ENHANCED CARGO CLEARANCE PROCEDURES WITH PROCEDURES ON TENTATIVE RELEASE

Pursuant to section 608, Tariff and Customs Code of the Philippines,
as Amended, the following rules and regulations are hereby promulgated:

I.          OBJECTIVES

1.         To further enhance the regulations covering the import clearance processes under the WTO Valuation System; and

2.         To facilitate the clearance of legitimate commerce while protecting government revenue.

II.         SCOPE

This Order shall cover all shipments in all ports except those
covered by the Super Green Lane facility, and by SGS-CRF, in which case
CMO Nos._ and 24-99 shall apply respectively.

III.       CARGO CLEARANCE PROCEDURE

1.         Documentation Requirements – The following documents shall be used in clearing importations at the BOC:

1.1       Import Entry and Internal Revenue Declaration (IEIRD)
Form – BC Form 236, which will include the Supplemental Declaration on
Valuation (SDV) form. The guidelines for the proper accomplishment
thereof are prescribed by CMO 1-96 A;

1.2       Bill of Lading or Air Waybill or House Bill of Lading, where applicable;

1.3       Commercial Invoice;

1.4       Packing List; and

1.5       Others additional documents as may be required.

2.         The IEIRD shall be based on self-assessment As such,
the importer and the customs broker shall make a complete and correct
declaration of the particulars of the importation on the IEIRD and the
SDV, which declaration shall be under oath and subscribed to by the
importer and the Customs broker before a notary public or a Customs
officer authorized to administer such oath under Section 3503 of the
Tariff and Customs Code of the Philippines, as amended, under pain of
prosecution for perjury. However, in the case of SDV, the Customs broker
shall sign to attest to the authenticity of the signature of the
importer.

3.         The importer/broker shall compute the duties and taxes
using the applicable valuation method as prescribed in Section I of CAO
No. 2-99.

4.         The computed duties and taxes based on self-assessment
shall be paid through Authorized Agent Bank (AAB) in accordance with CAO
2-95.

5.         An import entry may be subject to post entry audit to
verify the truth or accuracy of the declaration in the IEIRD and the
SDV.

Entry Lodgement

6.         For ports where the Automated Customs Operations System
(ACOS) is in operation, electronic lodgment of import entries shall be
made through any of the following as may be applicable:

6.1       Entry Encoding Center (EEC)	6.3       Electronic Data Interchange (EDI)
6.2       Direct Traders Input (DiTI)

For ports, which are not equipped with ACOS, lodgment shall be at
the Entry Processing Division or equivalent unit. In these ports,
provisions pertaining to ACOS and Selectivity shall not apply.

7.         Upon electronic lodgment, Selectivity is triggered.

7.1       If Green Channel — The import entry documents shall be
forwarded together with the ACOS generated assessment notice to the
Collection Division.

7.2       If Selected Channel — The import entry documents shall
be forwarded together with the ACOS generated assessment notice to the
Formal Entry Division (FED) through the Entry Processing Unit (EPU).

Assessment (for Selected Entries in ACOS)

8.         At the Entry Processing Unit —

8.1       The document examiner/processor shall check that all
required documents accompanying the IEIRD and the SDV are complete and
forward the same to the Releasing Clerk/Segregator.

8.2       The Releasing Clerk/Segregator shall segregate the
IEIRD copies according to the distribution list in II.3 of CAO 1-96A. He
shall then forward the Customs Copy (white) together with all the
supporting documents to the Formal Entry Division (FED), or equivalent
unit concerned.

9.         At the Formal Entry Division or equivalent unit concerned —

Upon receipt of the import entry documents the COO V shall, verify
through ACOS whether the import entry has been selected due to the
valuation screen or an enforcement screen. If hit by the valuation
screen, the COO V shall stamp the word “VALUATION” on the top right
corner of the IEIRD (space above the logo of the BOC).

For Entries under YELLOW Lane:

9.1       The conduct of document examination and disposition of
yellow lane shipments shall be in accordance with current procedures
governing yellow lane entries.

If hit by the valuation screen, the COO III and the COO V
concerned shall forward the import entry documents to the Valuation and
Classification Review Committee (VCRC).

But even if not hit by the valuation screen, the COO III and COO
V may nevertheless forward the import entry to the VCRC under paragraph
10.2.1 below.

9.2       For import entries re-routed, in appropriate cases, to
the red lane, the procedures for shipments through the red lane will
apply.

For Entries under RED Lane:

9.3       The conduct of physical examination and disposition of
red lane shipments shall be governed by the current procedures
governing shipment in the red lane.

If hit by the valuation screen, the COO III and the COO V
concerned shall forward the import entry documents to the Valuation and
Classification Review Committee (VCRC).

But even if not hit by the valuation screen, the COO III and COO
V may nevertheless forward the import entry to the VCRC under paragraph
10.2.1 below.

