Module 1, Week 1 Illustrations

**Exchange Rate Rule (CMO14-2019), Last Friday RE and One Week Application, Sec. 708 of the CMTA

In line with Sec. 708 of RA 10863, the exchange rate to be used for the assessment and collection of duty and
tax on imported goods and for purposes of determining the TV or PAPP is quoted in a foreign currency, the
same shall be converted into Philippine Peso. The exchange rate to be used is the FOREX published by the
Bangko Sentral ng Pilipinas.

Pursuant to CMO14-2019 (Exchange Rate Rule), the exchange rate to be used in converting foreign currency to
PHP shall be the Friday’s FOREX published by the BSP. The Friday’s ER shall be used for one (1) whole week. If
no ER is published on Friday, the ER for the day immediately preceding Friday shall be the applicable rate.

Illustration 1: If goods declaration is lodged on Jan. 9-15, 2021 and the ER published by the BSP is PHP50.00 on
Jan. 8, 2021, PHP50.00 shall be used in the assessment and collection of import duty for all goods
declaration/SAD from Jan. 9-15, 2021.

Illustration 2: In illustration No. 1, if no ER is published by the BSP on Jan. 8, 2021, then the ER for Jan. 7, 2021
shall be used from Jan. 9-15, 2021.

When Duty and Tax is Due on Imported Goods (Sec. 104)

Illustration 3: If final assessment notice is received Jan. 4, 2021, the assessment shall be final after 15 days
(Jan. 19, 2021) from receipt of the notice. The 20% per annum (.01666666667/month) interest commence to
run on Jan. 20, 2021). If the import duty, tax and other charges is paid within one (1) month (Jan. 20, 2021 to
Feb. 20, 2021) and total summary (CUD, tax and OC) is PHP1,000,000.00, the total amount to be paid by the
importer is PHP1,016,666.67, first month (summary and interest). The interest shall also apply to unpaid fine
or surcharge.

Effective Date of Rate of Import Duty (Sec. 105)

Illustration 4: Rate of duty under the AHTN shall be used in the computation of import duty.

Rule 1: If the imported goods is entered under consumption entry, the rate of duty applicable shall be the rate
prevailing at the date of lodgment.
Rule 2: If the imported goods is entered under warehousing entry, the rate of duty applicable shall be the rate
prevailing at the of withdrawal of goods at the CBW or time of lodgment of warehousing entry.

Rule 3: If the imported goods is withdrawn from free zones for introduction or consumption to the customs
territory, the rate to be used is the rate of duty prevailing at the time of withdrawal from economic zones.

Difference between as declared and as found/liquidated

As declared means the computation of CUD, VAT and other charges as lodged by the declarant and as found
means the CUD, VAT and other charges as found by the Customs Appraiser or Customs Assessor.

Illustration 5: A shipment with dutiable value (DV) of PHP695,250.00 is lodged with the system of the BOC
through VASP. The RD is 7% ad valorem, gross weight 1,240.00 kgs. and measurement 3.25m3, the shipment is
pending with the FED (Formal Entry Division) of the POM and the shipment was paid via letter of credit.

During the assessment by the FED, the Customs Officer found out that the correct DV is PHP753,370.00.
Compute the summary as declared and found. Find the additional CUD, VAT and other charges or the
difference.
Module 2, Week 2 Illustrations

Error in FOREX

Illustration 6: A shipment with a DV of USD28,200.00 is lodged with the system of the BOC. The RD is 3% ad
valorem, gross weight 1,240.00 kgs. and measurement 3.25m3, the shipment is pending with the FED (Formal
Entry Division) of the POM and the shipment was paid via letter of credit. In the declaration, the RE used is
PHP48.4545 and as found by the Customs Officer, the correct RE is PHP49.4545. Compute the additional CUD,
VAT and other charges or the difference.
Illustration 7: A shipment with an FOB value of JPY4.50M is lodged with the system of the BOC, the RD is 15%
ad valorem, gross weight 2,140.00 kgs. and measurement 4.15m3, the shipment is pending with the FED
(Formal Entry Division) of the POM and the shipment was paid via letter of credit. In the declaration, the RE
used by the declarant in converting Japanese Yen to USD was .00961. As found by the Customs Officer, the
correct RE is .00971. Freight is JPY25,200.00 and insurance is JPY22,000.00. RE from USD to Peso is
PHP49.25.Compute the additional CUD, VAT and other charges or the difference.
Adjustment on Assist

Illustration 8: A shipment with a DV of USD18,700.00 is lodged with the system of the BOC. The RD is 3% ad
valorem, gross weight 1,240.00 kgs. and measurement 3.25m3. The SAD is with the FED (Formal Entry
Division) of the POM. The shipment was paid via letter of credit. In the declaration, the DV as declared, an
assist as dutiable charges has been omitted in the computation of DV equivalent to USD400.00. Compute the
additional CUD, VAT and other charges or the difference. RE is PHP50.00.
Adjustment on Proceeds

Illustration 9: A shipment with a DV of USD21,200.00 is lodged with the system of the BOC. The RD is 10% ad
valorem, gross weight 3,240.00 kgs. and measurement 1.55m3, the goods is with the FED (Formal Entry
Division) of the MICP and the shipment was paid via letter of credit.

