IMPLEMENTING RULES AND REGULATIONS GOVERNING THE GRANTING OF TARIFF EXEMPTIONS ON THE IMPORTATION OF AGRICULTURE AND FISHERIES INPUTS, MACHINERY, AND EQUIPMENT
DEFINITION OF TERMS
The terms used in this set of implementing rules and regulations (IRRs) are defined as follows:
- Agriculture enterprise refers to any single proprietorship, partnership, cooperative, corporation, farmer’s organization/association of juridical entity engaged in the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, or poultry, the harvesting and marketing of such farm products, and other farm activities and practices.
- Agriculture inputs, machinery and equipment refer to goods that are used or employed in cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, or poultry, the harvesting and marketing of such farm products, and in the conduct of farm activities and practices.
- Agriculture sector refers to the sector engaged in the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock or poultry, whether for food or non food purposes, including the harvesting and marketing of such farm products, and other farm activities and practices.
- Bill of lading refers to a document issued by a carrier to a shipper, signed by a captain, agent, or owner of a vessel, furnishing written evidence regarding receipt of articles (cargo), the conditions on which transportation is made (contract of carriage), and the engagement to deliver goods at the prescribed port of destination to a lawful holder of the bill of lading.
- CIF peso value of articles refer to the cost of imported articles including marine insurance and freight costs.
- Commercial invoice refers to a document issued by an exporter to signify sales. This document identifies the seller and buyer of articles, invoice number, date, shipping date, mode of transport, delivery and payment terms, and a complete listing and description of the articles sold including prices, discounts and quantities.
- Consolidated purchase orders refer to the consolidation of purchases of participating agriculture/fisheries enterprise/s to foreign supplier or import consolidator.
- Cooperatives refer to duly registered associations of persons with the Cooperative Development Authority (CDA), which may be considered as agriculture and fisheries enterprises, with a common bond of interest who have voluntarily joined together to achieve a lawful common social and economic end, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.
- Exclusive use of imported agriculture and fisheries inputs, machinery and equipment refers to the employment, application, use or consumption by a certified agriculture and fisheries enterprise of an imported agriculture and fisheries input, machinery and/or equipment.
- Farmers and fisherfolk refer to natural persons engaged in agriculture and fisheries activities as their primary source of income.
- Farmers' and fisherfolk’s organizations or associations refer to entities duly accredited or registered by appropriate government agencies and which are composed primarily of agricultural producers, farmers, farm workers, agrarian reform beneficiaries, fisherfolk who voluntarily join together to engage in agriculture or fisheries activities which they themselves own control and patronize.
- Fish and fisheries/aquatic products refer to fin fish, mollusks, crustaceans, echinoderms, marine mammals, and all other species of aquatic flora and fauna and all other products of aquatic living resources in any form.
- Fisheries enterprise refers to any single proprietorship, partnership, cooperative, corporation, fisherfolk’s organization/association, and other judicial entity that is engaged in producing, harvesting, processing, marketing of fish or fisheries/aquatic products and developing and conserving aquatic resources and fisheries areas.
- Fisheries inputs, machinery and equipment refer to goods for use as an ingredient, or component part of a finished fisheries product, or employed in producing, harvesting, processing, marketing of fish or fisheries/aquatic products and developing and conserving aquatic resources and fisheries areas.
- Fisheries sector refers to the sector engaged in producing, harvesting, processing, marketing of fish or fisheries/aquatic products and developing, conserving, and managing aquatic resources and fisheries areas.
- Imports refer to all articles or commodities brought into the Philippines from any foreign country.
- Import consolidator refers to any authorized/accredited person who will import agriculture and fisheries inputs, machinery and equipment on behalf of eligible agriculture and/or fisheries enterprise/s. Authorized/accredited refers to authorization by the Department of Agriculture through the issuance of a Certificate of Accreditation (CA) every import transaction.
- Pro-forma invoice refers to an invoice together with a quotation provided by a supplier prior to sale or shipment of an article, informing the buyer of the kinds and quantities of goods to be sent, their value, and important specifications (weight, size, and similar characteristics).
