Kraft seeks reversal of BOC ruling on its powdered juice imports

Kraft Food Philippines is seeking a reversal of a Bureau of Customs (BOC) Valuation and Classification Review Board ruling which reclassified its powdered juice imports from food/beverage preparations, that are subject to a mere three percent tariff, to a sugar product which is subject to a much higher tariff of 48 percent.

Kraft is seeking another 20-day Temporary Restraining Order (TRO) against the BOC-VCRB as the first TRO which it secured last Aug. 18 is set to expire.

Kraft is seeking the TRO extension as it awaits the Department of Finance’s final ruling on the classification of its powdered juice imports.

Kraft, during President Arroyo’s trip last month to the US to attend the United Nations General Assembly, had lobbied for a favorable ruling on its powdered juice imports under the Tang and Kool Aid brands.

Kraft had secured a 20-day TRO last August 18 which forced a status quo on the enforcement of the BOC tariff ruling.

The tariff issue must be resolved by the DOF and not by the Tariff Commission since tariff rulings by the TC can be challenged.

It is only with matters regarding safeguard issues that the TC has final say.

According to Tariff Commissioner George Manzano, the Kraft tariff issue is out of the TC’ s jurisdiction now.

However, what is interesting about the Kraft powdered juice imports is that local powdered juices are classified by the TC as food/beverage preparations subject to a mere three percent tariff.

Industry observers said a reclassification of powdered juices as sugar products could in the future adversely affect locally manufactured powdered juices such as Eight O’Clock if they were to export such products.

Thus, reclassifying Kraft’s powdered juice imports as sugar products would be tantamount to a trade barrier which is barred under the World Trade Organization (WTO) of which the Philippines is a member.

The reclassification of Kraft’s powdered juice imports stemmed from a Sugar Regulatory Authority (SRA) finding that the Tang and Kool-Aid powered juices are almost entirely composed of sugar and should thus be classified as sugar products.