Module 1, Week 1 Illustrations

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

deClaration, computation and classification the brokers lodge this on behalf of importer. Which
will be check by customs officer - examiner and appraiser (appraiser mostly)- check byc customs
assessor

AD - as declared (customs broker) subject to checking (declaration, computing the duties and
taxes)

AF- as found (customs officer) will prevail. (examiner and appraiser) (assessment and
appraising)

AL - as liquidated ( customs assessor) (liquidation ito)

AU- as audit (recomputatoin by post clearance audit group within 3 yrs what importer has paid
to boc)

Liquidation is the recomputation of customs officer of what has been declared assess and paid
if its correct and precise amount oif duties and taxes and other chrages. It is to determine the
approriate and exact amount of DT,OC which has been paid. Normally, Rate of exchange is the
problem used by broker. Second common problem is FRT. 3rd is INS. 4th is RD , 5th is assist sa OC.
6th is OC. 7th Permissible deductions

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.

Re is bsp

Rd is ahtn

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.

BOc to peza is free duties

Peza to CT is with duties for consumption.

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.

AD AF

DV 695,250.00 753,370.00

BC 869.06 941.71

CUD 48,667.50 52,735.90

BF 5,919.06 5,991.71

WD 1,240 kgs/ 1000 = 87.68 87.68

1.24 MT x 36.65 = 45.45

3.25m3 x 35.3147 /40 =

2.87 RT x 30.55 = 87.68

AC= 2.87 x 149 427.63 427.63

CDS 280 280

IPF 750 1000

LC 752,250.93 814,834.63
 Vat Rate 12% 12%

VAT 90,270.11 97,780.16

AD AF

CUD 48,668 52,736

VAT 90,270 97780

CDS 280 280

IPF 750 1000

TADG 139,968 151,796

ADJ 11,828

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.

ADDITIONAL TADG = 4,340

ADDITIONAL CUD =846

ADDITIONAL VAT = 3,493.92

AD AF

DV 28,200 28,200

RE x PHP 48.4545 P49.4545

Dv in PHP 1,366,416.90 1,394,616.90

RD 3% 3%

CUD 40,992.51 41,838.51

DV 1,366,416.90 1,394,616.90

BC 1,708.02 1,743.27

CUD 40,992.51 41,838.51

BF 6,758.02 6,793.27

WD 1,240 kgs/ 1000 = 1.24 MT x 87.68 87.68

36.65 = 45.45

3.25m3 x 35.3147 /40 = 2.87 RT x

30.55 = 87.68

AC= 2.87 x 149 427.63 427.63

CDS 280 280

IPF 1000 1000

LC 1,417,670.76 1,446,787.26

VAT RATE 12% 12%

VAT 170,120.49 173,614.47

CUD 40,993 41,839

VAT 170,120 173,614

CDS 280 280

IPF 1000 1000

TADG 212,393 216,733

 ADJ 4,340

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.

DIFFERENCE tadg = 6,457

AD AF

FOB (USD) 43,245 (4.50M x .00961) 43,695 (4.50M x . 00971)

INS 211.42 (22,000 x .00961) 213.62 (22,000 x .00971)

FRT 240.25 (25,000 x .00961) 242.75 (25,000 x .00971)

DV in USD 43,696.67 44,151.37

RE 49.25 49.25

DV in PHP 2,152,061.00 2,174,454.97

RD 15% 15%

CUD 322,809.15 326,168.25

DV in PHP 2,152,061.00 2,174,454.97

BC 2,690.08 2,718.07

CUD 322,809.15 326,168.25

BF 7,740.08 7,768.07

WD 2,140kgs / 1000= 2.14 111.81 111.81

MT x 36.65= 78.43

4.15m3 x 35.3147 / 40 =
3.66 RT x 30.55 = 111.81

AC 3.66 x 149 545.34 545.34

CDS 280 280

IPF 1000 1000

LC 2,487,237.46 2,513,046.51

VAT RATE 12% 12%

VAT 298,469.00 301,565.58

CUD 322,809. 326,168

VAT 298,469 301,566

CDS 280 280

IPF 1000 1000

TADG 622,558 629,014

ADJ 6,456
Adjustment on Assist

Financial assistance interms of work, labor, materials or mcash provided or given by the
importer to the exporter free of charge.

Buyer assist the seller

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.

