TARIFF AND CUSTOMS CODE
Core Principles
Meaning and Scope
Section 3514 (TCC)
Provides that Tariff and Customs Laws include not only the provisions of the code itself and regulations pursuant thereto but all other laws and regulation which are subject to enforcement by the Bureau of Customs or otherwise within its jurisdiction. It extend not only to the provisions of the Tariff Customs Code but to all other laws as well; like Central Bank Circulars, the enforcement of which is entrusted to the Bureau of Customs.
Nature of Customs Duties and Tariff
1. Custom duties:
Are duties which are one charged upon commodities on their being imported into or exported out of a country.
2. Tariff:
Means a book of rates, a table or catalogue drawn usually in alphabetical order containing the names of several kinds of merchandise with the duties to be paid for the same as settled or agreed upon between several states that holds commerce together.
Concept of Goods for Customs duty purposes:
As to Imported Articles:
All articles when imported from any foreign country into the Philippines shall be subject to duty upon each importation even thought previously exported from the Philippines. Except as otherwise specifically provided for in the code or other laws:
As to Exported Articles
Certain articles like specific types of wood, mineral plant, vegetable and animal products are subject to tariff and premium duties.
Note: Articles: When used with reference to importation or exportation includes goods, wares and merchandise and, in general anything that maybe made the subject of exportation and importation.
Pertinent Case:
4 US dollars, having ceased to be legal tender in the Philippines, fall within the meaning of the term “merchandise” (Bastida vs. Acting Commissioner of Customs, et al, L-24011, Oct. 24, 1970)
Articles / Goods Covered under the Tariff and Customs Code:
1. Articles subject to duty
General Rule: All articles when imported from a foreign country including those previously exported from the Philippines one subject to duty unless otherwise specifically provided for in the Tariff and Customs Code or other laws. (Sec. 100, TCS)
2. Prohibited Importations
Classifications:
A. Articles which are absolutely prohibited:
1. weapons of war
2. gambling devices
3. narcotics or prohibited drugs
4. immoral, obscene or insidious articles
5. those prohibited under special laws
B. Articles Qualifiedly Prohibited:
Refers to those which maybe imported but subject to, and after compliance with, certain conditions.
Pertinent Cases:
1. Where such conditions as to warrant lawful importation neither do nor exist, the legal effects of the importation of qualifiedly prohibited articles are the same as those of absolutely prohibited articles. (Auyong Hian vs CTA, 59 SCRA 110)
2. Prohibited importations one subject to forfeiture whether the shipper and the consignee are one and the same person. (UTE PATEROR vs. Bureau of Customs, 193 S 132)
3. Conditionally-free importations:
These are articles which are exempt from import duties upon compliance with the formalities prescribed with regulations promulgated by the Commission of Customs with the approval of the Secretary of Finance. (Sec. 105, TCC)
This article includes:
1. Those prohibited for in Sec. 105 of the Tariff and Customs Code;
2. Those granted to government agencies, government-owned or controlled corporations with agreement with foreign countries;
3. Those given to international institutions, entitled to exemption by agreement or special laws; and
4. Those that maybe granted by the President upon NEDA’s recommendation.
Liability for Custom Duties
General Rule: All importations / exportation of articles / goods are subject to customs duties.
Exceptions:
1. Exempt under the TCC.
2. Exemption granted to government agencies, instrumentalities with existing contracts, commitment, agreements or obligations with foreign countries.
3. Exempt international organizations pursuant to agreements or special laws; and
4. Exempt by the President upon recommendation of NEDA.
Liability of Importer for Custom Duties:
A personal debt which can be discharged only by payment in full thereof;
A lien upon the imported article while they are in custody or subject to the control of the government.
Valuation of the Goods:
Invoice value of the goods plus:
1. freight
2. insurance
3. cost
4. expenses, and
5. other necessary expenses.
Note: Imported goods must be entered into a custom house at their port of entry otherwise they shall be considered as contraband and the importer is liable for smuggling.
