BOC amends rules on imports of raw materials

The Bureau of Customs (BoC) has amended the rules on the importation of raw materials to ensure their exportation into finished products.

Revoking the guidelines on the importation of raw materials, BoC Commissioner Antonio Bernardo said the existing rules issued in 1978 were already obsolete and no longer applicable to the changing times.

"There is a need to adopt new rules on the treatment of importations of materials on consignment to be processed into finished products for export," Bernardo said.

The new rules would ensure compliance with the government policy to encourage export-oriented and dollar-earning small scale industries.

Importation of raw materials for conversion into finished products for purposes of export would be tax free, provided that the importer or importers could prove that the imported raw materials were eventually exported.

This particular rule, according to some BoC officials, was not stringently followed as some importers managed to "hood-wink" the bureau into accepting their claim that the imported raw materials were converted into finished products and exported.

The said officials said the imported tax-free raw materials found their way into the local market instead of converting them into finished products and exporting them as required by the rule.

Bernardo said that this was also the reason why the BoC has closed more than 900 private bonded warehouses that were used as conduits for smuggling as shown by reports of illegal withdrawals of shipment in their custody.

Some importers, according to the reports, declared that their shipments were raw materials to be converted into finished products and therefore, should be treated tax free.

Once the shipment or shipments were shipped to private bonded warehouses, their importer or importers withdrew them by invoking the rule on conversion of raw amterials into finished products for export purposes.