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BUREAU OF CUSTOMS
MANILA 1099
08 NOV 2004
CUSTOMS ADMINISTRATIVE ORDER
No. 4-2004
Subject:
SEC. I. OBJECTIVES
A. To enhance and consolidate the regulations concerning the WTO Valuation
System, the objectives of which are:
B.
1.
To have a fair, uniform and neutral system for the valuation of goods
for customs purposes that precludes the use of arbitrary or fictitious
customs values;
2.
3.
4.
A. General
The dutiable value of imported goods shall be determined using one of the six
methods of valuation listed below, to be applied sequentially in the order
provided by law.
B.
1.
The dutiable value for an imported article shall be the Transaction Value
which is the price actually paid or payable for the goods when sold for
export to the Philippines adjusted in accordance with the provisions of
Section II.B.3 of this Order, and subject to the conditions specified in
Section II.B.2 herein.
2.
The dutiable value shall be the Transaction Value under method 1 if all of
the following conditions are satisfied:
a.
b.
2)
3)
c.
d.
e.
The buyer and the seller are not related or where they are related,
such relationship did not influence the price of the goods. The buyer
and the seller shall be deemed to be related only if:
1)
2)
3)
4)
f.
6)
7)
8)
person; or
If the buyer and seller are related, the use of the transaction value
method is acceptable if:
1)
2)
ii)
iii)
b.
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4.
1)
2)
3)
4)
e.
f.
g.
The cost of transport of the imported goods to the port of entry in the
Philippines;
h.
i.
The dutiable value must not include the following charges or costs, if they
are distinguished from the price actually paid or payable for the goods:
a.
b.
c.
d.
5.
M th d 2 Th T
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transaction value of identical goods sold for export to the Philippines and
exported at or about the same time as the goods being valued. The sale
involving such identical goods must also be at the same commercial level
and in substantially the same quantity as the goods being valued.
2.
2)
physical characteristics,
ii)
quality, and
iii)
reputation,
3.
4.
b.
c.
d.
b.
c.
1.
2.
3.
4.
Similar goods are defined as goods which, although not alike in all
respects,
1)
2)
3)
4)
5)
b.
c.
Where there are no similar goods produced by the same person in the
country of production of the goods being valued, similar goods
produced by a different person in the same country may be taken into
account.
b.
c.
cannot be determined under that method, under Method Five, except that at
the request of the importer, the order of application of Methods Four and
Five shall be reversed: Provided, however, That if the Commissioner of
Customs deems that he will experience real difficulties in determining the
dutiable value using Method Five, the Commissioner of Customs may
refuse such a request in which event the dutiable value shall be determined
under Method Four, if it can be so determined.
E.
1. By this method, the dutiable value is determined on the basis of sales in the
Philippines of the goods being valued or of identical or similar imported
goods, less certain specified expenses resulting from the importation and
sale of the goods.
2.
3.
b.
c.
d.
e.
The purchaser must not be related to the importer from whom he buys
such goods;
f.
The purchaser in the Philippines must not have supplied assists, either
directly or indirectly;
g.
b.
c.
d.
F.
1.
Under this method, the dutiable value is determined on the basis of the cost
of production of the goods being valued, plus an amount for profit and
general expenses usually reflected in sales from the country of exportation
to the Philippines of goods of the same class or kind.
2.
b.
G.
2)
The following are to be added if not included in a.1) and a.2) above:
1)
2)
3)
4)
c.
d.
Add the cost of transport, insurance and related charges to the port or
place of importation.
When the dutiable value cannot be determined under any of the previous
methods of valuation, it shall be determined by using other reasonable means
consistent with the principles and general provisions of GATT 1994, the
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t
2.
A system that provides for the acceptance for customs purposes of the
higher of two alternative values;
3.
4.
The cost of production, other than computed values, that have been
determined for identical or similar goods in accordance with Method Five
hereof;
5.
The price of goods for export to a country other than the Philippines;
6.
7.
H.
1.
2.
3.
4.
Upon written request, the importer shall have the right to an explanation in
writing from the Bureau as to how the customs value of the importers
goods was determined. When a final decision is made, the Bureau shall
communicate to the importer in writing its decision and the grounds
therefor.
5.
A.
Currency Conversion
If in the course of determining the dutiable value of imported goods, delay will
necessarily ensue in the final determination of such dutiable value, the importer
may secure the release of the imported goods from Customs provided:
1.
The importer pays the duties and taxes due based on his declaration; and
2.
3.
D.
Appeals
Importers who are not satisfied with the dutiable value determined by Customs
could file an appeal in the form of a formal protest pursuant to Section 2308 of
the Customs Code within fifteen (15) days from date of additional duties and
taxes are paid or collected from the guaranty posted, and upon payment of the
appropriate docket fee required under existing regulations.
The liquidation of an import entry shall be deemed final and conclusive upon all
parties after the expiration of three (3) years from the date of the final payment
of the duties due, except where:
SEC. IV.
1.
2.
A protest has been filed under the provision of Section 2308 of the
Customs Code;
3.
Where the import entry is selected for post audit within the three (3) year
period required for record-keeping provided that once started, the audit can
be completed beyond said period;
4.
2.
Upon the effectivity of Republic Act No. 9135, all importers are
required to keep at their principal place of business, for a period of
three (3) years from the date of filing of the import entry, all the
records of their importations and/or books of accounts, business
and/or computer systems and all other customs commercial data, in
whatever form, including payment records relevant for the
verification of the accuracy of the transaction value declared by the
importers/customs brokers on the import entry.
b.
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t th
t t th t
b.
c.