Import entry
It is a declaration in the Bureau of Customs showing particulars of the imported article that will enable the customs authorities to determine the correct duties.
1. When importation does begin?
Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with the intention to unlade therein.
2. When is it terminated / ended?
Importation is deemed terminated upon payment of duties, taxes and other charges due upon the articles pr secured to be paid at a port of entry and the legal permit for withdrawal shall gave been granted or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs (Sec. 1202, TCC)
Note: All imported articles into the Philippines, whether subject to duty or not, shall be entered through a customs house at a port of entry.
1. Port of Entry
Means a domestic open to both foreign and continuous trade including airport of entry.
2. Exportation
It is the bringing out of goods from the Philippines territorial jurisdiction.
3. Under Executive Order # 26, Series of 1986, Export taxes, except on logs, have been suspended
Kinds of Custom Duties
A. Regular / Ordinary Duties
These are duties imposed on imported articles that enter the country of the Philippines in avoidance with the schedules and classifications provided under the Tariff and Customs Code.
Classification:
1. Ad valorem Duty
Duty based on the value of the imported article.
2. Specific Duty
Duty based on the dutiable weight of goods number or measurement.
B. Special Duties
Imposed in addition to regular or ordinary duties principally in order to protect local industries against unfair competition from foreign manufacturers or procedures; consumer against possible deceptions; and national interest.
Classifications:
1. Dumping Duty
Imposed by the secretary of Finance upon the recommendation of the Tariff Commission when:
a. The price of the imported article is deliberately or continually fixed at less than the fair market value or cost of production; and
b. Importation would cause or likely cause and injury to local industries engaged in the manufacture or production of the same or similar articles or prevent their establishment.
Amount of special duty: extent of the under pricing.
2. Countervailing duty
Special duty imposed on imported articles which are granted any kind or form of subsidy by the government in the country or origin or exportation, the importation of which has caused or threatens to cause material injury to a domestic industry or has materially relaided the growth or, prevents the establishment of a domestic industry. (RA #8751)
Requisites:
1. The levy of an excise tax or inland tax or local goods of the same or similar class as the article imported or the grant of subsidy to the foreign exporter by his government; and
2. The importation is likely to insure materially established local industries or prevent their establishments.
Amount of special duty: Equal to the bounty or subsidy or subvention.
3. Marking Duty
Special duty of five percent (5%) advalorem imposed or articles properly marked, collected by the commissioner, except when such article is exported or destroyed under the customs supervision and prior to final liquidation of the corresponding entry.
Purpose: To prevent possible deception of the consumers.
4. Discriminatory/Retaliatory duty
Imposed on imported goods whenever it is found as a fact that the country of origin discriminates against the commerce of the Philippines in such a manner as to place the commerce of the Philippines at a disadvantage compared with the commerce of any foreign country.
5. Duties imposed under the Flexible Tariff Clause (Sec. 401, TCC)
Import duties which are modified by the President upon investigation of the Tariff Commissions and recommendation of the National Economic Development Authority in the interest of national economy, general welfare and national security.
President is empowered to adjust tariff rates
The President is given by the Tariff and Customs Code ample powers to adjust tariff rates Sec. 401 of TCC; empowers the president to:
1. Increase, reduce, or remove existing protective rates of import duty;
2. Establish import quota or to ban imports of any commodity;
3. Impose and additional duty on all imports not exceeding 10% advalorem whenever necessary.
Limitations imposed regarding the Flexible Tariff Clause:
1. Conduct by the Tariff Commission of an investigation in which a public hearing shall be hold wherein interested parties shall be afforded reasonable opportunity to be present, produce evidence and to be heard;
2. The commission shall also hear the views and recommendations of any government office, agency or instrumentality concerned;
3. The commission shall submit their findings and recommendations to the NEDA within 30 days after the termination of the public hearings. The NEDA thereafter, submits its recommendation to the President.
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