9.4       For import entries re-routed to red channel by VCRC,
the COO III shall inspect the goods in accordance with existing rules
and regulations and transmit the import entry, together with his
findings to the COO V who shall then forward the import entry to the
VCRC.

The Valuation and Classification Review Committee (VCRC)

10.       There is hereby created for each Collection District a
Valuation and Classification Review Committee (VCRC) directly under the
Chairmanship of the respective District Collector of Customs to be
composed of the following:

•           Deputy Collector for Assessment — Vice Chairman
•           Chief, FED or equivalent unit — Member
•           Concerned COO V and COO III — Members

10.1     The VCRC shall have the following functions:

10.1.1  To determine if there is a genuine valuation issue;

10.1.2  When a genuine valuation issue exists, to determine whether delay will ensue in the determination of customs value;

10.1.3  To process request for tentative release, when applicable;

10.1.4  To re-route import entry when necessary to the red channel;

10.1.5  To determine applicable method of valuation including computation of duties and taxes;

10.1.6  To perform such other functions as may be necessary to effectively carry out its mandate.

The VCRC shall meet at least once a week or as often as necessary
and shall be supported by a permanent Secretariat composed of a Head,
several evaluators and a clerical staff to be assigned by the District
Collector concerned.

10.2     Import Entries shall be coursed to the VCRC when:

10.2.1  Hit by the Valuation Screen under the selectivity system
(the ACOS computer will display the word “VALUATION” if the particular
shipment was hit by the valuation screen). Under this scenario, the COO V
shall fill up the Request for VCRC Review Form and immediately forward
the same together with the import entry to the VCRC.

Note that the COO V shall not decide whether or not the value of
the shipment is doubtable. Only the VCRC has the power to cast doubt on
the value of the shipment and decide whether a genuine valuation issue
exists or not.

10.2.2  Further valuation scrutiny is needed even if not hit by
the valuation screen as justified by the COO V and COO III. Such import
entry shall be endorsed by the COO V and COO III, with the appropriate
justification to the VCRC and shall be released tentatively, with the
Transaction Value accepted provisionally. A guarantee will however not
be required in this case and the procedures for tentative release are
stated in Section IV below.

10.3     A genuine valuation issue exists when:

10.3.1  The shipment is hit by the Valuation Screen, and

10.3.2  At least one of the elements under the Transaction Value
(method 1) is inconsistent with the declaration and/or is missing,
and/or

10.3.3  The VCRC establishes that the method of valuation used by the declarant is incorrect;

10.4     For purposes of 10.3.2 above, the elements under method 1 that should be reviewed are the following:

a.         Sale for Export	g.         Commissions and Brokerage fees
b.         Price Actually Paid or Payable	h.         Assists
c.         Restrictions to the Disposition of the Goods being Valued	i.          Royalties and License fees
d.         Conditions of Sale (for which the value cannot be determined)	j.          Packing and Container costs and charges
e.         Proceeds of any subsequent resale/disposal of the goods being valued	k.         Insurance
f.          Relationship between the buyer and the seller	l.          Transport Costs and charges

Procedure at the VCRC

11.       The following procedure shall be followed when an Entry is coursed to the VCRC:

VCRC Secretariat

11.1     The receiving clerk receives the Request for VCRC
Review Form properly filled up together with the Entry referred by the
concerned COO III and COO V and records the same in a pre-numbered
logbook

11.2     The Evaluator shall perform the following:

11.2.1  Check the value range

11.2.2  Consult CDSS and GVSS and print the available data

11.2.3  Require importer to submit documents, if warranted,
such as sales contract, evidence of payment, certificate of discount,
and other documents to verify price actually paid or payable

11.2.4  Initially determine if the article is correctly classified based on the data warehouse.

11.2.5  From the documents gathered, initially determine if there is a genuine valuation issue.

11.3     The Head, VCRC Secretariat shall be responsible for the following:

11.3.1  Maintenance of a logbook -which shall contain the
docket number assigned to a case the date and time when the VCRC Request
for Review Form has been received by the secretariat and by whom;

11.3.2  Preparation of the minutes of the VCRC meetings which shall, among others, indicate the following:

•           Facts of the case
•           Issue
•           Findings of the evaluators on value and classification
•           Excerpts of the position paper of the parties involved, if any

11.3.3  Computation of the amount of the guarantee for purposes of tentative release

VCRC

11.4     The VCRC shall deliberate on the issues involved
including the determination on whether a genuine valuation issue exists
or not.

11.5     If a genuine valuation issue exists, the VCRC shall
provisionally determine the appropriate value based on the applicable
valuation method pursuant to CAO 2-99 and shall inform the
importer/broker accordingly.

11.6     If the provisional value is acceptable to the
importer/broker, he may pay the assessed duties and taxes based
therefrom and the Collector of Customs shall cause the release of
shipment thereafter.

