Customs Modernization and Tariff Act Series 4: Title 1-Preliminary Provisions

Customs Modernization and Tariff Act Series 4: Title 1-Preliminary Provisions


For Series 1, click here.

For Series 2, click here.

For Series 3, click here.

Title I of the Customs Modernization and Tariff Act (CMTA) has four chapters: Chapter 1 provides the short title; Chapter 2 the general and common provisions; Chapter 3 defines the types of importation; and Chapter 4 is a special provision on relief consignment.

Chapter 1 (Short Title)

As previously mentioned, the original title of the initial bills filed in Congress in 2008 was “Customs and Tariff Modernization Act” or CTMA. The approved law revised the short title based on the misconception that the term tariff refers to the Tariff Commission and that the term modernization should properly refer to customs only.

In most customs jurisdictions, tariff administration is an inherent function of the customs office and there is no separate office assigned to perform tariff administration. In the Philippines, we have a separate agency known as the Tariff Commission which is under the National Economic and Development Authority whereas the Bureau of Customs is under the Department of Finance.

Chapter 2 (General and Common Provisions)

We have outlined below the specific changes provided under this chapter:

  • ‘Declaration of Policy’ (Section 101) is a new provision which specifically mentions the promotion of trade facilitation as a major customs function. (Section 101)
  • ‘Definition of Terms’ (Section 102) defines new terms not previously provided in the old law such as Admission, AWB (airway bill), AEO (Authorized Economic Operator), Carrier, Conditional Importation, Perishable Goods, Tentative Release, Transit, Travelers and Third Party.
  • Section 103 (When Importation Begins and Deemed Terminated) expounds on the instances when importation is deemed terminated.
  • Section 104 (When Duty and Tax is Due on Imported Goods) has a new provision providing for 20% legal interest on duties and taxes that are already due and demandable.
  • Section 105 (Effective Date of Rate of Import of Duty) provides the applicable dates depending on the type of goods such as those for consumption, goods withdrawn from customs bonded warehouses or from free zones and goods for public auction.
  • Sections 106 (Declarant) has redefined the declarant to refer mainly to the owner of the goods. Section 107 provides the rights and obligations of a declarant.
  • Section 108 on penalties adopts the Revised Kyoto Convention (RKC) policy that penalties should not be substantial for errors in the goods declaration and those not involving gross negligence or fraud.
  • Section 109 promotes the use of ICT in customs processes.
  • Section 110 adopts the RKC policy providing equal treatment of parties transacting directly with customs or through representatives.
  • Section 111 and 112 is based on the RKC policy to provide transparency and accessibility to information not otherwise considered as confidential in nature.
  • Section 113 (Decision and Ruling) defines the standards for issuing decisions, including advance rulings, relating to the importation and exportation of goods. Section 114 provides the right to appeal a decision deemed adverse to an importer or exporter.

Chapter 3 (Types of Importation)

This Chapter is based on the Section 100 and 101 of the Tariff and Customs Code of the Philippines (TCCP). The main difference under the CMTA is that the old provision on prohibited importation has been redefined under 2 new section—one on prohibited goods per se and another on restricted goods. Additionally, new provisions have been provided to define free and regulated goods.

Under Section 117, import permits for regulated goods may be submitted after arrival of the goods but prior to release from customs custody. Old customs rules require that import permits be issued prior to arrival of the goods and this rule affects many importations particularly telecom equipment and IT products arriving at Ninoy Aquino International Airport.

Chapter 4 (Relief Consignment)

Under Section 105 of the old TCCP, donations to relief organizations are duty free but subject to VAT. There is now a specific chapter under CMTA which provides for tax and duty free treatment of goods considered as relief consignments.

Please note that while Title I refers to preliminary provisions, this particularly chapter refers to special procedures for a specific type of importation. The original draft bills have these provisions together with those provisions for travelers and passenger baggage, postal matters and express shipment.

The author is an international trade, indirect tax (customs) and supply chain expert. He provides advisory and training service to most of the top corporations and industry associations. For questions, please email at or


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