- Purchase order refers to a purchaser’s (agriculture/fisheries enterprise) written offer to a supplier formally stating all terms and conditions of a proposed transaction.
- Total allowable peso value of import transaction refers to the cumulative CIF peso value of articles imported within the annual validity of the CE, which should not equal or exceed the declared assets of an agriculture or fisheries enterprise. In the case of an import consolidator, the CIF value of articles should not equal or exceed the sum of unused total allowable peso value reflected in the CE of each participating agriculture/fisheries enterprise referred in Section 3 (c) of Rule V.
All tariff-exempt importation of articles shall be subject to all existing import rules, regulations and requirements, as the case may be.
Only those agriculture and fisheries enterprises as defined in Rule I a) and m) shall be eligible for exemption from the payment of tariffs on imported inputs, machinery and equipment listed in Annex "C" that are for their exclusive use and shall be subject to the provisions of these IRRs.
APPLICATION/CERTIFICATION PROCEDURES FOR
AGRICULTURE AND FISHERIES ENTERPRISES
Section 1. Agriculture and fisheries enterprises availing of tariff-exempt importation shall apply for a Certificate of Eligibility (CE) from the DA or its deputized agencies. The CE entitles an enterprise for duty-free importation of agriculture and fisheries inputs, machinery, equipment listed in Annex "C".
Section 2. The Head of any of the following government agencies is deputized to issue the CE:
- The DA’s Regional Field Units (RFUs); or
- The Bureau of Fisheries and Aquatic Resources (BFAR) or its regional offices (for fisheries related inputs, machinery, and equipment); or
- The CDA and its regional offices; or
- The DTI’s regional and provincial offices; or
- The BOI and its regional offices.
- A certified copy of certificate of registration issued by:
(a.1) In the case of corporation and partnership, issued by the SEC; or
(a.2) In the case of single proprietorship, issued by the DTI or a certified copy of Business/Mayor’s Permit, as the case may be; or
(a.3) In the case of a cooperative, issued by the CDA; or
(a.4) In the case of farmers’/fisherfolks’ organizations and associations, issued by the SEC or an accreditation by appropriate government agency; and
- Duly notarized declared assets, which will be the basis of the total allowable peso value of import transaction/s in a year; Pro-forma invoice; and
- A sworn statement that the input, machinery, and/or equipment to be imported tariff-exempt will be for the exclusive use of the importing agriculture or fisheries enterprise.
- Name of the agriculture or fisheries enterprise;
- CE control number;
- Type of agricultural activity engaged in;
- Date of issuance and expiration of the CE;
- Total allowable peso value of import transaction/s within a year validity of the CE referred in Section 3 b) of this Rule; and
- A table for recording the following information as a result of tariff-exempt import transactions made by an enterprise:
(f.1.) H.S. Commodity code and description;
(f.2.) CIF peso value and volume/quantity;
(f.3.) Available balance/unused allowable peso value of imports;
(f.4.) Name and signature of BOC Collector/DA Officer, as the case may be; and
(f.5.) Date recorded.
Section 6. An eligible enterprise that secures more than one valid CE shall constitute a violation of this set of IRR and shall be subject to the penalty provisions outlined in Rule VIII.
Section 7. The CE is not transferrable and shall be valid for a year from the date of issuance, unless invalidated or revoked under Rule VIII. An enterprise reapplying for revalidation of expired CE shall surrender it together with the up-to-date documents referred in Section 3 of this Rule.
Section 1. An import consolidator as defined in Rule I q) shall represent and assist an/those eligible agriculture and/or fisheries enterprise/s that are unable to undertake direct importation of articles listed in ANNEX "C" due to the small size of orders/needs or lack of direct import experience.
Section 2. An import consolidator shall be prohibited from diverting for its benefit or use, nor shall sell, barter, exchange, lease or transfer to third persons, the imported agriculture and fisheries inputs, machinery and equipment. Circumvention of this provision by the import consolidator shall be subject to the penalty provisions under Rule VIII.
