The draft order outlining Philippine guidelines for implementing the government’s right of compulsory acquisition for undervalued shipments has been issued.
The proposed customs administrative order (CAO) will implement Section 709 and other relevant provisions of Republic Act No. 10863, otherwise known as Customs Modernization and Tariff Act.
It will apply to all imported goods, including consumption, warehousing, transshipment, and consolidated goods, as well as postal items, whose declared value is said to be undervalued.
The draft CAO, which when signed amends all previous issuances of the Bureau of Customs (BOC) on compulsory acquisition, aims to protect government revenues and deter importers from committing undervaluation.
It also seeks to prevent the abuse and misuse by balikbayans, overseas Filipino workers, and returning residents of the privilege of de minimis when declaring the value of their postal items.
Under the draft, only the customs commissioner may exercise the power of compulsory acquisition, which refers to the power of the government to acquire imported goods when the importer’s declared customs value is unconscionably low.
The commissioner may, on his own or on the recommendation of the district collector, issue the warrant of compulsory acquisition (WCA), with the order identifying the goods subject to compulsory acquisition.
A WCA may be issued when the commodity is found to be grossly undervalued, i.e., falling 50% below the median value of previously imported identical or similar goods.
A badge of undervaluation includes the duty benchmark, an irregular practice of paying uniform duty on certain categories of goods, disregarding their quality, quantity, and actual value.
Once the existence of duty benchmark is established, the draft order said the district collector shall recommend that the commissioner issue a WCA.
Undervaluation may also be identified through information coming from customs administrations from other countries, from reports based on valid industry complaints, and from recommendations by reputable and recognized organizations or chambers that such importation is causing economic sabotage to the local industry.
Once the WCA is issued, the goods will immediately be transferred to a customs facility or warehouse.
Importers who wish to appeal may file a motion for reconsideration within 10 working days of receiving the WCA.
If the motion for reconsideration is denied, the aggrieved importer may file an appeal before the Secretary of Finance within 20 working days of receipt of the denial. If not satisfied with the decision, the importer may appeal to the Court of Tax Appeals within 30 days of receiving the decision from the Department of Finance.
When no appeal is taken or upon affirmation of the decision of the Customs commissioner during the appeals process, the importer shall be paid in cash based on the price equal to the declared customs value plus any duties already paid on the goods.
Goods for compulsory acquisition will be disposed of through public auction or negotiated sale according to the rules and regulations on disposition of goods under customs custody.
Violations of the proposed CAO by any person, officer, or employee are to be penalized in accordance with Title XIV of the CMTA and other applicable penal provisions. – Roumina Pablo
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