Customs Memorandum Circular No. 310-2002

(NAR) VOL. 13 NOS. 1-4 / OCTOBER-DECEMBER 2002

[ CUSTOMS MEMORANDUM CIRCULAR NO. 310-2002, OCTOBER 21, 2002, October 21, 2002 ]

IMPORTED ARTICLES EXEMPT FROM AUTHORITY TO RELEASE IMPORTED GOODS (ATRIG) FROM THE BIR

For the information and guidance for all concerned, the Bureau of Internal Revenue and the Bureau of Customs entered into a MEMORANDUM OF AGREEMENT (MOA) on October 9, 2002, copy of which is hereto attached as Annex "A", to provide a mechanism for the gradual phase-out of the issuance of Authority to Release Imported Goods (ATRIG) by the Bureau of Internal Revenue. Conformably with the MOA, the Commissioner of Internal Revenue and the Commissioner of Customs signed on October 9, 2002 issued on September 11, 2002, BIR-BOC JOINT MEMORANDUM CIRCULAR No. 1-2002, copy of which is attached as Annex "B" and likewise deemed an integral part of this Circular, containing a list of imported articles that are exempt from the imposition of value-added tax under Section 109 of the Tax Code of 1997 and ATRIG shall no longer be issued by the BIR prior to the release of the articles from the BOC. All Customs officials and employees are advised to give this circular as wide a publicity as possible. Strict compliance is enjoined. Adopted: 21 October 2002

(SGD.) EMMA M. ROSQUETA Deputy Commissioner Internal Administration Group Annex “A” Memorandum of Agreement Between the Bureau of Internal Revenue And the Bureau of Customs Know All Men By These Presents: This Memorandum of Agreement, entered into this 9th day of October, 2002, by and between: The BUREAU OF INTERNAL REVENUE, a government bureau organized and existing under Republic Act No. 1189, as amended, with offices at the Bureau ofInternal Revenue Building, BIR Road, Diliman, Quezon City, represented herein by its Commissioner, GUILLERMO L. PARAYNO, JR., and hereinafter referred to as BIR; and The BUREAU OF CUSTOMS, also a government bureau organized and existing under Republic Act No. 1937, as amended, with offices at the Bureau of Customs Building, South Harbor, Port Area, Manila, represented herein by its Commissioner, ANTONIO M. BERNARDO, and hereinafter referred to as BOC.

WITNESSETH

WHEREAS, the BIR and the BOC are government instrumentalities under the administrative supervision and control of the Department of Finance;

WHEREAS, Sections 107 and 131 of the Tax Code of 1997 prescribe the imposition of value-added tax and excise tax, respectively, on importation of certain goods or articles;

WHEREAS, under Section 12(a) of the Tax Code of 1997, the Commissioner of Customs and his subordinates have been constituted as agents of the Commissioner of Internal Revenue with respect to the collection of national internal revenue taxes on imported goods;

WHEREAS, in the discharge of their respective functions, the BIR and BOC have instituted systems and procedures to ensure collection of the correct taxes and duties on imported articles;

WHEREAS, for the effective implementation of their common mandates to provide efficient and timely delivery of service to the taxpaying public, there is a need to streamline processes and procedures relative to the release of imported goods from customs custody;

WHEREAS, to improve the level of monitoring and control over the business activities of the importers, including the BIR disposition of imported articles, there is a need to strengthen the field of collaboration between the BIR and the BOC;

WHEREAS, under existing procedures, the BIR issues AUTHORITY TO RELEASE IMPORTED GOODS (ATRIG) on the following imported articles prior to release from customs custody:

1. Articles subject to excise tax;

2. Raw materials, machineries and mechanical contrivances specially used in the manufacture of articles subject to excise tax; and 3. Articles exempt from the value-added tax.

WHEREAS, the BIR and the BOC have an existing Memorandum of Agreement on Electronic Information Interchange which was entered into on April 24, 1999.NOW, THEREFORE, for and in consideration of the foregoing premises, the herein Parties, through their respective representatives, do hereby agree to undertake the following:

1. Provide a mechanism for the gradual phase-out of the issuance of ATRIG by the BIR as follows: Phase 1 Issuance of Joint Memorandum Circular enumerating the imported articles that are clearly exempted from the imposition of the value-added tax, the release of which from BOC's custody shall not require prior issuance of ATRIG Phase 2 Issuance of amendatory Circular expanding the coverage of VAT-exempt imported articles that should not be covered by ATRIG after resolution of certain legal and procedural issues Phase 3 Issuance of amendatory Circular on ATRIG-free importation to cover articles subject to excise tax, as well as raw materials, machineries and mechanical contrivances specially used in the manufacture thereof effective at the time when the direct on-line access facility of the BOC database shall be available to the BIR 2. Promulgate and disseminate rules and regulations that will clearly delineate responsibilities between the BIR and the BOC in the implementation of this Memorandum of Agreement.

