PH Customs clarifies surcharge issue in undervaluation, misdeclaration cases

PH Customs clarifies surcharge issue in undervaluation, misdeclaration cases


The Philippine Bureau of Customs (BOC) has explained issues surrounding how surcharge should be applied in cases of undervaluation, misclassification, and misdeclaration as stipulated under the Customs Modernization and Tariff Act (CMTA).

Customs Commissioner Nicanor Faeldon, in a memorandum to BOC officials dated March 6, issued the clarification on Section 1400 of the CMTA following “concern raised by some of our stakeholders in its implementation.”

Section 1400, under Title XIV (Offenses and Penalties), provides the grounds and penalties for committing misdeclaration, misclassification, and undervaluation in goods declaration.

Faeldon said that to avoid confusion, the rules as stated in Section 1400 on whether or not to impose a 250% surcharge for undervaluation, misclassification and misdeclaration will be followed.

However, the customs chief said the application of the last paragraph of Section 1400 “shall be temporarily suspended pending the clarification with Congress on their legislative intent.”

The last paragraph of Section 1400 states: “When misdeclaration, misclassification or undervaluation is intentional or fraudulent, such as when a false or altered document is submitted or when false statements or information are knowingly made, a surcharge shall be imposed equivalent to five hundred percent (500%) of the duty and tax due and that the goods shall be subject to seizure regardless of the amount of the discrepancy without prejudice to the application of fines and penalties provided under Section 1401 of this Act against the importer and other person or persons who wilfully participated in the fraudulent act.”

Suspending the enforcement of the last paragraph will be done without affecting that of Sections 1114 and 1402 of the CMTA in case of intentional or fraudulent misdeclaration, misclassification, or undervaluation, Faeldon said.

Section 1114 provides the properties not subject to forfeiture in the absence of prima facie evidence, while Section 1402 provides the penalty for parties that fail or refuse to give evidence or documents for assessment.


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