AD AF

DV in USD 18,700 19,100 (18,700 + 400 )

RE PHP 50.00 PHP 50.00

Dv in PHP 935,000 955,000

RD 3% 3%

CUD 28,050 28,650

Dv in PHP 935,000 955,000

BC 1,168.75 1,193.75

CUD 28,050 28,650

BF 6,218.75 6,243.75

WD 1,240 kgs/ 1000 = 1.24 87.68 87.68

MT x 36.65 = 45.45

3.25m3 x 35.3147 /40 = 2.87

RT x 30.55 = 87.68

AC= 2.87 x 149 427.63 427.63

CDS 280 280

IPF 1000 1000

LC 972,232.81 992,882.81

VAT Rate 12% 12%

VAT 116,667.94 119,145.94

CUD 28,050 28,650

VAT 116,668 119,146

CDS 280 280

IPF 1000 1000

TADG 145,998 149,076

ADJ 3,078
Adjustment on Proceeds

Proceeds means the future payment made by buyer to the seller as part of the condition of the
sale.

Eg. Pangan bought equipment too me and the transcation value is FOB inclusive of OC. 100k is
FOB, ms. Pangan will remit 20k as part of the contract of sale upon arrival of the goods in the
PH.(ADDITIONAL PAYMENT)

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.

AD AF

DV in USD 21,200 21,750(21,200 + 550)

RE 50.00 50.00

DV in PHP 1,060,000 1,087,500

RD 10% 10%

CUD 106,000 108,750

DV in PHP 1,060,000 1,087,500

BC 1,325 1,359.38

CUD 106,000 108,750

BF 6,375 6,409.38

WD 3,240kgs/1000= 3.24 118.75 118.75

MTx 36.65 = 118.75

1.55m3 x 54.74 /40 = 1.37 RT

x 30.55 = 41.85

AC 1.37 x 149 204.13 204.13

CDS 280 280

IPF 1000 1000

LC 1,175,302.88 1,205,621.64

VAT Rate 12% 12%

VAT 141,036.35 144,674.60

CUD 106,000 108,750

VAT 141,036 144,675

CDS 280 280

IPF 1000 1000

TADG 248,316 254,705

ADJ 6,389
Module 3, Week 3

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

Component of Dutiable Value)

Eg. If kotse is bago and use it open to riskj (mabangga, masubog , nakawin) pag hindi siya
insured wala kang habol. If insured ya tin ka tagal.

2 sides of insurance, beneficial and non-beneficial.

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.

AD AF

FOB 29,000.00 29,000

FRT 700.00 700.00

INS 300.00 580.00

CIF 30,000.00 30,280

RE 49.00 49.00

Dv in PHP 1,470,000 1,483,720

RD 7% 7%

CUD 102,900 103,860.40

Dv in PHP 1,470,000 1,483,720

BC 1,837.50 1,854.65

CUD 102,900 103,860.40

BF 6,887.50 6,904.65

WD 1,240 kgs/ 1000 = 1.24 87.68 87.68

MT x 36.65 = 45.45

3.25m3 x 35.3147 /40 = 2.87

RT x 30.55 = 87.68

AC= 2.87 x 149 427.63 427.63

CDS 280 280

IPF 1000 1000

LC 1,583,420.31 1,598,135.01

Vat Rate 12% 12%

VAT 190,010.44 191,776.20

CUD 102,900 103,860

VAT 190,010. 191,776

CDS 280 280

IPF 1000 1000

TADG 294,190 296,916

 ADJ 2,726

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.

It is the buyer who toook the insurance kaya lokal ya

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.

AD AF

FRT 600 600

CFR 25,000 25,000

INS 300 (14,700 x 49) 488(24,400x.02)

DV in USD CIP/CIF 25,300 25,488

RE 49 49
DV in PHP 1,239,700 1,248,912

RD 7% 7%

CUD 86,779 87,423.84

DV in PHP 1,239,700 1,248,912

BC 1,549.63 1,561.14

CUD 86,779 87,423.84

BF 6,599.63 6,611.14

WD 2,140 / 1000 = 2.14 MT x 93.18 93.18

36.65 = 78.43

3.45 x 35.3147 /40 = 3.05 RT

x 30.55 = 93.18

AC 3.05 x 149 454.45 454.45

CDS 280 280

IPF 1000 1000

LC 1,336,455.89 1,346,335.75

VAT Raate 12% 12%

VAT 160,374.71 161,560.29

CUD 86,779 87,424

VAT 160,375 161,560

CDS 280 280

IPF 1000 1000

TADG 248,434 250,264

 ADj 1,830

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)

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.

