REPUBLIC OF THE PeMLIPINES DEPRRIAUENT OF FINANCE BUREAU OF CUSTOMS: anita 1099 September 06, 2007 CUSTOMS MEMORANDU M ORDER No. L227 : TO: All Deputy Commissioners All Collectors of Customs All Division / Section and Unit Chiefs, All Lmporters / Brokers And Others Concerned Subject: of Dutiable Value Section I: OBJECTIVES: 11. ‘To consolidate all relevant Customs laws and regulations on Insurance and Freight charges 12. ‘To enswre that proper dutics and faxes ate wollecied under the WTO Valuation System as implemented by CAQ No, 4-204. 13. ‘To. guide all concemed’ parties as to the declaration and checking of Insurance and Ficight charges. Seelion 2: ADMINISTRATIY E PROVISIONS 2.1. Definition of Terms: - For’ purposes of this Order, the fallowing, definitions are adopted: a. Airway Bill (AWB) ~ a non-negotiable instrument issued by an ait cartier or freight forwarder to a shipper, to evidence contract of carriage by airb, 0 -22-D Bill of Lading (B/L) — a negotiable instrament that was forged between (he shipper and the carrier evidencing receipt of commodities and constilutes a fille of ownership over the said zoods, CPR (Cost and Freight) — is the inegterm ysed ty refer (0 a foreign trade wherein the seller ist pay only the costs and freight necessary to bring the zoods te the named post of destination |. CLF (Gust, Insurance and Freight) is the incoterm used to refer 1o a foreign trade wherein the seller must pay the costs and ficight necessary to bring the gonds to the named port of des¥nation. Tt differs from CFR in that the seller also as 1 procuce mating insurance against the buyer's risk of loss of ot damage to the goods during the ‘carriages. Cir (Carriage and Insurance Paid To) —is the incoterm used to refer to foreign trade wherein the seller delivers the goods to the carrier nominated by shim, but the seller must in addition pay the cost of eartiage necessary to be he goods to the named destivration Consequently, the seller contracts for inswance and pay the ix pron wranee FOB (Free Qn Board) — is the incoterm used to refer tw a foreign trade where the seller is considered to have fullilled his obligation to deliver when the gouds pass the ship’s sil al the named port of shipment. From thal tmourent on, the buyer has 4d bear all costs and risks of loss of vr damays to the goods from the said point ‘This term also requives the buyer to clear the: goods for export. 2 (2? (ore) g& House Air Way Bill (AWB) - document issued by the — facight forwarder/consolidator to the individual consignecsimpnricr. IATA (International Air ‘1 Asso camer ratc bureau established in 1945 that helped established and standardized —iluowh the years Intemational airfares. JEIRD (Import Entry and Internal Revenue Declaration) a seven (7) page set of official documents (BC Form 236) that is used in the clearance of goods fiom Customs and should contain tie details of a particular import cetry Insurance Prem is the amount paid fo the insurer in consideration of his undertaking, to indemnify the importer or loss of the latter's cargo during the course of transpott Local Insurance Premium — is the aunount paid in local currency to am insurer located in the Philippines that is applicable only for shipmiciits where the terms agreed upon by the parlics ave CER, FOB, FAS, and other noa-CIF. It is a must thal 3 certification as to the qwemiam actually paid be ‘attached to the entry Master Airway bill (MAWB) — the shipping document issued by the air cairier fo a consolidatav/ficight forwarder, covering a shipment, which could be consolidated oF not SAD (Single Document) — a set documents, derived Community practice (1988), Ww used to process shipments that pass Tuxough Customs. aoe2.2. 2 22.2 It shall be the responsib 2. 2. 2. Section 3. - OPERATIONAL PROVISIONS 2.1 It shall be the responsibility of the importer, declarant,’ and broker to properly disclose the actual freight and insurance incuied the importation: y of the Chief and Principal Appraiser of the port's Fonat Eniry Division or its equivalent unit to check the accuracy anc tcuthfulness of the declaration on freight and insurance. 23 The Customs Officers and person el are directed to perform their responsibilities as fequired herein. Failure on the part of those officials and continuation personnel to perforn ——their_——_=respeelive responsibility shall be a ground for disciplinary action pursuant to Civil Service Rules and Regulations. 24 The District Collector shall be responsible for Hhe smooth, proper ‘aud offective implementation of this Order in all cases, under histher distict’s jurisdiction, where it ~ applies. 