Customs Modernization and Tariff Act

Declaration of Policy

Protect and enhance government revenue.
Institute fair, transparent customs and tariff management.
Facilitate international trade efficiently.
Prevent customs fraud and illegal acts.
Modernize customs and tariff administration.
Develop and implement customs systems harmonizing procedures.
Adopt internationally consistent customs rules.
Ensure accessibility and transparency of customs information.
Coordinate with government agencies and private sector.
Provide fair administrative and judicial remedies.
Employ modern practices and ICT in customs.
Promote professionalism and meritocracy among customs personnel.

Definition of Terms

Comprehensive definitions including Abatement, Exportation, Admission, Airway Bill, Appeal, Assessment, Authorized Economic Operator, Bill of Lading, Customs Broker, Declarant, Smuggling, Free Zone, Goods Declaration, Taxes, Transit, Third Party, and more.

Commencement and Termination of Importation

Importation begins upon entry of goods via vessel or aircraft.
Deemed terminated upon payment or security for duties/taxes and legal clearance.

Duties and Taxes on Imported Goods

Duties and taxes due upon importation unless exempted.
Unpaid amounts incur 20% annual legal interest plus penalties.
Proof of payment issued by the Bureau.

Effective Date of Import Duty Rates

Duty rates effective on date of importation or withdrawal.
Auctioned goods duty based on auction date.

Declarants and Their Responsibilities

Declarant can be importer, exporter, customs broker, or authorized agent.
Two-year transition period for some agent provisions.
Declarant responsible for declaration accuracy and payment of dues.
Brokers responsible for accuracy but not payment.

Penalties for Goods Declaration Errors

Substantial penalties avoided if errors are inadvertent without fraud or negligence.
Penalties imposed to discourage recurrence but not excessive.

Use of Information and Communication Technology (ICT)

Bureau to use ICT to enhance customs control and promote paperless environment.
Electronic documents and payments have legal effect.
Security and continuity plans required.

Relationship with Third Parties

Transactions may be direct or via designated third parties with equal treatment.
Guidelines for Bureau-third party relationship to be issued.

Public Access to Information

Bureau must publish laws, rulings, circulars, and updates for transparency.
Information accessible to interested persons prior to implementation when practicable.

Specific Information Requests

Bureau to provide not confidential information upon reasonable request with possible fees.
Timely delivery of requested information required.

Decisions and Rulings

Binding advance rulings issued within 30 days upon request.
Written notification with reasons if adverse decision.

Right to Appeal

Aggrieved parties can appeal Bureau decisions within 15 days.
Written appeal specifying grounds required.
Bureau may allow evidence submission.

Types of Importation

Goods entered for consumption upon electronic lodging of declaration.
Free importation/exportation generally allowed without permits except where regulated.
Regulated goods require permits, clearances, declarations.
Prohibited goods include seditious printed materials, unlawful abortion items, obscene materials, adulterated food/drugs, infringing IP goods, and others.
Restricted goods include explosives, gambling devices, narcotics, opium pipes, among others.

Relief Consignment

Relief consignments for calamity victims are prioritized and cleared with simplified procedures.
Duty and tax exemption for relief consignments during declared calamities.

Bureau of Customs Administration

Headed by Commissioner and 4 to 6 Deputy Commissioners appointed by the President.
Commissioner exercises original jurisdiction over the Act's provisions.
Powers include review of customs officers' decisions, delegation (except for certain functions), assignment of personnel.
Functions: revenue collection, control of smuggling, trade facilitation, supervision of vessels/aircrafts, enforcement.
Annual report to President, Congress, and NEDA.
Promulgates rules and regulations, customs manuals.
Shares goods declaration data with government agencies.

Customs Districts and Ports of Entry

Philippines divided into customs districts with District Collectors and Deputies.
Ports operate under district supervision.
President can open/close ports on Finance Secretary's recommendation.
Assignment of customs personnel controlled by Commissioner.
District Collectors oversee entry, classification, revenue collection, smuggling prevention, and related duties.

Police Authority

Customs officials and designated law enforcement authorized to search, seize, and arrest for customs law enforcement.
May coordinate with AFP, PNP, and other agencies.
Powers extend to customs premises, vessels, aircrafts, cargo, and persons.
Entry into lands for customs enforcement with proper authority.
Search of dwelling houses requires judicial warrant.