1)
2)
3)
Organizational structure;
4)
5)
6)
7)
2)
3)
2)
3)
4)
Ocean bill of lading, and/or master air waybill, and/or house air
bill d/
lid t bill f l di
6)
7)
8)
Packing Lists;
9)
billings,
and/or
12) Receipts for arrastre charges, cargo handling and storage fees;
13) Short shipped/bad order reports, if applicable;
14) Goods tally records, if applicable;
15) Letters of credit, application for letter of credit, bank details;
16) Remittance advice;
17) Credit card transactions;
18) Telegraphic money transfers;
19) Offshore monetary transactions; and
20) Evidence of payments by any other means, including
information detailing non-cash compensation transactions.
d.
2)
3)
Production records;
4)
Costing records;
5)
Sales records;
Th
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import entry and necessary for the purpose of collecting the proper
duties and taxes on imports:
1)
Receipts, cashbooks;
2)
3)
Cheque records.
f.
To the extent that they are relevant for the verification of the accuracy
of the transaction value declared on the import entry and necessary
for the purpose of collecting the proper duties and taxes on imports,
and if applicable, charts and codes of accounts, ledgers, financial
statements, accounting instruction manuals, and systems and program
documentation that describes the accounting system used by the
importer.
g.
3.
Upon the effectivity of R.A. 9135, all customs brokers are required to keep
at their principal place of business, for a period of three (3) years from the
date of importation copies of the importation records in whatever form
covering transactions that they handle including records enumerated in
Section IV.A.2 paragraph c (items 1 to 13) of this Order.
4.
5.
a.
Articles of Incorporation;
b.
The company structure, which shall include but not be limited to:
1)
2)
3)
Organizational structure
c.
Key importations;
d.
Privileges enjoyed;
e.
Penalties; and
f.
Compliance Audit
1.
b)
Financial flow;
c)
d)
In addition, the authorized customs officer may require the importer and/or
broker to make certified copies of any such documents or extracts thereof.
3.
4.
An authorized customs officer shall not enter any premises under this
Section unless, before so doing, the officer produces to the person in
charge of the premises the following: 1) duplicate original of the AUDIT
NOTIFICATION LETTER (ANL) issued by the Commissioner of
Customs addressed to the importer/broker, and 2) official Customs
identification card. The person in charge of the premises entered by an
officer shall provide the officer with all reasonable facilities and assistance
for the effective exercise of powers under this Section.
5.
6.
7.
C.
1.
b.
c.
2.
D.
1.
Profiling/Information Analysis
b.
Audit Notification
c.
A dit C f
ith A dit
f.
Exit Conference
g.
Audit Reporting
h.
Audit Monitoring
SEC. V.
COMPULSORY ACQUISITION
In order to protect the Governments revenues against the undervaluation of
goods subject to ad valorem duty, the Commissioner of Customs may acquire
grossly undervalued goods for a price equal to their declared Customs value plus
any duties already paid on the goods, payment for which shall be made within
ten (10) working days from issuance of a warrant signed by the Commissioner of
Customs for the acquisition of such goods. For this purpose, there is gross
undervaluation when the discrepancy between the declared Customs value and
any of the test values sequentially applied in accordance with law as enumerated
in Section II.B paragraph f.2.1. to iii hereof is two hundred percent (200%) or
higher using the following formula:
difference between test value and declared value
= ------------------------------------------------------------------ x 100
declared value
and that the importer fails to satisfactorily explain or justify the difference
between the declared value and the test value as resulting from an arms length
transaction.
An importer who is dissatisfied with a decision of the Commissioner of Customs
pertaining to this Section may, within twenty (20) working days after the date on
which notice of the decision is given, appeal to the Secretary of Finance and
thereafter if still dissatisfied, to the Court of Tax Appeals as provided for in
Section 2402 of the Customs Code.
Where no appeal is made by the importer, or upon reaffirmation of the
Commissioners decision during the appeals process, the Bureau of Customs or
its agent shall sell the acquired goods pursuant to existing laws and regulations.
Th
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SEC.VI.
Any person who fails to keep and maintain all the records required to be kept
and maintained under Section IV.A of this Order shall be subject to the
following:
1.
2.
3.
Criminal prosecution punishable with a fine of not less than one hundred
thousand pesos (PhP100,000) but not more than two hundred thousand
pesos (PhP200,000) and/or imprisonment of not less two (2) years and one
(1) day but not more than six (6) years.
B.
Any importer and/or broker who denies an authorized officer full and free access
under Section IV.B hereof to the records required to be kept and maintained as
specified in Section IV.A of this Order shall be subject to the following:
1.
Punishment for contempt, for contumacy or refusal from the proper court
having criminal jurisdiction.
2.
3.
4.
pesos (PhP200,000) and/or imprisonment of not less than two (2) years and
one (1) day but not more than six (6) years.
C.
1.
Any person who, after being subjected to compliance audit or post entry
audit and examination as provided in Sections IV.B and IV.C, is found to
have incurred deficiencies in duties and taxes paid for imported goods,
shall be penalized according to three (3) degrees of culpability subject to
any mitigating, aggravating or extraordinary factors that are clearly
established by the available evidence:
a)
b)
c)
d)
2.
D.
Confidentiality Clause
SEC. VII.
REPEALING CLAUSE
Customs Administrative Order Nos. 2-99 and 5-2001, and all other Orders,
Memoranda, Circulars or parts thereof which are inconsistent with this Order are
hereby deemed repealed and/or modified accordingly.
SEC. XI.
EFFECTIVITY
This Order shall take effect fifteen (15) days after publication.
GEORGE M. JEREOS
Commissioner
APPROVED :
JUANITA D. AMATONG
Secretary of Finance