25 All signatorics = fo any certificatesreport requized under this Order shall be held liable for any misrepresentation wnade therein, and shall be procecded against under Sec, 3602 and 3604 of the TCCP, as amended Pursuant {o Section 201 of the Taiff and Customs Code of the pines as amendlet dutiable value. In order to determine the applicable insuiance premiom ar charges, the following .J, insurance and fic guidelines must be obser ved. ght charges are components of the Freight | EL472-0) deen BEL au aah 31.1. tf the terms of sale are CIF/CIP, the amount of the actual insuranec: premium shall be used in the assessinent, provided thal if such oun is lower than 2% of the FOB value for penetal cargo and 4% of the = FOR ~yalue for dangerous/inflammable rood, chemicals and other high tisk cargocs, the same shall be subject to further verification by the BOC. 3.1.2, If a shipwent is covered by a local or domestic insurance, the amount + of insurance preniumy ally paicl may be accepted. However, if the premium is Jower than 2%" of the FOB value for goneral gargo and 4% the FOB value for soustinflamuable goods, chemicals and other high risk cargoes, then a Certification from the insuzmce company as to the actual premium paid shall be presented to the BOC together syith the Original Official Receipt. A copy of that Official Receipt shall be certilicd ay a tue copy by the assigned Customs Appraiser / Examiner whiel: shall be attached to the original Working Entry: 3.1.3. For shipments not covered by a local jngurance, then the amount of inistance declared on the Entty may bbe accepted, provided that if’ such amount is lowes than 2% of the FOB value for general cargo and 4% of tre = FOB value or dangerousfinflanumable gouds, chemicals and other high risk cargoes, the sume shall be subject to fusther werifiea 3.14. Vor direct impar povetmment, tie oF al copy of Uhe © (2 busyges O7 ‘Marine Open Policy issued by the Government "Service Insurance System (GSES) together with a true copy shall be presented to BOC (Alin: Emport Assessnucnt Service) certified by the Taller. The Bureau shall apply the actwal GSIS insurance premiutn rate.” a. IC insured by a Surety, com other than GSIS, apply 3.1.2 b. if not covered by a focal insurance, apply 31.3. 2.LS. The amount of insurance shall be declared in the IEIRD box no. 90 and the equivalent appropriate box in the SAD for the electronic todgemem. 32. ight Charges 3.2.1. The freiplt charge to be° applied shall be based on the amowst indicated in the Air Waybill or Bill of Lading. 3.2.2. if no ficight charge is indicated on the Air Waybill, Bill of Lading, andor lnvoiec then the declared freight charge on the Impott Entry Intemal Revenue Declaration (IEIRDySingte Administrative Document (SAD) may be considered thercin, provided that if the amount indicated is lower then 70% of cities the IATA rate ot Conference vale for _aitfreight shipment sud sea fieight shipment, respectively, the same shall be subject to futher verification by the BOC. 3.23.10 the fieight charge is lower U 70% of either the JATA or Conference rate, the importer must present a Certification from the Camrier / Forwarder and / or Oficial B krmcsny324. 325 ee. 22S?) Receipt as to the actual ficight charges paid. vase of bulk shipments, the ified eopy of Charter Party document or Freight Contract, and Stowage Plan shall be presented 0 show the actual ficight:charge, all of which shall be attached to the working copy of the Entry, a. For bulk/gencral cargo shipments made by the National Food Authority (NFA), the freight charge if not Tower than 10% of the CFR value of the commodity may be accepted. In case of refrigerated shipment, a cerlification fiom shipping lines as to the freight paid must be presented for Customs verification. In the absence of a certification fiom the shipping lines, the following freight charges may be used as refer a, Shipments coming fom China should aot be lower $1,700.00/40 ft Reefer Container (Guangshou, China) $1,300.00/20 fi Reefer Container (Guangshow, China) $1,500,020 f Reefer Container (Xiamen, China) $1,800.00/40 ft Reefer Container (Xiamen, China) $1,800.00/20 11 Reefer Container (Shanghai, China) $3,200.00/40 ft Reefer Container (Shanghai, China) 2 e (27-0) pe110 ~ 2 -O7 $3,200.00/40 Reeler Container (Shanghai, China) $1,350.00/20 f Reefer Container (Dalian, China) $1,680.00/40 ff Reefer Container (Dalian, China) 4, Shipments conting: from Hongkong — 31,600.00 40 container reefer van c. Shipments coming from Singapore: $900,00/20 fl container reefer $1,850.00/40 & container reefer Plus: BAF ($70/20" & 140/40") Shipments coming from Los Angeles, U: 33,050.00/20 f Reefer Container $6,100.0/40 R Reefer Container c. If it is a 20 ft. container reefer van, thea the freight should be 50% of the freight charge of a 40 AL In ease lower, the same shall be subject to futher verification by the BOC. Section 4: SEPARABILITY CLAUSE ‘The provisions of this Order are liereby ordered separable and in case yy of the provisions hereof are declared invalid, the other provisions, which ae not affected shall remain in full force and effect. lorapedye: RAD wo 7 Section S: REPEALING CLAUSE All Customs Memorandum Orders, Memoranda or parts thereof, which are inconsistent with this Order are hereby decined superseded, amended or modified accordingly. Section 6: EFFECTIVITY CLAUSE ‘This Order shall Lake effect immediately and shall last until revoked. NAPOLEON) MORALES . fl ner