TARIFF AND CUSTOMS CODE
THE FALLBACK VALUE
- DV cannot be determined using any of the above methods
- Use other reasonable means consistent with principles and general provisions of GATT
C. Special Duties
Sec. 301 Dumping Duty
When Sec of Finance receives a petition or has reason to believe that a specific foreign article is being imported into, or sold/ likely to be sold in Phil, at a price less than its normal value
within 20 days, must determine prima facie case for dumping
Sec. 302 Countervailing Duty
When an article is granted any bounty, subsidy or subvention upon its production, manufacture or exportation in the country of origin and importation of which is likely to injure an established industry or retard the establishment of industry in Phil
countervailing duty = ascertained or estimated amount of bounty, subsidy or subvention
Injury criterion shall be applied only on imports from countries which adhere to GATT
If article was allowed a drawback, only the excess of the amount of drawback over the total duties and taxes shall constitute bounty, subsidy, subvention When the conditions which necessitated
the imposition of countervailing duties have ceased must discontinue imposition
Sec. 303 Marking
a. marking of articles
marked in official language of Phil and in conspicuous places to indicate to the ultimate purchaser the name of country of origin
b. marking of containers failure to mark 5% ad valorem
failure or refusal to mark within 30 days from date of notice shall constitute act o abandonment.
no imported article shall be delivered until it has been inspected, examined or appraised
Sec. 304 Discrimination by Foreign Countries
The president may proclaim new and additional duties in an amount not exceeding 100% ad valorem on articles from country where:
1. imposes an unreasonable charge, exaction not equally enforceable in other laws
2. discriminate against the commerce of Phil in such a way that it places Phil commerce at a disadvantage
D. Flexible Tariff Rates
Sec.401
Pres is empowered to:
1. increase, reduce or remove existing rates
2. establish quota or ban import of any commodity
3. impose an additional duty not exceeding 10% ad valorem
the pres’ power to increase or decrease rates of import duty shall include authority to modify the form of duty
any order of Pres shall take effect 30 days after promulgation
except if the imposition of additional duty is less than 10%, it shall take effect upon the discretion of the President.
III. IMPOSITION OF DUTIES A. Persons liable
Deemed Owner of Imported Articles: 1. consignee
2. holder of bill of lading
3. if consigned to order, the consignor 4. underwriters of abandoned articles and
salvors of articles saved at a wreck the liability of importer for the duties,
taxes, fees and other charges constitute a personal debt due to the government which may be discharged only upon full payment. It also constitutes a lien upon the articles imported while articles are in custody or subject to control of government
all importations by the government, its branches, instrumentalities, GOCCs, agencies or instrumentalities owned or controlled by government are subject to similar duties, taxes and fees except for those provided in Sec. 105 (conditionally free imports)
B. Declaration
imported articles must be entered in customhouse at the port of entry within 30 days from date of discharge by: 1. importer, being holder of B of L 2. customs broker
3. agent Import entries: 1. Informal entry
- articles of commercial nature intended for sale, barter or hire the DV is P2,000 or less
- personal and household effects, not in commercial quantity, for personal use
2. Formal entry
- may be for immediate consumption, or under irrevocable domestic letter of credit, bank guarantee or bond for:
a. placing article in customs bonded warehouse
b. constructive warehousing and immediate transportation to other Phil ports upon proper examination and appraisal c. constructive warehousing and
immediate exportation
Written Declaration of Import Entry must contain statements that declare:
1. full account of value or price
2. the invoice and entry contains just and faithful account of the value or price of articles; nothing has been omitted or concealed
3. to the best of knowledge of declaring, all the invoices and B of L are the only ones in exiting in relation to the importation in question
4. the invoices, entries and B of L are genuine and true
signed by importer, consignee or holder of bill, manager of corporation, firm or association, licensed customs broker
Form of Import Entry:
- shall be signed by person making entries - have required # of copies as prescribed
by RR Contents:
- name of importing vessel or aircraft - # and marks of packages,
- quantity
- description of article - value set in the invoice
C. Examination, Appraisal and
Classification (§1405-08) Procedure:
1. appraisers shall ascertain, estimate, determine the value or price of articles file action within 1 year
2. examiners shall render a report
3. appraisers shall describe all articles on the face of entry in tariff
15 days
An appraisal, fully passed upon and approved by Collector, may not be altered or modified except:
1. statement of error
2. request for reappraisal and/or classification
if duty assessed amount is lower than the entered value
D. Assessment of Taxes E. Liquidation (§1601-03)
Liquidation shall be made on the face of entry showing the particulars
Daily record of entries liquidated shall be posted ion the public corridor of customs house