3. Resolve promptly any operational, technical and/or legal issues involving taxation of imported articles before and after their release from customs custody.

4. Establish appropriate mutual information exchange and feedback mechanism, subject to the limitation on unlawful divulgence of information under Section 270 of the Tax Code of 1997 and Customs Administrative Order No. 5-2001.

5. Create an Inter-Agency Committee that shall oversee and monitor the proper implementation of this Memorandum of Agreement and shall convene immediately from the signing of this Agreement to prepare the necessary implementing rules and regulations.

6. Upon mutual agreement, issue supplemental provisions and/or amendments to extant provisions herein, as may be necessary from time to time. This Agreement shall take effect on ____________ and shall remain in force until otherwise modified or rescinded, mutually agreed, approved and duly signed by the concerned parties.

IN WITNESS WHEREOF, the Parties have signed this Agreement this 9th day of October, 2002 at Manila.

BUREAU OF INTERNAL REVENUE BUREAU OF CUSTOMS

By: By:

(SGD.) GUILLERMO L. PARAYNO, JR. (SGD.) ANTONIO M. BERNARDO Commissioner Commissioner SIGNED IN THE PRESENCE OF:(SGD.) LILIAN B. HEFTI (SGD.) GEORGE M. JEREOS Deputy Commissioner, Operations Group Deputy Commissioner for Assessment& Operations Coordinating Group Bureau of Internal Revenue Bureau of Customs ACKNOWLEDGMENT Republic of the Philippines ) City of _______________ ) BEFORE ME, a Notary Public for and in MANILA on this 22nd day of October, 2002, personally appeared the following: NAME COMMUNITY TAX PLACE AND DATE OF CERTIFICATE NO. ISSUE GUILLERMO L. 02323435 Parañaque City / April 29, PARAYNO, JR., 2002 ANTONIO M. BERNARDO 11947810 Makati City / March 11, 2002 known to me and to me known to be the same persons who executed the foregoing Memorandum of Agreement, which consists of four (4) pages, including this page, and they acknowledged the same is their free and voluntary act and deed of the entities herein respectively represented. IN TESTIMONY WHEREOF, I have hereunder set my hand and affixed my notarial seal at the place and on the date just above written.

(SGD.) EDUARDO A. SALINAS NOTARY PUBLIC UNTIL DEC. 31, 2003 PTR 0969128 MANILA 1-7- 02 TIN. 157-756-643 Doc. No. 222 Page No. 46 Book No. I Series of 2002 ANNEX “B” BIR-BOC JOINT MEMORANDUM CIRCULAR NO. 1-2002 List of Imported Articles that No Longer Require the Issuance of Authority to Release Imported Goods (ATRIG) from the Bureau of Internal Revenue Prior to Release from the Custody of the Bureau of CustomsFor the information and guidance of all concerned, provided below is a list of imported articles that are clearly exempt from the imposition of value-added tax under Section 109 of the Tax Code of 1997. As such, the prescribed Authority to Release Imported Goods (ATRIG) shall no longer be issued by the Bureau of Internal Revenue (BIR) prior to the release of these articles from the Bureau of Customs (BOC).