AD AF

FOB 20,000 20,000

FRT 450 450

INS 320 800

Dv in USD 20,770 21,250

RE 49 49

DV in PHP 1,017,730 1,041,250

RD 15% 15%

CUD 152,659.50 156,187.50

DV in PHP 1,017,730 1,041,250

BC 1,272.16 1,301.56

CUD 152,659.50 156,187.50

BF 6,322.16 6,351.56

WD 1,210 / 1000 = 1.21 MT x 68.74 68.74

36.65 = 44.35

2.55 x 35.3147 / 40 =2.25 RT

x 30.55 = 68.74

AC 2.25 x 149 335.25 335.25

CDS 280 280

IPF 1000 1000

LC 1,179,667.81 1,206,774.61

VAT rate 12% 12%

VAT 141,560.14 144,812.95

CUD 152,660 156,188

VAT 141,560 144,813

CDS 280 280

IPF 1000 1000

TADG 295,500 302,281

ADJ 6,781
Module 4, Week 4

Adjustment on FREIGHT(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.

AD AF

FOB 20,000 20,000

FRT 212.50 333.2

INS 420 420

Dv in USD 20,632.50 20,753.20

RE 49 49

Dv in PHP 1,010.992.50 1,016,906.80

RD 15 15

CUD 151,648.88 152,536.02

Dv in PHP 1,010,992.50 1,016,906.80

DC 1,263.74 1,271.13

CUD 151,648.88 152,536.02

BF 6,313.74 6,321.13

Cds 280 280

IPF 1000 1000

LC 1,171,498.86 1,178,315.08

Vat rate 12 12

VAT 140,579.86 141,397.81

CUD 151,649 152,536

VAT 140,580 141,398

CDS 280 280

IPF 1000 1000

TADG 293,509 295,214

ADJ 1,705
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.

AD AF

FOB 25,000 25,000

FRT 200.40 312.46 (105.40 x 4.235 x.70)

INS 510 510

Dv in USD 25,710.40 25,882.46

RE 49 49

Dv in pHP 1,259,809.60 1,265,300.54

Rd 15 15 15

CUD 188,971.44 189,795.08

Dv in pHP 1,259,809.60 1,265,300.54

BC 1,574.76 1,581.63

CUD 188,971.44 189,795.08

BF 6,624.76 6,631.63
WD 840 /1000 = .84MT x 114.26 114.26
36.65 = 30.79

4.235 * 35.3147 /40 = 3.74 x

30.55 = 114.26

AC 3.74 x 149 = 557.26 557.26

Cds 280 280

IPF 1000 1000

LC 1,458,932.08 1,465,260.40

VAt rate 12 12

VAT 175,071.85 175,831.25

CUD 188,971 189,795

VAT 175,072 175,831

CDS 280 280

IPF 1000 1000

TADG 365,323 366,906

ADJ 1,583
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.

AD AF

FOB 20,000 20,000

FRT 210.40 336(1.50 x 320 x .70)

INS 405. 405

DV in USD 20,615.40 20,741

RE 49 49

DV in PHP 1,010,154.60 1,016,309

RD3% 3% 3%

CUD 30,304.64 30,489.27

DV in PHP 1,010,154.60 1,016,309

BC 1,262.69 1,270.39

CUD 30,304.64 30,489.27

BF 6,312.69 6,320.39

CDS 280 280

IPF 1000 1000

LC 1,049,314.62 1,055,669.05

VAT rate 12% 12%

VAT 125,917.75 126,680.29

CUD 30,305 30,489

VAT 125,918 126,680

CDS 280 280

IPF 1000 1000

TADG 157,503 158,449

ADJ 946
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.

AD AF

FOB 18,000 18,000

FRT 275 502.85 (100.40 x7.155 x .7)

INS 400 400

DV in USD 18,675 18,902.85

RE 49 49

Dv in PHP 915,075 926,239.65

RD 10% 10%

CUD 91,507.50 92,623.97

Dv in PHP 915,075 926,239.65

BC 1,143.84 1,157.80

CUD 91,507.50 92,623.97

BF 6,193.84 6,207.80

WD .64 x 36.65 = 23.46 193.08 193.08

7.155 * 35.3147 /40 = 6.32 x

30.55

AC 6.32 x 149 941.68 941.68

Cds 280 280

IPF 1000 1000

LC 1,016,334.2.94 1,028,643.98

VAt rate 125 12

VAT 121,960.11 123,437.28

CUD 91,507.50 92,623.97

VAT 121,960.11 123,437.20

Cds 280 280

Ipf 1000 1000

TADG 214,748 217,341

ADj 2,593
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.