During the assessment, the Customs Officer found out that the declarant failed to include the proceeds as
adjustment in the computation of DV amounting to USD550.00. Compute the additional CUD, VAT and other
charges or the difference. RE is PHP50.00.
Module 3, Week 3

Adjustment on Insurance (CMO22-2007, Determination of Costs of Insurance and Freight as Component of

Dutiable Value)

Rule 1: If the term of shipment/INCOTERMS is CIF/CIP, the actual insurance declared shall be used in the
assessment, provided that if the insurance is lower than 2% of the FOB price for general cargo and 4% of the
FOB value (DG/inflammable goods and chemicals, other high risk (perishable and cars), the same shall be
subject to verification/adjustment by the BOC.

Illustration 10: A shipment (GC) with a declared CIF/CIP of USD30,000.00 (FOB29,000.00, freight USD700.00
and insurance USD300.00) is lodged with the BOC. The RD is 7% ad valorem, gross weight 1,240.00 kgs. and
measurement 3.25m3, the shipment is pending with the FED (Formal Entry Division) of the MICP and the
shipment was paid via letter of credit. RE is PHP49.00.

During assessment and verification, the Customs Officer found out that the correct insurance is the 2% of the
FOB and adjusted the CUD, VAT and other charges as declared. Compute the additional CUD, VAT and other
charges or the difference.
Rule 2: If the term of shipment/INCOTERMS is CFR/CPT, the local insurance declared may be accepted in the
assessment, provided that if the insurance is lower than 2% of the FOB price for general cargo and 4% of the
FOB value (DG/inflammable goods and chemicals, other high risk perishable and cars), the same shall be
subject to verification/adjustment by the BOC.

Illustration 11: A shipment (GC) with a declared CFR/CPT of USD25,000.00 with a declared freight of
USD600.00 is lodged with the BOC. The RD is 7% ad valorem, gross weight 2,140.00 kgs. and measurement
3.45m3, the shipment is pending with the FED (Formal Entry Division) of the POM and the shipment was paid
via letter of credit. RE is PHP49.00. The local insurance as declared is PHP14,700.00.

During assessment and verification, the Customs Officer instructed the declarant to present a Certification
from the insurer together with the original OR of the local insurance paid by the importer. The declarant-
importer failed to present Cert and OR, the Customs officer re-assessed the goods declaration and applied the
2% of the FOB and re-assessed the CUD, VAT and other charges as declared. Compute the additional CUD, VAT
and other charges or the difference.

Rule 3: If the term of shipment/INCOTERMS is FOB, the local insurance declared may be accepted in the
assessment, provided that if the insurance is lower than 2% of the FOB price for general cargo and 4% of the
FOB value (DG/inflammable goods and chemicals, other high risk cargo such as perishable and cars), classified
as LCL and the same shall be subject to verification/adjustment by the BOC.
Illustration 12: A shipment (DG) with a declared FOB of USD20,000.00 and freight USD450.00 is lodged with
the BOC. The RD is 15% ad valorem, gross weight 1,210.00 kgs. and measurement 2.55m3, the shipment is
pending with the FED (Formal Entry Division) of the POM and the shipment was paid via letter of credit. RE is
PHP49.00. The declared insurance is USD320.00. The shipment was shipped in LCL.

During assessment and verification, the Customs Officer re-assessed the goods declaration and applied the 4%
of the FOB and adjusted the CUD, VAT and other charges as declared. Compute the additional CUD, VAT and
other charges or the difference.

Module 4, Week 4

Adjustment on Insurance (CMO22-2007, Determination of Costs of Insurance and Freight as Component of

Dutiable Value)

Rule 1: If no freight is indicated in the AWB, B/L and/or commercial invoice, the declared freight cost in the SAD/GD may
be considered, provided that if the freight is lower than the 70% of either IATA rate or Gross Conference Rate, airfreight
and sea freight shipment, the freight as declared shall be subject to verification/adjustment.

Illustration 13: A shipment (GC) with a declared FOB of USD20,000.00 and no air freight is indicated in the
AWB is lodged with the BOC. The air freight declared in the GD is USD212.50. The RD is 15% ad valorem, gross
weight 340.00 kgs. and measurement .535m3, the shipment is pending with the FED (Formal Entry Division) of
the NAIA and the shipment was paid via letter of credit. RE is PHP49.00. The declared insurance is USD420.00.

After verification, the Customs Officer recomputed the goods declaration and applied the 70% of the IATA rate
and adjusted the CUD, VAT and other charges as declared. The IATA rate is USD1.40/kg. Determine the
additional CUD, VAT and other charges or the difference.

Illustration 14: A shipment (GC) with a declared FOB of USD25,000.00 and no sea freight is indicated in the bill
of lading is lodged with the BOC. The RD is 15% ad valorem, gross weight 840.00 kgs. and measurement
4.235m3, the shipment is pending with the FED (Formal Entry Division), MICP and the shipment was paid via
letter of credit. RE is PHP49.00. The declared insurance is USD510.00. Freight declared in the goods
declaration is USD200.40.