Section 3. An import consolidator providing import services for eligible agriculture and/or fisheries enterprise/s must apply in writing for a Certificate of Accreditation (CA) from and must submit the following to the Department of Agriculture through any of its Regional Field Units (RFUs):
Certificate of registration from the Cooperative Development Authority (CDA), Securities and Exchange Commission (SEC), or Department of Trade and Industry (DTI), as the case maybe; Sworn statement that the import consolidator will only use the CA for purposes of providing import services to eligible agriculture and/or fisheries enterprise/s and shall not undertake any of the activities referred in Section 2 of this Rule; Notarized letter of endorsement duly signed by all participating eligible agriculture and fisheries enterprises, attached with their individual valid CE (original), allowing the import consolidator to import agriculture and fisheries inputs, machinery and equipment on their behalf; and Consolidated purchase orders of participating agriculture and/or fisheries enterprise/s. Section 4. The DA shall issue the CA within three working days from which the issuing office receives the application, provided that the documents submitted referred in Section 3 of this Rule are complete and are in order.
Section 5. The CA authorizes an import consolidator to conduct importation of articles for agriculture and/or fisheries enterprise/s with valid CE. The CA shall contain the following information:
- Registered business name of import consolidator;
- CA control number;
- Main business activity;
- Date of issuance and expiration;
- Registered business name/s of each participating agriculture and/or fisheries enterprise/s referred in Section 3 of Rule IV including:
(e.1.) CE serial number/s
(e.2.) Peso value of articles to be imported as reflected in the enterprise purchase order
(e.3.) Unused total allowable peso value of import transaction;
- Total allowable peso value of an import transaction;
- A table for recording the following information;
(g.1.) H.S. Commodity code and description;
(g.2.) CIF peso value and volume/quantity;
(g.3.) Name and signature of BOC collector/officer; and
(g.4.) Date recorded.
Section 7. The CA is not transferable and only good for single import transaction, which shall remain valid for 5 months. A valid CA that is about to expire on the date of the arrival of the articles imported may be extended for another month upon reapplication and surrender of the original CA to the same issuing DA office.
TARIFF EXEMPT IMPORT PROCEDURES
Section 1. Upon arrival of the imported agricultural and fisheries inputs, machinery and equipment listed in Annex "C" at the point of entry into the Philippines, the importing agriculture or fisheries enterprise or import consolidator shall present the following documents to the Customs Collector/Officer to facilitate the exemption of the imports from tariff:
- Commercial invoice;
- Bill of lading;
- In the case of agriculture and/or fisheries enterprise, original plus two copies of valid CE; or
- In the case of an import consolidator, original plus a copy of valid CA.
Section 3. In processing, the import transaction, the Customs Collector shall record on the space provided in the CE and CA the information required in Section 4 f) of Rule IV and Section 5 g) of Rule V provided that:
In the case of agriculture and/or fisheries enterprise, the CIF peso value of each import transaction shall not equal or exceed the available balance of the total allowable peso value reflected in the valid CE; or In the case of an import consolidator, the CIF peso value of an import transaction shall not equal or exceed the total allowable peso value reflected in the CA referred in Rule I t). Section 4. A copy of the CE or CA shall be retained by the BOC. The other copy of the CE shall be forwarded by the BOC to the DA central office and the original copy of the CE shall be returned to the agriculture or fisheries enterprise for future use. The original copy of the CA shall likewise be returned by the BOC to the central office.
MONITORING AND REPORTING
Section 1. The DA, in coordination with BOI and DOF shall monitor the importation and utilization of articles under Annex "C". This shall be implemented as a safeguard against the possible abuse of the tariff-exempt importation privilege granted to agriculture and fisheries enterprises. Where violations are suspected, these agencies shall collaborate so that investigation and prosecution by the Economic Investigation and Intelligence Bureau (EIIB) and the Office of the Solicitor General (OSG), respectively may proceed.
Section 2. Agencies authorized to issue CE for eligible agriculture and fisheries enterprises shall submit to the DA central office a list of all approved CEs with control numbers not later than the second week of every month. The DA RFUs shall likewise submit to the DA central office the lists of approved CEs and CAs with control numbers on the same period.