-- Eg problem. No insurance given. BOLD NUMBERS

1x20 - guangshou AD AF

CFR 17,230 17,230

FRT 920 1,300

INS 680.2 652.40 (17,230 - 920 680.20 652.40

x .04)

DV in USD 17,910.20 17,882.40 18,290 .20(17,230 - 920 +

1300+680.20) 18,262.40

RE 49.85 49.85

DV in PHP 892,823.47 891,437.64 911,766.47 910,380.64

RD 7% 7%

CUD 62,497.64 62,400.63 63,823.65 63,726.64

DV in PHP 892,823.47 891,437.64 911,766.47 910,380.64

CUD 62,497.64 62,400.63 63,823.65 63,726.64

BF 6,166.03 6,164.30 6,189.71 6,187.98

WD 519.35 519.35

AC 3,727 3,727

CDS 280 280

IPF 1000 1000

LC 967,013.49 965,528.92 987,306.18 985,821.61

VAt rate 12 12

VAT 116,041.62 115,863.47 118,476.74 118,298.59

CUD 62,498 62,401 63,824 63,727

VAT 116,042 115,863 118,477 118,299

CDS 280 280

IPF 1000 1000

CSF 249(5x49.85) 249

TADG 180,069 179,793 183,830 183,555

ADj 3,761 3,762

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.

2x40 - Xiamen AD AF

FOB 27,230 27,230

FRT 2,700 (2x1350) 3,600 (1,800 x 2)

Ins 1,085.50 1,085.50

Dv in USD 31,015.50 31,915.50

RE 49.85 49.85

DV in PHP 1,546,122.68 1,590,987.68

RD3% 3% 3%

CUD 46,383.68 47,729.63

DV in PHP 1,546,122.68 1,590,987.68

BC 1,932.65 1,988.73

CUD 46,383.68 47,729.63

BF 6,982.65 7,038.73
WD 1,558.10 (779.05 x2) 1,558.10

AC 17,102(8,551 x 2) 17,102

CDS 280 280

IPF 1000 1000

LC 1,621,361.76 1,667,684.87

VAT rate 12% 12%

VAT 194,563.41 200,122.18

CUD 46,384 47,730

VAT 194,563 200,122

CDS 280 280

IPF 1000 1000

CSF 997 (20 x 49.85 ) 997

TADG 243,224 250,129

ADJ 6,905
Module 5, Week 5

Computation of Surcharges under the CMTA

a. Failure or Refusal of Party to Give Evidence or Submit for Documents for Assessment
(Sec. 1402, 20% of DV)
b. Sec. 1403 Other fraudulent practices against Customs revenue(Dutiable Value plus
CUD and Tax), penalty is under Sec. 1401)
c. Failure to Declared Baggage (Sec. 1404, 30% of the Landed Cost)
d. Discrepancy Between Actual and Declared Weight of Manifested Goods (Sec. 1414,
more than 10% rule and 20% surcharge based on the value)
e. Unauthorized withdrawal (Sec. 22)
f. Failure to pay duties, taxes and other charges (Sec. 1425)

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

g. Failure(ommission this is unintenional) or Refusal( intentional non compliance to

appear or submit records and documents such as proforma or commercial
invoice,serves as to how much was really the contract of sale proof of payment like
letter of credit remittance or non lc remittance for proof of payment, purchase
order which is ht econtract between buyer and seller that shows the contract price)
before bOC) of Party to Give Evidence or Submit for Documents for Assessment (Sec.
1402, 20% of DV)
a.
b. Subpoena are written order 2types ….subpoena adtestipikandum asks
importer to appear the boc wants to know the value paid , dusesticum for
submit documents?
c. Who to penalize ( AGent of the importer, importer)
d. Kapag metung subpoena mu ala pa problema pero kapag adwang besis
danaka pedalan subpoena karin naka maa penalized.
Illustration 19: A shipment consigned to Mr. Alrey C. Balatuba of Makisig Import Inc., Phils. was being
investigated by the VCRC (valuation and classification review comette)(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.