Tentative Liquidation
-if to determine the exact amount due some future action is required, liquidation is deemed tentative as to items affected and shall be subject to future and final adjustment and settlement within 6 months Finality of Liquidation:
After expiration of 1 year from date of final payment of duties
In the absence of protest, final and conclusive between the parties unless liquidation was tentative
IV. REMEDIES OF THE GOVERNMENT A. Extrajudicial
1. Enforcement of Tax Lien
Sec. 1508
When an importer has an outstanding and demandable account with the Bureau of Customs,
- Collector shall hold the delivery of the article
- Upon notice, he may sell such importation or a portion of it to satisfy the obligation importer may settle his obligation anytime before the sale
2. Seizure and Forfeiture
Sec 2205
WHO: customs official Fisheries Commissions Philippine Coast Guard
to make seizure of any vessel, aircraft, cargo, animal or any movable property when the same is subject to forfeiture or liable for any fine under the tariff and customs law
ADMINISTRATIVE PROCEEDINGS (Secs 2301 – 2316)
When seizure is made:
1. Collector shall issue a warrant for the detention of the property
Cash bond
- if importer wishes to secure release of article for legitimate use
- amount fixed by Collector
- conditioned on payment of appraised value of article and/or fine, expenses, costs
article will NOT be released if:
- prima facie evidence of fraud in the importation]
- article is prohibited by law
2. Report to Commissioner and Chairman of Commission of Audit
3. written notice to owner or importer he shall he given opportunity to be heard Notification to an unknown owner
- posting for 15 days in the public corridor of customhouse
- publication in newspaper
- other means Collector considers desirable 4. Collector shall make a list and particular
description and classification of the seized property, appraisal based on local wholesale values by
- at least 2 appraising officials
- absent such, 2 competent disinterested citizens
If within 15 days from notification, no owner or agent is found or appears before Collector property forfeited to Government and sold
at auction
SETTLEMENT
While case is pending, Collector may accept settlement of any seizure case
- upon approval of Commissioner
- payment of fine ( 25% - 80% of the landed cost of the article)
In case of forfeiture, should pay the domestic market value of the seized article Settlement NOT allowed:
o Fraud in importation
o importation prohibited by law o release would be contrary to law
PROTEST
- written protest
- payment before protest is necessary (amount due + docket fee)
When: at the time payment of the amount claimed to be due is made within 15 days thereafter
Form: filed according to RR; point out the particular decision or ruling grounds used as basis for the protest
Scope: limited to the subject matter of a single adjustment (refers to the entire content of one liquidation including duties, fees, surcharges and fines) or other independent transaction
failure to protest will render the action of the Collector final and conclusive except for manifest error
upon demand of Collector, the importer shall furnish samples of the articles which are the subject of the protest
HEARING: 15 days after filing of protest DECISION: within 30 days
REVIEW BY COMMISIONER: 15 days after notification in writing of Collector’s decision if decision of Collector is adverse to government automatic review
DECISION OF COMMISIONER: within 30 days notice to party who brought case ( if seizure case, personal service if practicable)
REVIEW BY SECRETARY OF FINANCE
if decision of Collector is adverse to government automatic review
»»» Inaction of Commissioner or Secretary for 30 days from receipt of records of the case
decision under review becomes final and executory
APPEAL TO CTA: within 30 days from receipt of copy of decision
Commissioner may compromise any case subject to approval by Secretary
B. Judicial
V. REMEDIES OF THE TAXPAYER A. Refund (§1707-08)
When:
1. manifest clerical error made in invoice or entry
2. error in return of weight, measure and gauge
- certified, under penalties of falsification or perjury, by examining official
3. error in the distribution of charges on invoices
- not involving any question of law - certified, under penalties of
falsification or perjury, by examining official
Conditions
1. errors discovered before payment OR discovered within 1 year after the final liquidation
2. written request and notice from importer OR statement of error certified by the Collector
How:
1. Claim made in writing
2. Collector shall verify with the records in his office
3. certify claim to Commissioner with his recommendation and necessary papers 4. Commissioner shall then cause the claim
to be paid if found correct
If the result of the refund would result to a corresponding refund of the internal revenue taxes on the same importation, Collector shall certify to Commissioner who shall cause the said excess to be paid, refunded or credited in favor of the importer
B. Protest (§2308-09. 2312) - written protest
- payment before protest is necessary (amount due + docket fee)
When: at the time payment of the amount claimed to be due is made within 15 days thereafter
Form: filed according to RR point out the particular decision or ruling ground used as basis for the protest
Scope: limited to the subject matter of a single adjustment (refers to the entire content of one liquidation including duties, fees, surcharges and fines) or other independent transaction