The DA shall maintain a databank of the information contained in the CEs and CAs and shall provide the DTI, BOI, DOF, CDA with a report on a quarterly basis.
Section 3. The DA shall provide the Bureau of Customs (BOC) with updated lists of agriculture and fisheries enterprises that were issued with CEs and import consolidators issued with CA every third week of the month.
Section 4. The BOC shall forward to DA central office the copy of the CEs and the original CAs of enterprises and import consolidators, respectively, granted with tariff-exempt importation of agricultural/fisheries inputs, machinery and equipment listed in Annex "C" not later than the second week of every month.
Section 5. The DA shall prepare a monthly report on the volume and value of importation of tariff-exempt inputs, machinery and equipment based on used CEs and CAs submitted by BOC and National Statistics Office (NSO) import data. The report shall follow the formats as follows:
- Trend analysis of CE and CA by commodity, issuing agency, type of enterprise;
- Trend analysis of use of CE by commodity, type of enterprise, importer;
- Trend analysis of use of CA by commodity, type of enterprise; and
- Trend analysis of share of CE and CA imports to total imports by commodity.
- The DA shall provide the DTI, BOI, DOF, and CDA with a copy of the abovementioned report on a quarterly basis or earlier upon receipt of a written request from any of these agencies. Section 6. The DA, DTI, BOI, CDA and DOF, may collectively or individually conduct periodic inspection/review of agriculture and fisheries enterprises and import consolidators to ensure the exclusive utilization of the imported products by agriculture and fisheries enterprises. The inspection/review shall be conducted on a spot-review basis. Inspection is warranted on the following cases:
- Statistical information indicates misuse or diversion of imported commodities;
- Verified report from any third party; and
- Irregular increase in importation of articles or import surge.
- These agencies or any of these agencies conducting the review shall document and prepare a report for submission to DA not later than a week after the conclusion of this review. This report may also be used during the annual review referred in Section 4 of the main body of the EO. Pursuant to the provision in Sec. 2 Rule VIII of this set of IRR, the DA shall notify in writing, the EIIB of the DOF about the pertinent facts gathered upon the conclusion of the review. On appropriate cases, the EIIB shall recommend that legal action be pursued against the enterprise or the import consolidator who violated the terms and conditions specified under this set of IRR.
Section 1. Any person, partnership, corporation, association and other juridical entity found circumventing the provisions of this set of IRRs shall suffer the penalty of imprisonment for a period of not less than six (6) months but not more than one (1) year, or a fine equivalent to two hundred percent (200%) of the value of the imported materials, or both, at the discretion of the court, and the accessory penalties of confiscation of the imported goods in favor of the government and revocation of the privileges given under this title.
In cases where the violator is a juridical entity, the officers responsible in the violation of this set of IRRs shall suffer the penalty of imprisonment prescribed in this section.
The importation of goods equivalent to or exceeding the declared assets of the single proprietorship, partnership, or farmers/fisherfolk organizations and associations or the authorized capital stock in case of corporations and cooperatives, and/or the resale of the imported goods shall be a prima facie evidence of the violation of the provisions of this set of IRRs.
Section 2. Based on the investigations by the appropriate offices, and on the results of the import monitoring mechanism established in this set of IRRs, information on actions by any entity considered by any person or the concerned agencies to be in violation of this set of IRRs shall be endorsed to the Economic Intelligence and Investigation Bureau (EIIB) for proper legal action.
Section 3. Any commodities under the custody of the BOC and which are determined to have been imported in violation of any of the provisions of this set of IRRs shall be confiscated in favor of the government of the Republic of the Philippines and disposed of according to the usual procedures of the BOC.
Section 4. Any government employee or official who knowingly issued a CE or CA to an enterprise which is not eligible under this set of IRRs shall be imposed the penalty of removal from service, demotion in rank, suspension for not more than one year without pay or fine in an amount not exceeding six months salary in addition to such other penalties imposed by other laws, rules and regulations which are violated.