COA: Customs let P3.5 billion worth of shipments in without required physical inspection

The Bureau of Customs (BOC) allowed the entry of 2,416 shipments with assessed duties and tax rate worth P3.5 billion without the physical inspection they should have been subjected to, the Commission on Audit (COA) said.

In its annual audit report on the BOC for 2022, state auditors said the 2,416 shipments should have been processed in the red lane, which mandates physical inspection. They were instead processed in the green, yellow and orange lanes.

Shipments in the green lane are released without further inspection, while those in the yellow lane are subjected to documentary check. Those in the orange lane undergo x-ray scanning and will be only subject to physical inspection if found to be suspicious.

“A review of the e2m (electronic to mobile) database of consumption entries and the result of the  conducted walkthrough and interview of the operations of the RMO (Risk Management Office) revealed the following: verification disclosed that 2,416 consumption entries with assessed duties and taxes of P3.558 billion have been inappropriately tagged as “green, yellow or orange” in the selectivity system and the goods were released without  conducting the mandatory 100 percent physical inspection, inconsistent with the prescribed and fixed criteria,” COA said.

The 2,416 shipment entries which should have been tagged for the red lane for physical inspection consist of:

• 1,846 entries in the green lane with assessed duties and taxes value of P3.24 billion;
• 240 entries in the yellow lane with assessed duties and taxes value of P26 million; and
• 330 entries in the orange lane with assessed duties and taxes value of P289.7 million.

These 2,416 entries, the COA said, required physical inspection as provided under BOC’s fixed criteria because there are considered high-risk imports.

“Subjecting these importations to 100 percent examination facilitates  the process of evaluation and assessment and likewise validates that the nature,  origin, condition, quantity, and value of the goods are in accordance with the details and specifications contained in the goods declarations. Tagging the said importations under the “red” lane category is vital for the Bureau to monitor and perform the required inspection of goods to ensure that no prohibited importations were allowed to enter the country and that duties and taxes were paid correctly,” COA said.

“The release of shipments which should have been tagged as “red” without 100 percent physical inspection poses the risks that misdeclaration/undervaluation of goods and importations of prohibited goods may not be detected, thereby affecting the revenue generation and border protection functions of the Bureau to the disadvantage of the government,” COA added.

In addition, COA also said that shipments with assessed duties and taxes of P38.510 billion were unnecessarily subjected to inspection/scanning, and stringent process of cargo clearance procedures by the BOC.

More 'inappropriately tagged'

“Analysis of the e2m database of consumption entries and validation of the application of the active fixed criteria also revealed that 45,677 consumption entries with assessed duties and taxes of P38.51 billion were found to have been inappropriately tagged, inconsistent with the prescribed and provided fixed criteria,” COA said.

Of the 45,677 shipments unnecessarily subjected to stringent clearance, COA said 26,029 should have been tagged green, 1,453 should have been tagged yellow, and 18,195 should have been tagged green or yellow.

“The above table shows that these shipments were not categorized under any criteria that require physical inspection, x-ray scanning, or document examination but were tagged as “Yellow”, “Orange” or “Red.” Those tagged as  “Red” or “Orange” require that those shipments be held at the port to undergo the stringent process of x-ray scanning and/or physical inspection. These shipments, unless qualified under specific criteria, should have been tagged as “Green.” As a result, importers may incur costs of time delays or arrastre, wharfage, and demurrage charges,” state auditors said.

“Unnecessary inspection/scanning and stringent process of cargo clearance procedures for low risk shipments impedes the movement of cargoes and contributed to additional costs (e.g. arrastre, wharfage and demurrage charges) to importers due to time delays and does not support the achievement of BOC’s mandate on trade facilitation,” COA added.

In the report, COA said the BOC agreed with its recommendation mandating the chief of the Risk Management Office of the BOC to review all the consumption entries worth over P42 billion in total which have been inappropriately tagged and explain the non-compliance with the fixed criteria.

GMA News Online has reached out to the BOC for comment and will publish its reply as soon as it becomes available. — BM, GMA Integrated News