failure to protest will render the action of the Collector final and conclusive except for manifest error
upon demand of Collector, the importer shall furnish samples of the articles which are the subject of the protest C. Abandonment (§1801-03)
Article is deemed abandoned when:
1. owner, importer or consignee expressly signifies in writing to Collector his intention to abandon
2. after due notice, fails to file an entry within 30 days from date of discharge of last package from vessel or aircraft 3. after filing entry, fails to claim his
importation 15 days from date of posting of the notice to claim such importation Effect:
- deemed to have renounced his interest and property rights
- ipso facto deemed property of the Government
any official or employee who:
- had knowledge of the existence of abandoned article
- custody or charge of such article fails to report within 24 hours from time article deemed abandoned shall be punished accdg to sec. 3604 ( fine: P5000 – P50,000mprisonment: 1 yr – 10 yrs SEIZURE
WRITTEN NOTICE TO IMPORTER/ OWNER
SETTLEMENT PROTEST HEARING DECISION Review by Commissioner DECISION Secretary of Finance Appeal to CTA 15 days 30 days 15 days 30 days 30 days If gov’t, automatic review
perpetual disqualification to hold public office, vote and participate in election)
VI. Problems
1. Whenever the decision of the Collector of Customs is adverse to the government, it is automatically elevated to the Commissioner for review and, if it is affirmed by him, it is automatically elevated to the secretary of Finance for review. What is the basis of the automatic review procedure in the Bureau of Customs? Explain. (2002 Bar)
Answer: Automatic review is intended to protect the interest of the Government in the collection of taxes and customs duties in seizure and protest cases. Without such automatic review, neither the Commissioner of Customs nor the Secretary of Finance would know about the decision laid down by the Collector favoring the taxpayer. The power to decide seizure and protest cases may be abused if no checks are instituted. Automatic review is necessary because nobody is expected to appeal the decision of the Collector which is favorable to the taxpayer and adverse to the Government. (Yaokasin v. Commissioner 180 SCTA 591
2. The Collector of Customs of the Port of Cebu issued warrants of seizure and detention against the importation of machineries and equipment by LLD Import and Export Co. for alleged nonpayment of tax and customs duties in violation of customs laws. LLD was notified of the seizure, but before it could be heard, the Collector of Customs issued a notice of sale of the articles. In order to restrain the Collector from carrying out the order to sell, LLD filed with the CTA a petition for review with application for issuance of a writ of prohibition. It also filed with the CTA an appeal for refund of overpaid taxes on its other importations of raw materials which has been pending with the Collector of Customs. The Bureau of Customs moved to dismiss this case for lack of jurisdiction of the CTA. (2002 Bar)
A. Does the CTA have jurisdiction over the petition for review and writ of prohibition? Explain. B. Will an appeal to the CTA for a tax
refund be possible? Explain. Answer:
A. No, because there is no decision as yet by the Commissioner of Customs which can be appealed to the CTA. Neither would the remedy of prohibition lie because the CTA has not acquired any appellate jurisdiction over the seizure case. The writ of prohibition being merely ancillary to the appellate jurisdiction, the CTA has no jurisdiction
over it until it has acquired jurisdiction on the petition for review.
B. No, because the Commissioner of Customs has not yet rendered a decision on the claim for refund. The jurisdiction of the Commissioner and the CTA are not concurrent in so far as claims for refund are concerned. The only exception is when the Collector has not acted on the protested payment for a long time, the continued inaction of the Collector or Commissioner should not be allowed to prejudice the taxpayer (Nestle v. CA, July 6, 2001)
3. On the basis of a warrant of seizure and detention issued by the Collector of Customs for the purpose of enforcing the Tariff and Customs laws, assorted brands of cigarettes said to have been illegally imported into the Philippines were seized from a store where they were openly offered for sale. Dissatisfied with the decision rendered after hearing by the Collector of Customs on the confiscation of the articles, the importer filed a petition for review with the CTA. The Collector moved to dismiss the petition for lack of jurisdiction. Rule on the motion. (2000 Bar)
Answer: No. The legislators intended to divest the RTCs of the jurisdiction to replevin a property which is subject of seizure and forfeiture proceedings for violation of the Tariff and Customs Code otherwise, actions for forfeiture of property for violation of the Customs laws could easily be undermined by the simple device of replevin. (Dela Fuente v. De Veyra, 120 SCRA 455)
4. What do you understand by the term “flexible tariff clause” as used in the Tariff and Customs Code? (2001 Bar)
Answer: The term “flexible tariff clause” refers to the authority given to the President to adjust the tariff rates under Section 401 of the Tariff and Customs Code, which is the enabling law that made effective the delegation of the taxing power to the President under the Constitution.