Article 116p. 116

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

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.

SECTION 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.

SECTION 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.

SECTION 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.

SECTION

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;

© Compiled by RGL

116 of 201