A. LIVE ANIMALS, AND UNPROCESSED MEAT CARCASS/ES OR PARTS THEREOF (Whether fresh, frozen, chilled, salted, dried or boneless), EXCEPT RACE HORSES, GAME COCKS OR CHICKEN FOR COCK FIGHTING, AND PETS 1. Asses 13. Hinnies 2. Buffalo 14. Horses 3. Chicken/Chicks 15. Lambs 4. Cows 16. Mules 5. Deer 17. Offal (including tripe, gut & stomach) 6. Donkeys 18. Oxen 7. Ducks 19. Pigeons 8. Fats (beef, pork & poultry) 20. Pigs 9. Geese 21. Rabbits 10. Goats 22. Swine 11. Guinea fowls 23. Sheep 12. Hares 24. Turkeys B. LIVE MARINE FOOD PRODUCTS OR UNPROCESSED MEAT/PARTS THEREOF (Whether, fresh, chilled or frozen, dried, salted, shelled or filleted), EXCEPT ORNAMENTAL AND AQUARIUM FISHES 1. Albacore or long finned tunas 21. Milkfish fry 2. Anchovies 22. Mollusks 3. Aquatic invertebrates other than 23. Mussels crustaceans and mollusks 4. Carp 24. Octopus 5. Catfish 25. Oysters 6. Clams 26. Pitchards 7. Coalfish 27. Plaice 8. Cod 28. Rock lobster and other sea crawfish 9. Cuttlefish 29. Salmon 10. Crabs 30. Sardines 11. Dogfish and other sharks 31. Scallops 12. Eels 32. Shrimps and prawns 13. Flat fish 33. Skip jack 14. Haddock 34. Snails, and other sea snails 15. Hake/Sea Bass 35. Sole 16. Halibut 36. Sprars 17. Herrings 37. Squid 18. Lapu-lapu fry 38. Trout 19. Lobsters 39. Tunas (including yellow fin tuna) 20. Mackerel C. UNPROCESSED VEGETABLES PRODUCTS (Whether whole, cut, sliced, broken, dried, fresh, chilled, frozen, shelled, skinned or split)1. Agaric 21. Edible roots & tubers 41. Pumpkin/Squash 2. Alfalfa 22. Eggplants 42. Radishes 3. Artichokes 23. Garlic 43. Rhubarb 4. Asparagus 24. Gherkins 44. Rosemary leaves 5. Aubergine 25. Guar seed 45. Sage leaves 6. Bamboo shoots 26. Gumbo 46. Salad beetroot 7. Beans 27. Kohlrabi 47. Salsify 8. Brussels sprouts 28. Kale and similar edible 48. Savory leaves brassicas 9. Cabbage 29. Leeks 49. Shallots 10. Capers 30. Lettuce 50. Spinach 11. Capsicum 31. Marjoram 51. Sweet corn 12. Carrots 32. Mushrooms 52. Tarragon leaves 13. Cauliflower 33. Olives 53. Tomatoes 14. Celery 34. Onions 54. Truffles 15. Celeriac 35. Oregano leaves 55. Turnips 16. Chard 36. Parsnip 56. Water chestnuts 17. Chervil 37. Parsley 57. Watercress 18. Chicory 38. Peas 58. Witloof chicory 19. Cucumber 39. Pimenta 20. Dill 40. Potatoes D. UNPROCESSED EDIBLE FRUITS AND NUTS (Whether fresh or dried, shelled or peeled), BUT NOT BOTTLED, POWDERED OR CANNED 1. Almonds 26. Dates 51. Nutmeg 2. Anise 27. Dill seed 52. Oranges 3. Apples 28. Fennels 53. Papayas or papaws 4. Apricot 29. Figs 54. Pears 5. Avocados 30. Ginger 55. Peaches (including nectarines) 6. Badian 31. Gooseberries 56. Peanut 7. Banana 32. Grapes 57. Pecans 8. Basil leaves 33. Grapefruit 58. Pepper 9. Bay leaf 34. Green tea 59. Peyin beans 10. Black berries 35. Guavas 60. Persimmons 11. Black tea 36. Hazelnuts or 61. Pineapples filberts 12. Brazil nuts 37. Juniper berries 62. Pistachios 13. Caraway 38. Laurels leaves 63. Plums 14. Cardamoms 39. Lemons & 64. Quinces Limes 15. Cashew nuts 40. Loganberries 65. Rambutans 16. Cherry 41. Longans 66. Raspberries 17. Chestnuts 42. Lychees 67. Saffron 18. Cinnamon 43. Mace 68. Sloes 19. Citrus fruit 44. Macadamias nuts 69. Strawberries 20. Cloves 45. Mandarins 70. Tea (Not in tea bags; not fermented) 21. Cocoa beans 46. Mangoes 71. Turmeric(Curcuma) 22. Coffee beans (not 47. Mangoesteens 72. Thyme decaffeinated) 23. Coriander 48. Mate 73. Walnuts 24. Cumin 49. Melons (including watermelons) 25. Currants 50. MulberriesE. UNPROCESSED CEREALS 1. Barley 6. Oats (cereal grass) 2. Buckwheat 7. Rice (whether husked, semi- milled or wholly milled rice[polished or glazed]) 3. Grain sorghum 8. Rye 4. Maize, Corn, Popcorn(unpopped) 9. Spelt 5. Meslin 10. Wheat F. UNPROCESSED SEEDS, MISCELLANEOUS GRAINS, MEDICINAL HERBS AND PLANTS 1. Annatto seeds 26. Liquorice roots 2. Asparagus seeds 