Customs Jurisdiction and Control

Bureau exercises jurisdiction over Philippine waters, borders, ports, and means of transport.
Goods under customs control regardless of duties.
Cooperation with quarantine and other agencies.
Exclusive control over customs premises.
Temporary storage systems for abandoned or overstaying goods.

Import Clearance and Formalities

All imports through customs office or free zone.
Goods declarations required, formal or informal depending on value and nature.
Provisional declarations allowed with commitments to complete.
Ownership presumed with consignee or bill holder.
Liability for duties is personal debt.
Government imports subject to duties unless exempted.
Electronic lodgement and amendments of goods declarations.
Advance lodgement allowed.
Mixed entries for consumption and warehousing permitted.
Goods declarations must include specific details, truthful statements.
Commercial invoice requirements detailed.
Samples and wreck salvage regulations.

Examination of Goods

Examinations prompt, especially for perishable goods.
Non-intrusive methods preferred; physical exam under specified conditions.
Customs officers have defined duties during examination.
Costs of examination charged to importer/exporter.

Assessment and Release

De minimis threshold for duty collection set at P10,000, adjustable.
Customs officers classify, value, and assess duties.
Tentative assessments allowed with security.
Limits on readjustment periods.
Final assessment after 15 days notice.
Release upon payment or securing of duties, exceptions for lab tests.
Release procedures regarding documents specified.
Importer authorization for release and lien provisions.

Special Procedures

Simplified clearance for travelers, postal items, express shipments.
Voluntary advance customs clearance programs allowed.

Export Clearance and Formalities

Export declarations mandatory.
Compliance with export standards and packaging.
Advance rulings on classification, valuation, and origin offered.

Customs Transit and Transshipment

Customs transit permits required.
Duties on transit goods depend on destination.
Carrier securities required.
Transshipment goods duty-exempt if reexported timely.

Import Duty and Tariff Administration

Valuation methods follow a sequential system ending with fallback valuation.
Transaction value used primarily, with adjustments.
Other methods include transaction of identical/similar goods, deductive, computed, fallback.
Customs may verify declared values.
Exchange rate for valuation set by BSP.
Special duties include marking, anti-dumping, safeguards, countervailing duties.
Discrimination by foreign countries addressed with tariff measures.

Duty Drawback and Refund

Drawbacks on fuel, petroleum oils, and goods made from imported materials under conditions.
Claims paid within 60 days.
Refunds for overcharges, abatements for damaged/lost goods, defects.
Procedures for claims and appeals.

Post Clearance Audit

Audits conducted up to 3 years after payment.
Selection based on risk management criteria.
Full access to records required; noncompliance has penalties.
Importers and parties must keep records for 3 years.
Commissioner has authority to obtain records, summon, and administer oaths.
Penalties for negligence and fraud related to audit results.

Administrative and Judicial Procedures

Advance rulings on classification, valuation, rules of origin with timelines.
Protest procedures and exclusivity.
Alert orders to suspend goods processing on derogatory info.
Seizure and forfeiture provisions: instruments, vehicles, goods subject to seizure and grounds.
Rights of owners, service of warrant, hearings, and appeals detailed.
Settlement options in forfeiture cases.
Judicial review by Court of Tax Appeals.

Disposition of Property in Customs Custody

Procedures for abandoned, forfeited, or lien-subjected goods.
Public auction, donation, or destruction procedures.
Restrictions on participation in auctions.
Allocation of proceeds to forfeiture fund and its uses.

Customs Service Providers and Third Parties

Registration and accreditation rules for customs brokers and service providers.
Ports open to designated vessels and aircraft.
Requirements on manifests, reports, and inspections.
Regulations on unauthorized boarding and other acts.
Oversight on third parties transacting with the Bureau.
Authorized Economic Operators program with incentives and trade facilitation.

Customs Fees and Charges

Collection of fees for services rendered.
Authority to adjust dues and charges to protect government interests.

Offenses and Penalties

Comprehensive penalties on misdeclaration, smuggling, fraudulent acts.
Graded imprisonment and fines based on value of unlawful goods.
Penalties for obstruction, failure to report fraud, false statements, breaking seals, unauthorized withdrawal from warehouses.
Penalties on customs officers for misconduct including extorti