation System as implemented by CAO 4-2004, and guide all concerned parties regarding the declaration and checking of Insurance and Freight charges.
Airway Bill (AWB) is a non-negotiable instrument issued by an air carrier or freight forwarder to a shipper, evidencing a contract of carriage by air.
CIF (Cost, Insurance and Freight) requires the seller to pay costs and freight to bring goods to the destination port and also procure marine insurance. CFR (Cost and Freight) requires the seller to pay only the costs and freight necessary to bring the goods to the port, without the obligation to buy insurance.
The importer, declarant, and broker are responsible for properly disclosing the actual freight and insurance incurred in the importation.
Signatories to any certificate/report required under this Order who make misrepresentations shall be held liable and proceeded against under Sections 3602 and 3604 of the Tariff and Customs Code of the Philippines (TCCP), as amended.
If the declared insurance premium is lower than 2% of the FOB value for general cargo, it is subject to further verification by the Bureau of Customs (BOC).
For government direct importations, the original copy of the Marine Open Policy issued by GSIS, along with a true copy certified by BOC, must be presented, and BOC will apply the actual GSIS insurance premium rate. If insured by another surety company, other rules as per local insurance are applied.
If no freight charge is indicated, the declared freight charge on the Import Entry Internal Revenue Declaration (IEIRD) or Single Administrative Document (SAD) may be considered provided it is not lower than 70% of the IATA or Conference rates; otherwise, further verification by BOC is required.
A certified copy of the Charter Party document or Freight Contract, along with the Stowage Plan, must be presented and attached to the working copy of the Entry.
The District Collector is responsible for the smooth, proper, and effective implementation of this Order within their jurisdiction.