27. Locust beans 3. Bamboo beans 28. Lucerne (Alfalfa) seeds 4. Beet seeds 29. Melon seeds 5. Broad beans 30. Mung beans 6. Cantaloupe seeds 31. Mustard seeds 7. Castor oil seeds 32. Palm nuts 8. Chicory roots 33. Poppy seeds 9. Clover seeds 34. Potato seeds 10. Coriander seeds 35. Rape of colza seeds 11. Corn seeds 36. Red beans 12. Cotton seeds 37. Safflower seeds 13. Cumin seeds 38. Seaweeds 14. Fennel seeds 39. Seeds of forage plants 15. Fescue seeds 40. Sesamum seeds 16. Fruit stones 41. Shea nuts (karite nuts) 17. Ginseng roots 42. Soya beans 18. Ground-nuts(shelled whether or not 43. Sugar seeds broken) 19. Hop cones 44. Sunflower seeds 20. Horse beans 45. Timothy grass seeds 21. Kentucky blue grass 46. Vanilla 22. Kidney beans 47. Vegetable seeds(others) 23. Kernels 48. Watermelon seeds 24. Lentils 49. White pea beans 25. Linseed It shall be understood that the above articles are considered unprocessed or in their original state even if they have undergone the simple process of preparation or preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking or stripping. Furthermore, the above imported articles shall only be released by the Bureau of Customs if the same are accompanied by the following documents: PRODUCT GROUP NAME OF DOCUMENT A. ANIMALS, AND MEAT a. Health Certificate from the Country CARCASS/ES OR PARTS THEREOF of Origin (Whether fresh, frozen, chilled, salted, dried b. Veterinary Quarantine Clearance or boneless), EXCEPT RACE HORSES, (VQC) from the Bureau of Animal GAME COCKS OR CHICKEN FOR COCK Industry(BAI) FIGHTING, AND PETS c. Import permit from BAIB. LIVE MARINE FOOD PRODUCTS a. Health Certificate from the Country OR MEAT/PARTS THEREOF (Whether of Origin fresh, chilled or frozen, dried, salted or b. Import Permit and Clearance from shelled or filleted), EXCEPT the Bureau of Fisheries and Aquatic ORNAMENTAL AND AQUARIUM Resources FISHES C. UNPROCESSED VEGETABLES a. Phytosanitary Certificate from the PRODUCTS (Whether whole, cut, sliced, Country of Origin broken, dried, chilled, frozen, shelled, b. Permit to Import as well as skinned or split) of Plant Industry Clearance from the Bureau D. UNPROCESSED EDIBLE FRUITS a. Phytosanitary Certificate from the AND NUTS (Whether fresh or dried, shelled Country of Origin or peeled), BUT NOT BOTTLED, b. Permit to Import as well as POWDERED OR CANNED Clearance from the Bureau of Plant Industry E. UNPROCESSED CEREALS a. Phytosanitary Certificate from the Country of Origin b. Permit to Import as well as Clearance from the Bureau of Plant Industry F. UNPROCESSED SEEDS, a. Phytosanitary Certificate from the MISCELLANEOUS GRAINS, FRUITS, Country of Origin AND MEDICAL HERBS AND PLANTS b. Permit to Import as well as Clearance from the Bureau of Plant Industry c. Import Permit from National Food Authority (for rice only) d. Fortification requirement on rice effective November 7, 2004 under R.A. 8976 Pending resolution on the taxability of certain imported articles and the issuance of clear policies and procedures on the issuance of certifications from concerned regulatory government agencies, the appropriate ATRIG shall still be secured from the BIR on the following articles until such time that a supplemental Circular expanding the coverage of the above list shall have been issued:

1. Feed and feed ingredients;

2. Fertilizers;

3. Articles subject to excise tax as well as on the raw materials, apparatus or mechanical contrivances, and equipment specially used for the manufacture thereof; and 4. Other VAT-exempt importation of goods not included in the above list. All revenue and customs officials and employees are enjoined to give this Circular as wide a publicity as possible.Adopted: September 16, 2002

(SGD.) GUILLERMO L. PARAYNO, JR. (SGD.) ANTONIO M. BERNARDO Commissioner of Internal Revenue Commissioner of Customs