OVER 40 rice importers have been told to pay a combined total of P1.4 billion “additional audited assessment” after the Bureau of Customs (BOC) found them liable for undervaluing their rice shipments from March to June last year.
Sixty entities with the “most number of incidents of deviation and highest percentage discrepancies in duties paid were selected for the transaction-based audit in view of the risk to revenue impact of these entities’ import activities and the relative magnitude of customs revenue to be generated from them.”
For the audit period of March 5 to June 20 last year, Customs Assistant Commissioner and spokesperson Atty. Vincent Philip Maronilla said records showed a total of 245 entities imported rice, falling under Tariff Heading 1006.
Maronilla told the BusinessMirror that 47 out of the 55 auditees were “found to have committed violations of customs laws and regulations.”
Maronilla, who heads BOC Post-Clearance Audit Group (PCAG), added: “Based on the transaction audit conducted, the Bureau of Customs found the audited importers liable for the payment of deficiency customs duties, penalties, surcharges and interest for the period 05 March to 20 June 2019 in the aggregate amount of One Billion Four Hundred Seventeen Million One Hundred Sixty-Seven Thousand Three Hundred Sixty-Eight Pesos and 10/100 (Php 1,417,167,368.10), representing deficiency assessments arising from the following issues: 1) Customs Value, (2) Tariff Classification (3) Insurance, (4) Freight, and (5) Surcharge.”
Maronilla said they have already informed the rice importers of the results of the transaction audit.
While the audited rice importers found to have violations may still appeal, Maronilla said that, pending the appeal, they still “need to pay under protest.”
As for the remaining five importers, the BOC said they discovered during the audit that 66 out of the 752 import entries examined pertaining to these five auditees were still under Tentative Assessment subject to pending dispute settlement proceedings with the respective ports of entry.
“The PCAG, upon instructions with the Commissioner of Customs, deferred the audit examination and investigation of these five (5) auditees to preserve the integrity of the audit findings, pending their final readjustment based on the final resolution of the VCRC (Valuation and Classification Review Committee) proceedings or protest case, as the case may be, pursuant to Section 425 of the CMTA (Customs Modernization and Tariff Act) in relation to Section 4.1.2 of CAO (Customs Administrative Order) No. 01-2019,” he said.
Maronilla added they are also conducting an audit for rice shipments covering January to June this year and expect to finish this by yearend.
‘Clearly undervalued’
In a separate statement on Tuesday, Customs Commissioner Rey Leonardo Guerrero said the BOC found some rice shipments to be “clearly undervalued,” although he assured Finance Secretary Carlos Dominguez III that rice stocks imported by private traders during the pandemic would still be subject to “post-modification and post-audit” to ensure that undervalued shipments are properly assessed and subsequently paid with the correct amount of duties and taxes.
“But those are subject to post-modification and post-audit. And in the meantime, we are still conducting the post-modification, verifying the payments of rice because some of them are clearly undervalued. So we will catch up in the post-modification and post-audit,” Guerrero said at a recent Department of Finance (DOF) Executive Committee meeting held via Zoom.
Maronilla clarified to this paper that Guerrero was referring to the audit findings, and again some shipments with tentative assessment early this year.
For the release of shipments under tentative assessment, the importer will be required to post the required security, whether in the form of surety bond or cash bond.
Guerrero said the BOC has also responded to reports by concerned citizens regarding warehouses suspected of storing smuggled rice stocks by immediately issuing Letters of Authority to enable BOC officers to inspect such warehouses and seize goods without the requisite importation permits.
“We actually raided them and we found out that many of these warehouses were operating legally and their stocks are covered by proper documents,” Guerrero said.
In June, the Federation of Free Farmers (FFF) claimed that the government lost at least P890 million in tariff revenues from over 766,000 metric tons of the staple imported from January to April.
The FFF also estimated that the undervaluation in rice imports last year resulted in a tariff shortfall of P1.9 billion.
The amount “should have helped farmers cope with the ill effects of liberalized rice imports and even Covid-19,” the FFF said.
Since the enactment of the rice trade liberalization (RTL) law which deregulated the industry, the BusinessMirror has published several reports regarding the alleged undervaluation of rice imports, as discrepancies in import figures were flagged by farmers groups. (Read first story here: https://businessmirror.com.ph/2019/07/09/undervalued-rice-imports-may-have-caused-p5-billion-gap-in-tariff-collection/)
As early as July 2019, the BOC told the BusinessMirror that there were indeed inconsistencies in the import figures being disclosed by rice importers with the prevailing international market quotations. (Read story here: https://businessmirror.com.ph/2019/07/12/b-o-c-to-probe-january-june-rice-imports/)
On July 6, 2020, the BusinessMirror reported that the BOC and the FFF have agreed to form a “small group” that would focus on the issue of rice import undervaluation to boost the government’s tariff revenues and help farmers amid the Covid-19 pandemic.