THE Bureau of Customs (BoC) is seeking to implement stricter rules on the acquisition of wrongfully-declared imported goods under the Customs Modernization Tariff Act (CMTA), according to a draft order.

The proposed implementing rules and regulations of section 709 of the CMTA law state that: “Only the Commissioner may exercise the power of Compulsory Acquisition. He may, on his own or upon the recommendation of the District Collector, issue the Warrant of Compulsory Acquisition.”

Currently, no provision in the Tariff and Customs Code of the Philippines states that the Commissioner has the exclusive authority over such acquisitions, with no comprehensive operational procedures spelled out. There is also no mention of an allowed threshold on undervaluation.

Compulsory acquisition is the power of government to acquire imported goods when the traders misdeclare their value.

This occurs when the traders “fail to disclose in full the price actually paid,” or “when an incorrect valuation method is used,” resulting in a discrepancy in the tax to be paid.

A commodity is considered grossly undervalued when the declared value falls 50% below the median value of previously imported identical or similar goods, according to the order.

The measure aims to protect government revenue, and deter importers from undervaluing shipments — which is one of the most common corrupt practices at the BoC.

To acquire undervalued goods, the Customs Commissioner may issue a motu proprio order covering the goods found to be undervalued, or may be upon the recommendation of a district collector.

Upon the issuance of a Warrant of Compulsory Acquisition, the goods shall immediately be transferred to a Customs facility.

“The importer shall be paid in cash based on the price equal to the declared customs value plus any duties already paid on the goods,” according to the draft order.

The importer may file a motion for reconsideration if the party is dissatisfied with the issuance of the Writ of Compulsory Acquisition, and may elevate it to the Secretary of Finance and the Court of Tax Appeals.

The acquired goods shall then be held for Public Auction or negotiated sale.

The CMTA, or Republic Act No. 10863, was enacted into a law by former President Benigno S.C. Aquino III on May 30, 2016. However, the first set of implementing rules and regulations (IRR) were not approved until October that year.

The law is implemented in tranches, given its comprehensive scope. It contains 1,805 sections over 166 pages, and aims to modernize customs laws, rules and procedures to bring them at par with international standards, and to expand the use of information and communications technology to curb illicit activity in Customs zones.

To date, seven IRRs have received final approval. — Elijah Joseph C. Tubayan

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