11.7     If the provisional value is unacceptable to the
importer/broker, the shipment may nevertheless be released through
tentative release if the will be a delay in the resolution of the case
(note: “delay” means the resolution of issue would take more than 16
working; hours).

11.8     In shipments that will be processed under tentative
release, an importer shall be given a period of 15 days, extendible for a
period not exceeding another 15 days for reasonable cause, from receipt
of notice to comply with the requirements needed (e.g. contract of
sale, royalty agreement, etc.). The VCRC, in turn, shall resolve the
issue within 24 hours from receipt of full requirements.

11.9     For shipments, where tentative release is not availed of,
the VCRC shall resolve the issue within 24 hours upon receipt of the
documentary requirements.

11.10   Failure to comply with the documentary requirements as
directed by the VCRC within the period provided in paragraph 11.8 shall
be a ground for rejecting the valuation method as declared.

11.11   The VCRC shall prepare and submit a draft resolution containing the following information:

a.         Port of Entry	g.         Resolution (Method used)
b.         Country of Importation	h.         Basis of Resolution (Explanation on method used)
c.         VCRC Issue No.	i.          Computation of duties and taxes as per resolution
d.         Date filed	j.          Implementation Instruction
e.         Entry No.
f.          Name of Consignee

11.12   The VCRC shall notify the importer of the decision.

11.13   The Commissioner of Customs and the Deputy Commissioner
for Assessment and Port Operations through the Import and Assessment
Service shall be furnished with copies of all the decisions of the VCRC
under this Order.

Payment Verification/Cargo Release

12.       The Collection Division shall cause the release of
shipments through OLRS based on the results of payment verification.

13.       For shipments released under tentative release:

13.1     The Collection Division shall insure that the required
bond has been posted before causing the release of the subject shipment
through OLRS.

13.2     The Collection Division shall return the import entry to the VCRC for appropriate disposition.

IV.       TENTATIVE RELEASE

1.         Tentative release of shipments shall not be allowed, or if already granted, the same is deemed withdrawn when:

1.1       The shipment is the subject of an alert/hold order involving an enforcement issue.

1.2       The shipment has incurred a violation that would merit the issuance of a Warrant of Seizure and Detention (WSD).

1.3       The importer fails to put up the required security, in
which case, the VCRC shall resolve the issue without the benefit of
tentative release.

1.4       If any other instance where the VCRC can actually
resolve the valuation question within sixteen (16) working hours from
receipt of the valuation selected Entry.

2.         Form of the Security — To secure the
additional revenue in the event of an adverse decision resulting in
higher customs assessment, the importer shall be required to post a
guarantee which may take the form of Cash or a Manager’s;/Cashier’s
check.

3.         Amount of Security — The amount of the
security shall be equivalent to the difference in the duties, taxes and
other charges assessed by Customs using any of the acceptable method of
valuation as against the duties, taxes and other charges computed based
on the declaration plus 25% thereof.

4.         Handling of Security — The treatment of
Cash/Check Guarantee for tentatively released shipment shall be handled
in accordance with Customs Memorandum Order (CMO) No. 4-99.

Procedures on the Tentative Release of Shipments

5.         When the importer opts to avail of the Tentative
Release of shipments in appropriate cases, the importer shall file with
the VCRC a formal request for tentative release of his shipment.

6.         The VCRC shall evaluate the request and take appropriate action thereon.

7.         If disallowed, the VCRC shall resolve the valuation
issue without benefit of tentative release. If disallowance is by reason
of enforcement issue or WSD, the shipment shall be treated in
accordance with existing rules and regulations applicable in the
premises.

8.         If allowed, the VCRC shall transmit the Entry to the
Collection Division which shall check the sufficiency of initial payment
of duties and taxes made, and ensure the posting of the required
guaranty. Thereafter, the Collection Division shall immediately return
the import entry to the VCRC for appropriate disposition including the
flagging of the subject Entry in ACOS covering a tentatively released
importation.

9.         The final decision of the VCRC under this Order shall
be forwarded to the Collection Division for implementation pursuant to
CAO 4-99.

V.        APPEALS/PROTEST PROCEDURE

If the importer disputes the final assessment of the Collector
through the VCRC, the importer may appeal the decision of the VCRC to
the Commissioner of Customs.

VI.       SEPARABILITY CLAUSE

If any part or parts hereof is/are declared unconstitutional by
the courts, the rest of the provisions will remain in full force and
effect.

VII.      REPEALING CLAUSE

CMO Nos. 25-99 and 26-99 and all Orders, Memorandums, Circulars or
parts thereof which are inconsistent with this Memorandum are hereby
deemed repealed and/or modified accordingly.

VII.      EFFECTIVITY

This order shall take effect immediately upon signing.

Adopted: 3 April 2000

(SGD.) RENATO A. AMPIL
Acting Commissioner