QuestionsQuestions (BC CUSTOMS MEMORANDUM ORDER NO. 22-2007)
It cites Section 201 of the Tariff and Customs Code of the Philippines, as amended, which provides that insurance and freight charges are components of dutiable value.
To consolidate relevant Customs laws and regulations on insurance and freight charges; ensure proper duties and taxes are collected under the WTO Valuation System implemented by CAO 4-2004; and guide concerned parties on declaration and checking of insurance and freight charges.
The importer, declarant, and broker are responsible for properly disclosing the actual freight and insurance incurred.
The Chief and Principal Appraiser of the Port’s Formal Entry Division (or equivalent unit) checks the accuracy and truthfulness of the declarations.
The actual insurance premium amount is used, subject to verification if it is lower than 2% of the FOB value for general cargo or 4% of the FOB value for dangerous/inflammable goods, chemicals, and other high-risk cargoes.
A certification from the insurance company as to the actual premium paid must be presented together with the Original Official Receipt; a certified true copy of the Official Receipt is attached to the original working entry (certified by the assigned Customs Appraiser/Examiner).
The insurance amount declared on the Entry may be accepted; however, if it is lower than 2% of FOB for general cargo or 4% of FOB for dangerous/inflammable goods, chemicals, and other high-risk cargoes, it is subject to further verification by the BOC.
The original copy of the Marine Open Policy issued by GSIS, with a true copy, must be presented to the BOC (Attn: Import Assessment Service) and certified by the latter; BOC applies the actual GSIS insurance premium rate.
The Order states: if insured by a surety company other than GSIS, apply the rule on local insurance acceptance (3.1.2).
The insurance amount must be declared in IEIRD box no. 90 and the equivalent appropriate box in the SAD for electronic lodgement.
The freight charge is based on the amount indicated in the Airway Bill (AWB) or Bill of Lading (B/L).
The declared freight charge on the IEIRD/SAD may be considered; if it is lower than 70% of either the IATA rate (airfreight) or the Conference rate (sea freight), it is subject to further verification by the BOC.
If the freight charge is lower than 70% of either the IATA or Conference rate, the importer must present a certification from the carrier/forwarder and/or Official Receipt showing the actual freight paid.
Certified copies of the Charter Party document or Freight Contract and the Stowage Plan must be presented and attached to the working copy of the Entry.
The freight charge may be accepted if it is not lower than 10% of the CFR value of the commodity.
The Order provides reference freight charges depending on the origin and container size/type (e.g., specific amounts per 20ft/40ft reefer containers). If it is a 20ft container reefer van, freight should be 50% of the 40ft rate; if lower, it is subject to further verification by the BOC.
General cargo: lower than 2% of FOB triggers verification. Dangerous/inflammable goods, chemicals, and other high-risk cargo: lower than 4% of FOB triggers verification.
If the declared freight is lower than 70% of either the IATA rate (air) or Conference rate (sea), it triggers further verification by the BOC.
The failure and continuation in such failure are stated to be grounds for disciplinary action pursuant to Civil Service Rules and Regulations.
It takes effect immediately and lasts until revoked.