Advance rulings from the Bureau of Customs and the Tariff Commission

(Second of two parts)

In last week’s column, we discussed the Advance Ruling system which was introduced under the provisions of Republic Act No. 10863, or the Customs Modernization and Tariff Act (CMTA), which was passed into law on May 30, 2016. Importers and exporters can now request an official, written and legally binding ruling from the Tariff Commission or the Bureau of Customs (BoC) on matters involving commodity classification, on the proper application of a specific method on customs valuation of specific goods or whether the goods qualify under rules of origin (ROO) of an applicable preferential trade agreement.

After having discussed the procedures for application of the Advance Ruling system for commodity classification with the Tariff Commission, we will now look in more detail into the specific procedures for applications to be filed with the BoC.

ADVANCE RULING FOR VALUATION AND PREFERENTIAL RULES OF ORIGIN
On 28 November 2016, the BoC issued Customs Memorandum Order (CMO) No. 30-2016 implementing Customs Administrative Order (CAO) No. 03-2016, which establishes an advance ruling system on customs valuation method and rules of origin of goods.

The BoC has been accepting applications through the Office of the Customs Commissioner since the beginning of 2017. A Technical Support Team for Advance Ruling (TST-AR) for Valuation and ROO was formed specifically to ensure the smooth implementation of the Advance Ruling system and establish a monitoring plan to guide the implementation and evaluation of the effectiveness of any such advance ruling. However, while the CMO provides that the Management Information System and Technology Group (MISTG) of the BoC shall develop a database system that will capture, record, and generate reports on all data and information on advance ruling requests and issuances, this is yet to be accomplished. We should also consider that, in the light of the recent changes in the leadership of the BoC, a new Commissioner may choose to introduce changes to the current procedures.

An applicant for the advance ruling can be a natural or juridical person who is an importer, foreign exporter, or its authorized agent. A foreign exporter is defined as “a natural or juridical person intending to export any goods or commodities from a foreign country to the Philippines.” The definition of an exporter, however, does not cover a local/Philippine exporter since the valuation and origin of goods (for preferential treatment) to be exported from the Philippines are properly within the jurisdiction of the specific country of destination.

The application is initiated by the submission of the accomplished application forms (Appendices A and B, CMO 30-2016 which are also available online at the BoC website customs.gov.ph/forms), proof of payment of the filing fee of P1,500 to the TST-AR at its official e-mail address tst.advanceruling.valuation@customs.gov.ph or tst.advanceruling.roo@customs.gov.ph (for application for valuation or origin, respectively) with the supporting documents.

The supporting documents for the application usually consist of samples, technical catalogs/brochures, duly certified complete composition, plans, photographs or other documents or details that may assist the BoC in determining the correct valuation or origin of the goods subject of the application for advance ruling.

The application must be submitted at least 90 calendar days before the date of the importation, which is the date of lodgment of goods declaration. Importing the goods that are subject of the ruling within a period of less than 90 days after the filing of the application would be deemed an implied withdrawal of the ruling request.

Once the application is filed, the TST-AR may require additional information, which must be submitted within 30 calendar days from receipt of Notice to Submit, although applicants have the option to request for an extension of this period. In case of failure to respond or supply additional information or comply with any of the other requirements, the request shall be rejected or deemed withdrawn.

Once issued, the BoC ruling is valid for three calendar years from issuance, or from the date specified in the ruling. Before the three-year period expires, the ruling may be revalidated by filing a request for revalidation at least 90 calendar days before expiration. The rules allow for a motion for reconsideration of a denial, or a modification/revocation/invalidation of a ruling, within 15 calendar days from receipt of the ruling or decision. If still unsuccessful, the applicant may file an appeal to the CTA within 30 days from receipt of denial of the motion for reconsideration.

While the BoC has been accepting applications for ruling after the issuance of CMO 30-2016, there has so far been no published ruling issued.

The key take-away here is that the procedures and the requirements of the advance ruling system are now in place both at the Tariff Commission and the BoC. The act of publishing to establish transparency is now mandated by both agencies.

Given the challenges often encountered in the course of an importation of goods, it is clearly advantageous for importers or foreign exporters to be aware of and evaluate the benefits of securing an advance ruling, which could help with making timely business decisions based on legally binding rules.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Arlyn A. Sarmiento-Sy is a Senior Tax Director of SGV & Co.