After verification, the Customs Officer recomputed the goods declaration and applied the 70% of the GCR rate
and adjusted the CUD, VAT and other charges as declared. The GCR is USD105.40/cubic meter. Determine the
additional CUD, VAT and other charges or the difference.
Rule 1: If the freight charge is lower than 70% of either the IATA or GCR, the importer must present the
Certification from forwarder/shipping lines and/or copy of the OR as to the actual freight paid.

Rule 2: If the importer cannot present the Certification from forwarder/shipping lines and/or copy of the OR as
to the actual freight paid, the BOC shall consider applying the 70% IATA or GCR.

Illustration 15: A shipment (GC) with a declared FOB of USD20,000.00 and USD210.40 air freight is indicated in
the AWB is lodged with the BOC. The RD is 3% ad valorem, gross weight 320.00 kgs. and measurement
24x50x22 cms., the shipment is pending with the FED (Formal Entry Division) of the NAIA and the shipment
was paid via letter of credit. RE is PHP49.00. The declared insurance is USD405.00.

After failure of the importer to present the Certification from forwarder/shipping lines and/or copy of the OR
as to the actual freight paid to the airline company, the Customs Officer re-assessed the goods declaration and
applied the 70% of the IATA rate and adjusted the CUD, VAT and other charges as declared. The IATA rate is
USD1.50/kg. Determine the additional CUD, VAT and other charges or the difference.
Illustration 16: A shipment (GC) with a declared FOB of USD18,000.00 and USD275.00 sea freight is indicated
in the bill of lading is lodged with the BOC. The RD is 10% ad valorem, gross weight 640.00 kgs. and
measurement 7.155m3, the shipment is pending with the FED (Formal Entry Division), POM and the shipment
was paid via letter of credit. RE is PHP49.00. The declared insurance is USD400.00.

After failure of the importer to present the Certification from forwarder/shipping lines and/or copy of the OR
as to the actual freight paid to the shipping lines, the Customs Officer re-assessed the goods declaration and
applied the 70% of the GCR and adjusted the CUD, VAT and other charges as lodged. The GCR is
USD100.40/cubic meter. Determine the additional CUD, VAT and other charges or the difference.
Reefer Shipments/Perishable Items

Illustration 17: A shipment of 1 x 20 container STC perishable goods shipped from Guangshou, China is being
assessed at the POM. The declared value in the SAD is USD17,230.00, CFR, RE is PHP49.85, RD is 7% ad
valorem, insurance is USD680.20 and ocean freight as entered is USD920.00. Shipment was paid via DAP, gross
weight is 12,340.00 and measurement is 11.20 CBM.

In the assessment, the Customs Officer instructed the declarant to submit a shipping lines’ certification as to
actual freight paid by the shipper and the declarant failed to submit. Compute the as declared and as adjusted
and the difference.

Illustration 18: A shipment of 2 x 40 containers STC perishable goods shipped from Xiamen, China is being
assessed at the MICP. The declared value in the GD is USD27,230.00, FOB, RE is PHP49.85, RD is 3% ad
valorem, insurance is USD1,085.50 and ocean freight as declared is USD1,350.00/container. Shipment was
paid via letter of credit, gross weight is 32,340.00 and measurement is 31.20 CBM.

In the assessment, the Customs Officer instructed the declarant to submit a shipping lines’ certification as to
actual freight paid by the shipper and the declarant failed to submit. Compute the as declared and as adjusted
and the difference.

Module 5, Week 5

Surcharges and penalty under the CMTA, Sec. 1402, 1403, 1404, 1414, 1422 and 1425

Failure or Refusal of Party to Give Evidence or Submit for Documents for Assessment, Sec. 1402

Illustration 19: A shipment consigned to Mr. Alrey C. Balatuba of Makisig Import Inc., Phils. was being investigated by the
VCRC of the BOC. The FOB value of the shipment consisting of Used Pneumatic Tires for Motorcycles of the inquiry is
USD13,250.00. After subpoenas were issued by the BOC, Mr. Balatuba failed to submit the Purchase Order Invoice of the
subject shipment. The freight as determined by the BOC USD420.50, RD is 10% ad valorem, RE applicable is PHP48.50
and the insurance as declared is USD320.50. Compute the applicable surcharge pursuant to Sec. 1402 of RA 10863.

Illustration 20: A shipment consigned to Mr. Rey C. Maoy of Hard Rubber Import Inc., Phils. was being investigated by
the VCRC of the BOC. The value inclusive of other of the shipment consisting of Polymer Tube and Pipes of the inquiry is
USD15,150.00. After subpoenas were issued by the BOC, Mr. Maoy failed to submit the Proforma Invoice of the subject
shipment. The freight as determined by the BOC USD340.50, RD is 15% ad valorem, RE applicable is PHP48.50 and the
CUD as found is PHP114,584.80. Compute the applicable surcharge pursuant to Sec. 1402 of RA 10863. Compute the
applicable surcharge pursuant to Sec. 1402 of RA 10863.
Surcharge under Sec. 1403 of RA 10863, Other Fraudulent Practice Against Customs Revenue

Illustration 21: Mr. Armando D. Ugas, the Import Manager of El Negro Fashion Inc., Pasay City, a non-Customs Bonded
Manufacturing Warehouse secured a refund for taxes from their previous importation clothing materials. After
investigation by the BOC, it was discovered that the refund was fraudulently obtained by the consignee. The shipment
was paid via DAP and transported in 1 x 20 container. The value of the goods as appraised was USD7,200.50, RD is 5% ad
valorem and RE is PHP49.75. Compute the imposable penalty pursuant to Sec. 1403 of the CMTA.
Illustration 22: Fashion Design Inc., Pasay City, a non-Customs Bonded Manufacturing Warehouse secured a drawback
for taxes from their previous importation clothing materials. After investigation, the BOC found out that Fashion Design
Inc., Pasay City unlawfully obtained the drawback. The shipment was paid via letter of credit and the shipment consist of
3 cartons with a gross weight of 680.20 kgs. and total measurement is 2.50 cubic meter. The value of the goods as
appraised was PHP624,750.50, RD is 7% ad valorem and RE is PHP49.75. Compute the imposable penalty pursuant to
Sec. 1403 of the CMTA.
Surcharge under Sec. 1404 of the CMTA, Failure to Declare Baggage

Illustration 23: Mr. Lougan R. White, an American citizen and a tourist arrived at the NAIA via Phil.
Airline flight XXX123 on Jan. 2, 2021. Six (6) pairs of Nike Rubber Shoes were found by the Customs Examiner undeclared
in the Airport Baggage Declaration form. The worth of each pair is FOB USD150.40, estimated air freight USD25.40 and
insurance USD16.50. The RD as classified is 15% ad valorem. The shipment is being cleared by Mr. White and no
payment is to be made by importer as to the value of the goods. RE is PHP49.80. Compute the CUD, VAT, other charges
including the surcharge pursuant to Sec. 1404 of RA 10863.
Illustration 24: Ms. Brenda D. Amage, a returning resident hired the professional service of Mr. Reynaldo S. Abit, a
Customs Broker to clear the baggage of the former currently stored in one of the PBW at Clark-Customs. Ms. Amage
arrived on Jan. 5, 2021 via Japan Airline flight 0267. During examination, the Customs Officer found 8 pieces undeclared
Ray Ban Sunglasses in the baggage. The price piece is 175.50, inclusive of other charges. The air freight as computed is
USD15.80 and insurance USD56.50. The RD as classified is 5% ad valorem. No payment is to be made by importer as to
the value of the goods. RE is PHP49.90. Compute the CUD, VAT, other charges including the surcharge pursuant to Sec.
1404 of RA 10863.
Continuation of Surcharges, Sec. 1414, 1422 and 1425

Surcharge under Sec. 1414 of RA 10863, Difference on Weight as Inspected and Manifested

Illustration 25: Upon inspection of the goods loaded on vessel MV Early Bird Voyage No. 32DN at the Port of Manila. Mr.
Stephen S. Mahigpit, the Customs Inspector discovered that 4 crates as listed in the ICM was with a total weight of
450.00 kgs. is incorrect. The actual weight as inspected by Mr. Mahigpit was 620.50 kgs. As found by the BOC each crate
is with an FOB price of USD8,240.00 and applicable RD is 10% ad valorem. RE is PHP49.85. Compute the applicable
surcharge pursuant to Sec. 1414 of the CMTA.
Illustration 26: After inspection of the cargoes loaded on Cathay Pacific flight 023 at the NAIA. Ms. Lilith S. Unin, the
Customs Boarding Inspector found out that 2 boxes STC Kili-Kili Perfumes had an actual weight of 68.50 kgs./box. The
manifested weight as submitted to the BOC was 57.50 kgs./box. As found by the BOC each box contains 15 bottles of
said perfume with a CIF price of USD79.20/bottle and applicable RD is 7% ad valorem and the same is subject to 20% ad
valorem tax under the NIRC. RE is PHP49.75. Compute the applicable surcharge pursuant to Sec. 1414 of the CMTA.

Module 6 Week 6

Computation of the following:

 a. Undervaluation
b. Misclassification
c. Misdeclaration
d. Percentage of Difference
e. Penalty

Undervaluation, Sec. 1400 of the CMTA

Rule 1: When the discrepancy as to value (PAPP or dutiable adjustment, incorrect valuation method) as
declared and as found results in a percentage difference as to what was paid and collected (CUD and tax) is
10% to 30%, the shipment shall be subject to a surcharge of 250% of the duty and tax due. If the percentage
difference is more than 30%, the shipment shall be subject to a surcharge of 500% of the duty and tax due.

Formula: CUD and tax (AF) minus CUD and tax (AD) = Percentage of Difference
CUD and tax (AF)

Rule 2: When the discrepancy as to value (PAPP or dutiable adjustment, incorrect valuation method) as
declared and as found results in a percentage difference as to what was paid and collected (CUD and tax) is
less than 10% of CUD and tax (AF and AD), no surcharge shall be imposed.

Illustration 27: A shipment of 4 packages STC Golf Umbrellas was discovered undervalued by the Customs Officer of FED-
POM. The declared price inclusive of other charges is USD21.80/piece. The price as found is USD26.20/piece, FOB. The
shipment was shipped via sea freight and paid through RCBC Letter of Credit No. 210/234-2021. Gross weight is 4,150.80
lbs. and total measurement is 1.50 cubic meter. Each pkg. contains 18 pieces of the said item. RE is PHP48.755, ETA is
Jan. 2, 2021 and Reg. No. XXX123. Freight in the B/L is USD 350.20 and insurance is USD280.40. Compute the CUD and
VAT as declared and as found. Determine the correct summary and the imposable surcharge pursuant to Sec. 1400 of
the CMTA.