FOB 13,250

FRT 420.50

INS 320.50

Dv in USD 13,991

RE 48.50

Dv in PHP 678,563.50

RD 10%

CUD 67,856.35

DV in PHP 678,563.50

Surcharge rate 20%

Surcharge 135,712.70
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

CUD 114,584.80

/ RD 15%

DV in PHP 763,898.67

X Surcharge Rate 20%

Surcharge 152,779.73

Surcharge under Sec. 1403 of RA 10863, Other Fraudulent Practice Against Customs Revenue

h. Sec. 1403 Other fraudulent practices against Customs revenue(Dutiable Value plus
CUD and Tax), penalty is under Sec. 1401)
REFUND - Physcial returnin whole or in part of the duties and taxes by the boc to the importer or
exporteer

DRawback- device wherein imported goods or raw materials are reexported as if they were not
imported att all.
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. local ME is
PHP 7,500. Compute the imposable penalty pursuant to Sec. 1403 of the CMTA.

DV in USD 7,200.50

RE 49.75

DV in 358,224.88

RD 5%

CUD 17,911.24

DV in PHP 358,224.88

CUD 17,911.24

ME 7,500

LC 383,636.12

12%

VAT 46,036.33

Note: in section 1403, decimal is included.

DV in PHP 358,224.88

CUD 17,911.24

VAT 46,036.33

Total PHP 422,172.45

ASSUMING THE PROBLEM HAS NO GIVEN ME.

BF 5,497.78

WD 519.35

AC 3,727.

Cds 280

IPF 500

ME 10,524.13

DV in PHP 358,224.88

CUD 17,911.24

ME 10,524.13

LC 386,660.25

Vat rate 12%

VAT 46,399.23

DV in PHP 358,224.88

CUD 17,911.24

VAT 46,399.23

Total PHP 422,535.35 (basis for penalty as CMTA 1401

paragraph b . (between 250k – 500k)
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. ME is 8,800Compute the imposable penalty pursuant to Sec. 1403
of the CMTA.

SOLVE AGAIN

DV in PHP 624,750.50

CUD 43,732.54

ME 8,800

LC 677,283.04

VAt 81,273.96

DV in PHP 624,750.50

CUD 43,732.54

VAt 81,273.96

Total PHP 749,757

Surcharge under Sec. 1404 of the CMTA, Failure to Declare Baggage

i. Failure to Declare (Sec. 1404, 30% of the Landed Cost)

a. Include any persons include ;
b. Travelers tourist arrivin in PH
Returning residents arriving and returniong to ph
c. Ofw to be punish to failure dewclare bagge and contents.

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 (non lc). RE is PHP49.80. Compute the CUD, VAT, other charges including the surcharge pursuant
to Sec. 1404 of RA 10863.

NO BF SINCE TOURIST YA

No bc- Silent in lc

1404 tadg plus surchage

FOB 902.40 (150.40 x 6)

FRT 25.40

INS 16.50

DV in USD 944.30

RE 49.80

DV in PHP 47,026.14

RD 15%

CUD 7,053.92
DV in PHP 47,026.14

CUD 7,053.92

Cds 280

IPF 250

LC 54,610.06

VAT 6,553.21

Surcharge 30% of lc 16,383.02

LC 54,610.06

Surcharge 30% of lc 16,383.02

CUD 7,054

VAT 6,553

CDS 280

IPF 250

Surcharge 16,383.02

TADG 30,520
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.

FOB 1,404 (175.50)

FRT 15.80

INS 56.50

DV in uSD 1,476.30

RE 49.90

Dv in PHP 73,667.37

RD 5%

CUD 3,683.37

Dv in PHP 73,667.37

CUD 3,683.37

BF 4700

CDS 280

IPF 250

LC 82,580.74

VAT 9,909.69

SUrcharge 30% LC 24,774.22

CUD 3,683

VAT 9,920

CDS 280

IPF 250

SUrcharge 30% LC 24,774

TADg 38,897
Continuation of Surcharges, Sec. 1414, 1422 and 1425

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

FORMULA . Weight AF – Weight AD = Percentage Difference

Formula Surcharge ( FOB x 20% x RE)

Who? Owner of veseel, employee, operator or agent of vessel becaause of negligence

delcration of actual weitght in inht cargo manifest

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.

620.50 – 450 / 620.50 = 27% Discrepancy. ( More than 10% discrepancy subject to 20% surcharge)

FOB 32,960 (8,240 x 4)

Rate 20%

Surcharge 6,592

RE 49.85

Surcharge 328,611.20

Weight as Declared (WAD) 20% of ther value of goods kapag 10 percent discrepancy more
than . WAF ((weight as found)

Formula in discrepancy

Waf- wad / waf ..

Discrepancy 27%

RESTUDY LATER!
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.

Sec. 1422, Unauthorized Withdrawal

2ways

Withdrawal of goods from cbw Without the approved withdrawal permit , or requisition slip.

Any person could be punish

1st penalty taxes due on the goods without proper authorization . 50% , dv cud oc is tadg. That tadg is
50% surcharge. This must be paid within a year. If this wasn’t paid within the year. 75% will be
imposed. 25% is the increase annually. Deliquency.

Illustration 27: The Apparel Clothing Inc., Taguig City, a registered bonded manufacturing warehouse
with Bureau released 1 x 45 container STC Pile Fabrics of 100% Polyester, Knitted. Said shipment was
exported by TETS Inc. Indonesia via King Philip Voyage DNS234 and arrived at the MICP on Feb. 21, 2021.
The invoice value as declared in the warehousing entry is USD12.25/yard, FOB, Indonesia. The container
is packed with 1,670.50 yards, gross weight is 32,240.80 pounds, measurement is 15.457 cubic meter.
The ocean freight in the bill of lading is USD720.80, estimated trucking charges from MICP to Taguig City
PHP16,200.00 and insurance USD542.70. RE is PHP48.785. The shipment was paid via LC No.
234/789BDO. Upon transfer to the CBMW, the raw materials were withdrawn illegally and the importer
was fined for un authorized withdrawal pursuant to Sec. 1422 of the CMTA. Compute the
summary and the surcharge if the same was paid within a year and after a year.

1x45

FOB USD 20,463.63 (12.25 x 1,670.50)

FRT 720.80

INS 542.70

Dv in USD 21,727.13

RE 48.785

Dv in PHP PHP 1,059,958.04

RD 3%

CUD PHP 31,798.74

Dv in PHP PHP 1,059,958.04

BC 1,324.95

Dv in PHP PHP 1,059,958.04

BF 6,374.95

WD 916.50

AC 8,551

CDS 280

IPF 1000

LC 1,110,204.18

Vat Rate 12%

VAT 133,224.50

Summary (50% Surcharge)

CUD PHP 31,799

VAT 133,225

CDS 280

IPF 1000

CFS 488 (10x48.785)

TADG 166,792

Surcharge Rate 50% (applies within the year)

Surchage 83, 396

 TADG with Surcharge 250,188

Applies after a year (assume)

CUD 31,799

VAT 133,225

CDS 280

IPF 1000

CSF 488

TOTAL 166,792

S Rate 75%

S 125,094

TADG 291,886

Sec. 1425, Failure to Pay Duties, Taxes and Other Charges

If the tadg is not paid within 15 days from final assessment notice. The surcharge is 10% within a year.
10% is shall be increased to 25% after a year.

Illustration 28: A shipment of 12 boxes STC Weed Killers in aerosol cans, 23.00 grams/can were
unloaded at the NAIA on Feb. 1, 2021. The consumption entry was lodged through the VASP on Feb. 2,
2021 and the notice of assessment was transmitted on the same day. Bounty Planters Inc., Valenzuela
City, consignee entered value was USD8.55/can, ex-work and the same was paid via letter of credit
issued by BPI Caloocan City. Airfreight in the AWB is USD120.20, selling commission USD82.80, handling
fee USD57.90, each box contains 30 cans, buying commission PHP5,600.20. Gross weight 70.20 kgs. and
measurement is 23x50x38 cms. RE is PHP48.5605.

The CUD, VAT and other charges were paid 35 days from date of notice assessment. Compute the
summary plus surcharge, if any.

EX-W USD 3,078 (12bxs x 30cns x 8.55)

OC 140.70 (82.80 + 57.90 )0

FCA 3,218.70

FRT 120.20

INS 128.75 (4%FCA)

DV in USD 3,467.65

RE 48.5605

DV in PHP 168,390.82

RD 3%

CUD 5,051.72

DV in PHP 168,390.82

BC 210.49

CUD 5,051.72

BF 5,300

CDS 280

IPF 250

LC 179,483.03

Vat rate 12%

VAT 21,537.96

CUD 5,052

VAT 21,538

CDS 280
IPF 250

Total 27,120

S. rate 10%

S 2,712

TADG 29,832

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-Customs Subic. 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
Illustration 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: