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The Bureau of Customs supports a Lower House bill seeking to require the declaration of the value of imported goods in shipping and airlines documents, particularly in the manifest and/or bill of lading and airway bill
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House Bill 178 aims to curb illicit trading practices by requiring common carriers to declare the value of the goods and articles in the cargo manifest of vessels from a foreign port, B/L and AWB as it appears in the commercial invoice and letters of credit
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Some stakeholders described the proposal as a contravention of international shipping practices
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It will prove disruptive to vessel operations as compliance would mean tinkering with the shipping lines’ global IT system in cargo manifest preparation, said Association of International Shipping Lines president Patrick Ronas
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Ronas added BOC’s technology systems already in place are much more effective mechanisms to detect Customs fraud and protect government revenues
The Bureau of Customs (BOC) supports a Lower House bill seeking to require the declaration of the value of imported goods in shipping and airline documents, particularly in the manifest and/or bill of lading (B/L) and airway bill (AWB).
House Bill (HB) 178, authored by representatives Caroline Tanchay and Rodante Marcoleta, aims to amend Section 1204 (Manifest Required of Vessel from Foreign Port) of Republic Act (RA) No. 10863, or the Customs Modernization and Tariff Act (CMTA). Marcoleta has also filed a similar bill, which was subsequently substituted, in the previous Congress but did not reach third and final reading.
In its explanatory note, the bill seeks to curb illicit trading practices by requiring common carriers to declare the value of the goods and articles in the cargo manifest, B/L and AWB as it appears in the commercial invoice and letters of credit so “authorities can have adequate basis in assessing and collecting correct taxes, duties and charges.”
The measure claimed many smuggled and prohibited items pass customs scrutiny using spurious commercial and prohibited documents. “The fraud is perpetuated by the fact that cargo manifest of vessels from a foreign port, airway bills and bills of lading do not indicate the value of the goods and articles being imported. Actual purchase and customs fees that need to be collected are not required to be declared in these commercial documents; thus, giving the importer and consignee the opportunity to misdeclare, undervalue, and misclassify the goods and articles.”
Not sitting well with industry
Some stakeholders, however, have aired concerns over the proposed bill, which they said is against international best practices.
Chamber of Customs Brokers, Inc. president Adones Carmona told PortCalls in a text message that as far as he knows, declaring the value of the goods in the manifest is not practiced internationally.
Association of International Shipping Lines president Patrick Ronas, in a Viber message to PortCalls, echoed the same sentiment, adding the bill contravenes international shipping practices.
Ronas noted that valuation of goods for the purpose of collection of duties and taxes principally involves three parties—the supplier/seller, importer/consignee, and BOC. He said international shipping lines are not in any way involved in this as the sole purpose of its business is to transport goods from the port of origin to the port of destination pursuant to the contract of carriage with the shipper.
“Over 85% of global trade is carried by sea transport. Declaring the value of imported goods in the cargo manifest and bill of lading places the Philippines in an awkward situation as such requirement contravenes international shipping practices,” Ronas pointed out. He said compliance to the measure would entail a unique procedure for shipping lines as it will mean tinkering with the global IT system in cargo manifest preparation, which will prove disruptive to vessel operations. He said this will translate to delays, increase in administrative cost, and additional manpower, which will significantly impact on vessel efficiency.
“It also needs to be considered that what would be most worrisome for international shipping lines is the spectre of being exposed to liabilities in case the value of the goods declared in the cargo manifest and bill of lading is found incorrect,” Ronas pointed out.
He said such “scenario is totally unacceptable to international shipping lines because they are being forcefully dragged into a situation where they will be held accountable for something beyond its competence and field of expertise.”
“If this happens, its global ramifications on international shipping operations cannot be approximated and can significantly affect the standing of the Philippines as a preferred port of choice,” Ronas said.
He said BOC’s technology systems already in place, such as the Enhanced Value Reference Information System (e-VRIS) and Cargo Targeting System, “are much more effective mechanisms to detect Customs fraud and protect its revenues.”
Furthermore, he said BOC can always rely on the different valuation methods provided for in Sections 701 to 706 of the CMTA to check on the legitimacy of the invoice value submitted by the importer/consignee.
Leo Morada, chief executive officer of BOC-accredited value-added service provider Cargo Data Exchange Center, Inc., told PortCalls the current customs electronic manifest data format for seafreight and airfreight import shipments includes a data element in which to declare customs value.
“As of the moment it is optional for shipping lines, airlines and forwarders to declare this value during e-manifest submission but some airfreight stakeholders already provide this information as mandatory data,” Morada said.
During the first Lower House Committee on Ways and Means hearing on the bill, BOC Import and Assessment Service director Atty. Yasser Ismail Abbas said BOC fully supports the proposed amendment.
The agency, however, proposed the inclusion of wording that would reflect other methods of valuation under Sections 700-707 of the CMTA, which are pursuant to the World Trade Organization’s Customs Valuation Agreement, which has been adopted by BOC, and other international agreements.
During the same hearing, BOC assistant commissioner Atty. Vincent Philip Maronilla said the data on goods values the bureau can collect as a result of the proposed measure “will not only be of great value to us on an audit perspective” but can also be used to further improve the agency’s reference valuation system and “classify further the kind of importer a company is in terms of risk management.” Maronilla also heads the Post Clearance Audit Group.
Under HB 178, a vessel or aircraft from a foreign port must declare in the inward cargo manifest, B/L or AWB the value of the articles or goods as they appear in the commercial invoice or letter of credit, or both. The stated value will therein be the basis for ascertaining correct duties, taxes, and other charges due thereon.
The manifest should also contain individual names of the consignees covered by the B/L or AWB.
Further, the Piers Inspection Division (PID) or Aircraft Operation Division (AOD) should reconcile hard copies of the cargo manifest against the electronic cargo manifest.
After the arrival of the electronic cargo manifest to BOC’s computer system and after the submission of the hard copy of the cargo manifest upon entry of the vessel, no change or alteration should be allowed, except by means of an amendment, under oath, by the master, consignee or agent.
After the arrival of the carrying vessel or aircraft, BOC should not accept any compact disk, diskette, flash drive, memory card, or other forms of data storage device from the shipping line or airline agents, non-vessel operating common carrier, freight forwarder, cargo consolidator, or their authorized agent to incorporate a change or alteration in the electronic cargo manifest.
Any person who violates any provisions of the proposed measure will be punished in accordance with penalties prescribed in the CMTA.– Roumina Pablo