Illustration 28: A shipment of 1 x 20’ STC Dental Chairs was found undervalued by the Customs Officer of
FED-MICP. The entered value is USD280.30/piece, FOB. The invoice value as found is USD410.50/piece,
inclusive of other charges. The shipment arrived on Jan. 21, 2021 and paid a Doc. Against Payment. Gross
weight is 15,150.20 pds. and total measurement is 12.058 CBM. The TEU contains 12 pieces of the said item.
RE is PHP48.555 and Reg. No. WAL245. Freight in the B/L is USD 620.10 and insurance is USD520.40.
Compute the CUD and VAT as declared and as found. Determine the correct summary and the imposable
surcharge pursuant to Sec. 1400 of the CMTA.

Misclassification, Sec. 1400 of the CMTA

Rule 1: When the discrepancy as to classification as declared and as found results in a percentage difference
as to what was paid and collected (CUD and tax) is 10% to 30%, the shipment shall be subject to a surcharge
of 250% of the duty and tax due. If the percentage difference is more than 30%, the shipment shall be
subject to a surcharge of 500% of the duty and tax due.

Formula: CUD and tax (AF) minus CUD and tax (AD) = Percentage of Difference
CUD and tax (AF)

Rule 2: When the discrepancy as to classification as declared and as found results in a percentage difference
as to what was paid and collected (CUD and tax) is less than 10% of CUD and tax (AF and AD), no surcharge
shall be imposed.

Illustration 29: A shipment of 1 carton was found by the Customs Officer of NAIA-BOC misclassified. The
invoice price as declared exclusive of other charges is USD1,050.00. The shipment was shipped via Japan
Airlines and paid via LC No. 210/334-2020/EWB. Gross weight is 205.80 kgs. and total measurement is 44 x
45 x 50 centimeters. RE is PHP48.755, ETA is Jan. 21, 2021 and Reg. No. JAL876. Air freight in the AWB is
USD1.20/kg. and insurance is USD90.70. As declared, the RD is 5% ad valorem and the Customs Officer
findings 7% ad valorem. Compute the CUD and VAT as declared and as found. Determine the correct
summary and the imposable surcharge pursuant to Sec. 1400 of the CMTA.

Illustration 30: A shipment of 2 cartons was found by the Customs Officer of Clark-BOC misclassified. The
invoice price as declared inclusive of other charges is USD5,130.00. The shipment was shipped via Singapore
Airlines and paid via LC No. 510/0124-2020/BPI. Gross weight is 225.20 kgs. and total measurement is 48 x
55 x 34 cms. RE is PHP48.755, ETA is Jan. 25, 2021 and Reg. No. SAL765. Air freight in the AWB is USD.95/kg.
and insurance is USD150.90. As declared, the RD is 3% ad valorem and the Customs Officer finding is 7% ad
valorem. Compute the CUD and VAT as declared and as found. Determine the correct summary and the
imposable surcharge pursuant to Sec. 1400 of the CMTA.

Misdeclaration, Sec. 1400 of the CMTA

Rule 1: When the discrepancy as to declaration (quantity, quality, weight, measurement or description)
declared and as found results in a percentage difference as to what was paid and collected (CUD and tax) is
10% to 30%, the shipment shall be subject to a surcharge of 250% of the duty and tax due. If the percentage
difference is more than 30%, the shipment shall be subject to a surcharge of 500% of the duty and tax due.

Formula: CUD and tax (AF) minus CUD and tax (AD) = Percentage of Difference
CUD and tax (AF)
Rule 2: When the discrepancy as declared and as found results in a percentage difference as to what was
paid and collected (CUD and tax) is less than 10% of CUD and tax (AF and AD), no surcharge shall be
imposed.

Illustration 31: A shipment of 5 boxes STC Jumping Ropes was found by the Customs Officer of NAIA-BOC
misdeclared. The invoice price as declared is USD14.45/piece, FOB. The shipment was shipped via YYY
Airlines and paid via Docs. Against Payment. Gross weight is 95.10 kgs. and total measurement is 18 x 55 x
34 cms. RE is PHP48.755, ETA is Feb. 2, 2021 and Reg. No. SAL564. Air freight in the AWB is USD1.15/kg. and
 insurance is USD122.30. As declared, the RD is 10% ad valorem. As entered, each box contains 24 pieces and
as found 32 pieces/box. Compute the CUD and VAT as declared and as found. Determine the correct
summary and the imposable surcharge pursuant to Sec. 1400 of the CMTA.

Illustration 32: A shipment of 1 x 40’ STC Gerber Soup and Baby Food in Bottles discovered misdeclared by the Customs
Officer of FED-Port of Manila. The shipment was shipped via National Honor from South Korea and paid through LC
No.102/344-2021. Gross weight is 6,150.80 kgs. and total measurement is 11.20 cubic meter. As declared, the net weight
is 150 grams at USD3.20/bottle, EXW. During examination, the COOIII found that the actual content was 180 grams and
the price exclusive of other charges should be USD5.2 0/bottle. Total number of shipment is 38,500 bottles. Selling agent
fee USD560.45, insurance USD920.60, freight cost USD802.50 and packing charges USD200.10. FOREX is PHP48.5755
and ETA is Jan. 25, 2021. Compute the CUD and VAT as declared and as found. Determine the correct summary and the
imposable surcharge pursuant to Sec. 1400 of the CMTA .

Module 7, Week 7

Other Penalties
 a. Re-Export Bond
b. Late Re-Exportation
c. Late Submission of Exportation Documents
d. Computation of Fines Under CAO4-94
e. Computation of Other Fines (No Import Permits) CAO4-94
f. Marking Duty
g. Dumping Bond
h. Computation of Rewards (Sec. 1512)
i. Computation of CUD and Tax for Cost of Repair Sec.

Re-Exportation Bond

Illustration 33: A shipment of one (1) unit YYY Aircraft Engine as unloaded at the Port of Manila on June 1, 2020. The
machinery was shipped by ABX Machine Inc., Vietnam to UKV Repair Inc., Pasig City. The declared customs value (FOB) is
USD22,580.00 and the applicable exchange rate is PHP49.5894. The said item was to be repaired and reconditioned by
the consignee in 5 months. After the completion of the work on the engine, the same shall be shipped back to ABX
Machine Inc. The importer availed of the conditionally free importation pursuant to Sec. 800 (d) of RA 10863. The
weight is 3,400.20 kgs. and measurement is 2.504M3. For the conditional release of the goods, the importer posted the
required bond on June 3, 2020. Compute the amount of re-export bond to be posted by the consignee.

Late Re-Exportation
Illustration 34: In illustration no. 33, assuming the goods declaration/SAD was lodged on June 3, 2020 through Mr. Roy
D. Dindaw, a Customs Broker. The completion of the repair and reconditioning was made on Nov. Dec. 10, 2020. The
consignee shipped the aircraft engine on Feb. 9, 2021 on board MV West Bound. Compute the applicable penalty under
CAO5-91.

Illustration 35: In illustration no. 34, assuming the consignee failed to re-export the aircraft engine within the 6 months
period and decided to retain the item (no re-exportation). The formal letter informing the BOC was sent by Feb. 10,
2021. Compute the applicable amount due to the government and the penalty under CAO5-91.

Late Submission of Exportation Documents

Illustration 36: In illustration no. 34, assuming the importer’s schedule of submission of the proof of exportation is
March 7, 2021. How much is the imposable penalty under CAO5-91?

Lack of BIS-FTEB prior authority

Lack of one year residency abroad
Lack of proof of income abroad
Lack of 6 months use/registration

Penalty
Non- compliance of one (1) of the above requirements 20%
Non-compliance of two (2) of the above requirements 30%
Non-compliance of thee (3) of the above requirements 50%
Non-compliance of all the above requirements 80%

Second violation of any of the above requirements 80%

Third violation No settlement by fine

Other Violation (No clearance, import permit, license)

First Violation 30%

Second Violation 80%
Third Violation No settlement by fine

Computation of Fines under CAO4-94 (Used Motor Vehicles of Returning Residents/Brand New MVs)

Illustration 37: 1. Dr. Pilar H. Olalia, a returning resident, brought a 2019 EX5-BMW sedan, A/T and gasoline type. The
customs value as declared is US21,224.00, ocean freight is USD720.50 and insurance is USD615.70, RE PHP50.205, ETA
Jan. 5, 2021, South Harbor, gross weight 5,350.00 pounds and measurement 3.455m3. The ISP/MSP as found by the BOC
is PHP 1.14M. Dr. Olalia failed to secure the FTEB/BIS for the car. Compute DV, CUD, AVT, LC, VAT, fine and TADG.
Illustration 38: 1. Mr. Dan S. Ayuda , an OFW from Australia, brought a 2016, Civic Honda sedan, M/T and gasoline type.
The customs value as declared is US12,452.00, ocean freight is USD540.50 and insurance is USD425.70, RE PHP50.205,
ETA Feb. 1, 2021, MICP, gross weight 2,820.00 kgs. and measurement 3.55m3. The ISP/MSP as found by the Customs
Officer is PHP 650,200.00. Mr. Ayuda failed to secure the following requirements: lack of proof of income in Australia,
lack of one year residency requirement and lack of 6 months used of the car. Compute DV, CUD, AVT, LC, VAT, fine and
TADG.
Computation of Other Fines (No Import Permits) CAO4-94

Illustration 39: VIDOC Inc., Makati City imported 2 pkgs. STC regulated items from Kamikaze Limited, Tokyo, Japan. The
shipment arrived via MV Asian Pearl, Voyage No. DN34 and covered by B/L No. 1209-JPN-PHL. The commercial invoice
reveals the following information: Total FOB/Customs Value is US15,504.50, paid via L/C through BPI, Makati City, gross
weight is 3,350.50 kgs., ocean freight is USD345.70, measurement is 1.55 cbm and insurance premium is USD312.20.

During the assessment at the FED, the COOV discovered that VIDOC Inc. failed to secure the required import clearance
from the concerned government agency. The COOV also found out that this was the first infraction of the importer. RE is
PHP48.955 and applicable RD is 7% ad valorem. Compute DV, CUD, AVT, LC, VAT, fine and TADG.
Illustration 40: ASF-BABS Inc., Philippines received 1 x 45’ STC regulated items from Dark Pte. Ltd., Jurong , Singapore.
The shipment arrived on Jan. 18, 2021. The commercial invoice shows the following information: Total ex-work price is
USD32,204.00, paid via telegraphic transfer, gross weight is 13,805.20 kgs. and measurement is 16.255 cbm.

During the assessment at the FED-MICP, the Customs Officer discovered that ASF-BABS Inc., failed to secure the import
permit from the regulatory agency. The investigation also revealed that the importer was fined before for the same
violation and paid a 30% penalty. RE is PHP48.3505, sea freight is USD800.20, insurance is USD650.25, selling
commission is USD250.40 and handling USD180.80. Shipment is classified as general cargo. Applicable RD is 10% ad
valorem. Compute DV, CUD, AVT, LC, VAT, fine and TADG.
Marking Duty (Sec. 710, CMTA, 5% of DV)

Illustration 41: HRSP Inc., Caloocan City imported 3 cartons STC non-regulated items from El Chaps Limited, Hong Kong.
The shipment arrived via Cathay Pacific covered by AWB No. 129-290-304. The commercial invoice reveals the following
information: Total FOB/Customs Value is US12,904.50, paid via L/C through BDO, Binondo, Manila, chargeable weight is
230.20 kgs., air freight is USD1.35/kgs., measurement is 45x60x60 cms., insurance premium is USD212.20 and total CFR
is USD13,215.27.

During intrusive examination, Mr. Henry L. Masungit, COOIII found that the cartons were not properly marked with the
country of origin or manufacture. The FED-NAIA recommended the imposition of the marking duty pursuant to Sec. 710
of the CMTA. RE is PHP49.345 and RD is 3% ad valorem. Compute DV, CUD, AVT, LC, VAT, marking duty and TADG.
Dumping Bond (Sec. 711, RA 10863)

Normal Value minus declared/entered value = Anti-Dumping Bond

Normal Value as Found (Final Normal Value) minus declared/entered value = Dumping Duty

Illustration 42: In an administrative proceeding for dumping before the DOF, the TC after evaluation and investigation of
available documents, recommended the normal value of PHP215,000.00 of a certain item from the original normal value
in protest of PHP240,000.00 against the entered value of PHP190,000.00 of the shipment under consideration. The case
was resolved by the TC. Shipment is subject to 15% ad valorem.

Solution:

Computation of Dumping Bond

Original normal value PHP235,000.00

Less: Entered/Declared Value 190,000.00
Amount of Cash Bond PHP 45,000.00

Computation of Dumping Duty

Final Normal Value AF PHP215,000.00

Less: Entered/Declared Value 190,000.00
Dumping Duty PHP 25,000.00

Computation of Rewards (Sec. 1512 of the CMTA, 20% of the proceeds of sale or 20% of the actual collection
of duties, taxes and other charges)

Illustration 43: Mr. Allan I. Nahas, a Customs informer gave the Custom Intelligence and Investigation Service
confidential and reliable information regarding smuggled goods in the possession of ABC Inc., a private bonded
warehouse. The agents of the CIIS were able to seize and confiscate some imported goods with a worth of
PHP5,200,000.00, landed cost. The goods were sold in a public auction by the BOC-Auction and Cargo Disposal Division
to the highest bidder for PHP4,250,000.00. Compute the applicable reward.
Illustration 44: Due to reliable and confidential information of Cesar N. Guso, a non-BOC informer, the Liquidation and
Billing was able to re-compute the correct duties, taxes and other charges paid by the importer, Palusot Inc., Phils. The
total amount paid by the importer as declared was PHP7,250,230. Mr. Guso gave the LBD documents showing the
correct dutiable value of the goods in question. As liquidated, the correct amount representing duties, taxes and other
charges should be PHP8,350,500.00. Compute the applicable reward.
Computation of CUD and Tax for Cost of Repair Sec. 800 (c), RA 10863, 30% of the DV

Illustration 45: A shipment of one (1) unit Waste Incinerating Machine was shipped for repair by Sakuragi Inc., Phils. to
Xerox Inc., Tokyo, Japan. The machine was properly documented and a Cert. of Identification was issued by the BOC
prior departure. In repairing the item, Xerox Inc. incurred USD520.80, replacement parts and the cost of labor is
USD210.00. In shipping back the machine into the Philippines, Sakuragi Inc. paid an ocean freight of USD350.00 and
insurance premium of USD420.50. Estimated local charges is PHP3,400.70. The original dutiable value computation was
PHP4,200,540.00 and RD is 5% ad valorem. Compute the imposable CUD, tax and other charges. RE is PHP50.25.
Module 8, Week 8

Remedial Computations

1. Automobiles (Non-Hybrid)
Ad Valorem Tax Rates under TRAIN Law

Net Manufacturer’s Selling Price/Importer’s Selling Price (NMSP/ISP Rate

Net of Excise Tax and VAT

Up to PHP 600,000 4%
Over 600,000 up to 1M 10%
Over 1M up to 4M 20%
Over 4M 50%

NOTE: For hybrid cars, 50% of the applicable AVT rates for non-hybrid automobiles

NMSP/ISP-refers to the price net of excise tax and VAT at which the imported automobiles are offered for sale
to the dealers or to public directly or through their sales agents as reflected in the submitted importer’s sworn
statement to the BIR before the end of June and December of each year.

Sources of NMSP/ISP
a. Gross MSP less excise tax and VAT
b. 80% of dealer’s SRP net of excise tax and VAT (DSRP)
c. When MSP or SRP is not available, the Landed Cost is used
as NMSP/ISP for AVT computation

Illustration 46: A 2020 Mitsubishi Pajero, AT, gasoline type, 2.50L is being assessed at the Port of Manila. The declared
Customs value is USD20,140.00, freight is USD540.00 and insurance USD801.50, RD is 30% ad valorem, RE is PHP49.505
and NMSP PHP850,250.00. Weight is 2,560.00 kgs. and measurement is 3.45M3. The shipment is brought by a returning
resident. Compute the CUD, AVT, VAT and summary.
Illustration 47: A 2021 Porsche, AT, gasoline type, 2.70L is being assessed at the MICP. The declared Customs value is
USD65,340.00, freight is USD884.00 and insurance USD2,133.50, RD is 30% ad valorem, RE is PHP49.505 and GMSP is
PHP3.80M. Weight is 2,100.20 kgs. and measurement is 2.504 cubic meter. Shipment is consigned to ABC Cars Inc. and
paid via letter of credit. Compute the CUD, AVT, VAT and summary.
Illustration 48: A 2015 BMW, AT, gasoline type, 2.50L is being assessed at the Port of Manila. The declared Customs
value is USD17,342.00, ocean freight is USD890.00 and insurance USD650.20, RD is 30% ad valorem, RE is PHP49.505
and DSRP PHP850,250.00. Weight is 2,300.30 kgs. and measurement is 2.6035 CBM. The car is brought by a returning
DFA official and such the imported was granted with DOF partial exemption of USD3,250.00. Compute the CUD, AVT,
VAT and summary.
Illustration 49: A 2021 BMW, AT, gasoline type is being assessed at the Port of Manila. The declared Customs value is
USD37,342.00, ocean freight is USD890.00 and insurance USD1,493.20, RD is 30% ad valorem, RE is PHP49.505. Gross
weight is 2,500.00 kgs. and measurement is 2.905M3. Shipment is consigned to Mr. Jay Sta. Klaus, a Filipino millionaire.
Compute the CUD, AVT, VAT and summary.
Illustration 50: A 2017 Toyota Prado, diesel type, MT, 2.70L is being assessed at the MICP. The declared Customs value is
USD21,152.00, ocean freight is USD620.00 and insurance USD836.70, RD is 30% ad valorem, RE is PHP49.505. Gross
weight is 2,750.00 kgs. and measurement is 3.20M3. Shipment was imported by Mrs. Linda A. Reid, a former citizen of
Philippines and married to Jaime T. Reid . NMSP as found by the Customs Officer is PHP1.84M (excise tax PHP230,000.00
and VAT PHP260,000.00) and DSRP is PHP1,900,320.00. Compute the CUD, AVT, VAT and summary.

NOTE: Brand New Automobiles (9 seaters and below) are not entitled to depreciation.

a. Current or advance year models in the country of manufacture or origin

b. Immediately preceding year model, provided that:
 the motor vehicle have mileage of 200 kms. or less;
 that the automobile was acquired by the importer from the dealer as first owner

Other considerations in MVs computation

1. If NO freight is given, use the arbitrary freight in the country of manufacture

 From Germany and other European Countries USD920.00
 From Japan and other Asian Countries 600.00
 From US
a. West Coast USD1,002.00
b. East Coast 2,004.00
 From Middle East Countries 600.00
2. If local charges or miscellaneous expense is NOT given, use PHP7,200.00/unit.
3. For local purchase (Annex E), local charges is PHP265.00
4. Nine (9) seaters and below (including the driver’s seat), RD is 30% ad valorem
5. Ten (10) seaters and above, RD is 20%, ad valorem
6. Depreciation shall be subject to fifty percent (50%) limit
PIllustration 51: Five (5) units of 2021 Toyota Altis, gasoline type, AT, 1.50L is being assessed at the POM. The declared
Customs value is USD13,500.00, ocean freight is USD540.40/unit and total insurance is USD2,850.00, RD is 30% ad
valorem, RE is PHP49.555. Shipment was imported by Malagu Cars Dealers Inc., Angeles City. The ISP as found by the
Customs Officer is PHP710,400.00/unit. Compute the CUD, AVT, VAT and summary.

Remedial Computation on Liquors/Distilled Spirits

Illustration 52:

7. Liquors
8. Wines
9. Fermented Liquors
10. Cigarette Products
11. Petroleum Products
12. Backward

Liquors

Illustration 47:

Wines

Illustration 48:

Fermented Liquors

Illustration 49:

Cigarette Products

Illustration 50:

Petroleum Products

Illustration 51:
Backward

Illustration 52: