TITLE X
POST CLEARANCE AUDIT
SEC. 1000. Audit and Examination of Records. – Within three (3) years from the date of final payment of duties and taxes or customs clearance, as the case may be, the Bureau may conduct an audit examination, inspection, verification, and investigation of records pertaining to any goods declaration, which shall include statements, declarations, documents, and electronically generated or machine readable data, for the purpose of ascertaining the correctness of the goods declaration and determining the liability of the importer for duties, taxes and other charges, including any fine or penalty, to ensure compliance with this Act.
SEC. 1001. Scope of the Audit. – The audit of importers shall be conducted when firms are selected by a computer-aided risk management system, the parameters of which are to be based on objective and quantifiable data, subject to the approval of the Secretary of Finance upon recommendation of the Commissioner. The criteria for selecting firms to be audited shall include:
(a) Relative magnitude of customs revenue to be generated from the firm; (b) The rates of duties of the firm's imports;
(c) The compliance track records of the firm; and
(d) An assessment of the risk to revenue of the firm's import activities.
SEC. 1002. Access to Records. – Any authorized officer of the Bureau shall be given by the importer and customs broker full and free access to the premises where the records are kept, to conduct audit examination, inspection, verification, and investigation of those records relevant to such investigation or inquiry.
A copy of any document certified by or on behalf of the importer is admissible in evidence in all courts as if it were the original copy.
A customs officer is not entitled to enter the premises under this section unless, before so doing, the officer produces to the person occupying or apparently in charge of the premises written evidence of the fact of being duly authorized. The person occupying or apparently in charge of the premises entered by an officer shall provide the officer with all reasonable facilities and assistance for the effective exercise of the officer's authority under this section.
Unless otherwise provided herein or in other provisions of law, the Bureau may, in case of disobedience, invoke the aid of the proper regional trial court within whose jurisdiction the matter falls. The court may punish contumacy or refusal as contempt. In addition, the fact that the importer or customs broker denies the authorized customs officer full and free access to importation records during the conduct of a post clearance audit shall create a presumption of inaccuracy in the transaction value declared for their imported goods and constitute grounds for the Bureau to conduct a reassessment of such goods.
In addition, the imposition of the appropriate criminal sanctions provided under this Act and other administrative sanctions may be concurrently invoked against contumacious importers, including the suspension of the delivery or release of their imported goods.
SEC. 1003. Requirement to Keep Records. – (a) All importers are required to keep at their principal place of business, in the manner prescribed by regulations to be issued by the Commissioner and for a period of three (3) years from the date of final payment of duties and taxes or customs clearance, as the case may be, all records pertaining to the ordinary course of business and to any activity or information contained in the records required by this title in connection with any such activity.
For purposes of the post clearance audit and Section 1005 of this Act, the term importer shall include the following:
(1) Importer-of-record or consignee, owner or declarant, or a party who:
(i) Imports goods into the Philippines or withdraws such goods into the Philippine customs territory for consumption or warehousing; files a claim for refund or drawback; or transports or stores such goods carried or held under security; or
(ii) Knowingly causes the importation or transportation or storage of imported goods referred to above, or the filing of refund or drawback claim.
(2) An agent of any party described in paragraph (1); or
(3) A person whose activities require the filing of a goods declaration.
A person ordering imported goods from a local importer or supplier in a domestic transaction shall be exempted from the requirements imposed by this section unless:
(1) The terms and conditions of the importation are controlled by the person placing the order; or
(2) The circumstances and nature of the relationship between the person placing the order and the importer or supplier are such that the former may be considered as the beneficial or true owner of the imported goods; or
(3) The person placing the order had prior knowledge that they will be used in the manufacture or production of the imported goods.
(b) All parties engaged in customs clearance and processing are required to keep at their principal place of business, in the manner prescribed by regulations to be issued by the Commissioner and for a period of three (3) years from the date of filing of the goods declaration, copies of the abovementioned records covering the transactions handled.
(c) Locators or persons authorized to bring imported goods into free zones, such as the special economic zones and free ports, are required to keep subject-records of all its activities, including in whole or in part, records on imported goods withdrawn from said zones into the customs territory for a period of three (3) years from the date of filing of the goods declaration.
Failure to keep the records required by this Act shall constitute a waiver of this right to contest the results of the audit based on records kept by the Bureau.
SEC. 1004. Power of the Commissioner to Obtain Information and Issue Summons. – For the effective implementation of the post clearance audit functions of the Bureau, the Commissioner is hereby authorized to:
(a) Obtain on a regular basis from any person, in addition to the person who is the subject of a post clearance audit or investigation, or from any office or officer of the national and local governments, government agencies and instrumentalities, including the BSP and GOCCs, any information such as costs and "volume of production, receipts or sales and gross income of taxpayers, and the names, addresses, and financial statements of corporations, regional operating headquarters of multinational companies, joint accounts, associations, joint ventures or consortia and registered partnerships, and their members, whose business operations or activities are directly or indirectly involved in the importation or exportation of imported goods or products manufactured from imported component materials;
(b) Summon the person liable for duties and taxes or required to file goods declaration, or any officer or employee of such person, or any person having possession, custody, or care of the books of accounts and other accounting records containing entries relating to the business of the person liable for duties and taxes, or any other person, to appear before the Commissioner or the duly authorized representative at a time and place specified in the summons and to produce such books, papers, records, or other data, and to give testimony;
(c) Take such, testimony of the person concerned, under oath, as may be relevant or material to such inquiry; or
(d) Obtain information from banks or other financial institutions on commercial documents and records pertaining specifically to payments relevant to import transaction.
The provisions of the foregoing paragraphs notwithstanding, nothing in this section shall be construed as granting the Commissioner the authority to inquire into bank deposits of persons or entities mentioned in this Title.
SEC. 1005. Failure to Pay Correct Duties and Taxes on Imported Goods. – Any person who, after being subjected to post clearance audit and examination as provided in Section 1000 of this Act, is found to have incurred deficiencies in. duties and taxes paid for imported goods, shall be penalized according to two (2) degrees of culpability subject to any mitigating, aggravating, or extraordinary factors that are clearly established by available evidence as described hereunder:
(a) Negligence. – When a deficiency results from an offender's failure, through an act or acts of omission or commission, to exercise reasonable care and competence in ensuring that a statement made is correct, the offender shall be charged for committing negligence, and, if found guilty shall be penalized with a fine equivalent to one hundred twenty-five percent (125%) of the revenue loss: Provided, That subject to Section 108 of this Act, no substantial penalty shall be imposed on an inadvertent error amounting to simple negligence, as defined by rules promulgated by the Secretary of Finance, upon recommendation of the Commissioner;
(b) Fraud. – When the material false statement or act in connection with the transaction was committed or omitted knowingly, voluntarily and intentionally, as established by clear and convincing evidence, the offender who is charged for committing fraud and is found guilty thereof, shall be penalized with a fine equivalent to six (6) times of the revenue loss and/or imprisonment of not less than two (2) years, but not more than eight (8) years.
The decision of the Commissioner, upon proper hearing, to impose penalties as prescribed in this section may be appealed in accordance with Section 1104 of this Act.
SEC. 1006. Records to be Kept by the Bureau. – The Bureau shall keep a database of importer and broker profiles which shall include a record of audit results and the following information and papers:
(a) Articles of Incorporation;
(b) The company structure, which shall include, but not limited to, incorporators and board of directors key officers, and organizational structure;
(c) Key importations;
(d) Privileges enjoyed;
(e) Penalties; and (1) Risk categories.
The Bureau shall furnish the BIR and the DOF a copy of the final audit results within thirty (30) days from the issuance thereof.
