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(NAR) VOL. 10 NO. 1 / JANUARY - MARCH 1999
[ DA JOINT DEPARTMENT ADMINISTRATIVE ORDER NO. 1, S. 1998, December 07, 1998 ]
IMPLEMENTING RULES AND REGULATIONS GOVERNING THE GRANT OF TARIFF EXEMPTIONS ON THE IMPORTATION OF AGRICULTURE AND FISHERIES INPUTS, MACHINERY AND EQUIPMENT UNDER SECTIONS 108 TO 110 OF REPUBLIC ACT 8435 — THE AGRICULTURE AND FISHERIES MODERNIZATION ACT OF 1997
Pursuant to the authority granted to the Department of Agriculture (DA), in consultation with the Department of Finance (DOF) and the Board of Investments (BOI), under Section 109 of Republic Act No. 8435, otherwise known as the "Agriculture and Fisheries Modernization Act of 1997," the following implementing rules and regulations (IRRs) are hereby promulgated and issued for the guidance of all concerned.
Preliminary Provisions
Section 1. Title. — These rules and regulations shall be known as the rules and regulations implementing Title 5 (Trade and Fiscal Incentives) of Republic Act No. 8435.
Section 2. Objective. — These rules and regulations shall govern the importation of agriculture and fisheries inputs, machinery and equipment exempt from the payment of tariff and duties.
Section 3. Construction. — These rules and regulations shall be construed to carry out the objectives of RA 8435 as follows:
a) To modernize the agriculture and fisheries sectors by transforming these sectors from a resource-based to a technology-based industry;
b) To enhance profits and incomes in the agriculture and fisheries sectors, particularly the small farmers and fisherfolk, by ensuring equitable access to assets, resources and services, and promoting higher-value crops, value-added processing, agribusiness activities, and agro-industrialization;
c) To ensure the accessibility, availability and stable supply of food to all at all times;
d) To encourage horizontal and vertical integration, consolidation and expansion of agriculture and fisheries activities, groups, functions and other services through the organization of cooperatives, farmer's and fisherfolk's associations, corporations, nucleus estates, and consolidated farms and to enable these entities to benefit from economies of scale, afford them a stronger negotiating position, pursue more focused, efficient and appropriate research and development efforts and enable them to hire professional managers;
e) To promote people empowerment by strengthening people's organizations, cooperatives and NGOs and by establishing and improving mechanisms and processes for their participation in government decision-making and implementation;
f) To pursue a market-driven approach to enhance the comparative advantage of our agriculture and fisheries sectors in the world market;
g) To induce the agriculture and fisheries sectors to ascend continuously the value-added ladder by subjecting their traditional or new products to further processing in order to minimize the marketing of raw, unfinished or unprocessed products;
h) To adopt policies that will promote industry dispersal and rural industrialization by providing incentives to local and foreign investors to establish industries that have backward linkages to the country's agriculture and fisheries resource base;
i) To provide social and economic adjustment measures that increase productivity and improve market efficiency while ensuring the protection and preservation of the environment and equity for small farmers and fisherfolk; and
j) To improve the quality of life of all sectors.
Section 4. Definition of Terms. — The terms used in this set of IRRs are defined as follows:
a) Agriculture Enterprise refers to any single proprietorship, partnership, cooperative, corporation, farmer's organization/association or 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.
b) 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.
c) 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.
d) Cooperatives refer to duly registered associations of persons, 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.
e) 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.
f) Farmers and Fisherfolk refer to natural persons engaged in agriculture and fisheries activities as their primary source of income.
g) 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.
h) 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.
i) Fisheries Enterprise refers to any single proprietorship, partnership, cooperative, corporation, fisherfolk's organization/association, and other juridical entity that is engaged in producing, harvesting, processing, marketing of fish or fisheries/aquatic products and developing and conserving aquatic resources and fisheries areas.
j) 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.
k) 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.
l) Imports refers to all articles or commodities brought into the Philippines from any foreign country.
m) Import Consolidator refer to any authorized person who will import agriculture and fisheries inputs, machinery and equipment on behalf of eligible agriculture and fisheries enterprises. Authorized refers to authorization as may be required by the Department of Agriculture from importers other than what the Rules hereunder require.
Covered Imports
Section 1. The lists of agriculture and fisheries inputs, machinery and equipment eligible for tariff exemptions for five years from the date of the effectivity of this Administrative Order (AO) shall be issued in two batches, according to their appropriate eight-digit harmonized commodity description and coding system in the Tariff and Customs Code of the Philippines:
a) The 1st batch, which is attached as Annex A*, covers products which shall be imported duty-free and where the rules on the application/certification and monitoring procedures of this AO shall not apply; and
b) The 2nd batch shall be issued as Annex B, within 30 days from the effectivity of this AO which shall cover eligible products for tariff exemption, subject to the application and certification procedures outlined in Rule V of this set of IRRs.
Section 2. Agriculture and fisheries inputs, machinery and equipment for importation should comply with existing sanitary, phytosanitary, quality, grade, and/or performance standards, and/or other commodity clearance requirements of concerned DA agencies and other government units.
Section 3. The DA, in consultation with the concerned private and government institutions, shall review Annexes A and B periodically but at least once per semester until 31 December 2002.
Covered Enterprises
Agriculture and fisheries enterprises as defined in Section 4 a) and i) of Rule I of this set of IRRs shall be eligible for exemption from the payment of tariffs on imported inputs, machinery and equipment listed in Annex B that are for their exclusive use, subject to the provisions outlined in Rule V to VIII of this set of IRRs.
Import Consolidators
Section 1. Import consolidators as defined in Section 4 m) of Rule I of this set of IRRs shall represent and assist those eligible agriculture and fisheries enterprises that are unable to undertake direct imports due to the small size of orders or lack of direct import experience.
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 of this set of IRRs.
Section 2. Import consolidators shall be allowed to import duty-free agriculture and fisheries inputs, machinery and equipment, provided that they have secured the following:
a) Certificate of Registration from the Cooperative Development Authority (CDA), Securities and Exchange Commission (SEC), or with the Department of Trade and Industry as the case may be.
b) Notarized letter of endorsement duly signed by all participating eligible agriculture and fisheries enterprises, attached with their approved individual CEs, allowing the import consolidator to import agriculture and fisheries inputs, machinery and equipment on their behalf; and
c) Aggregated and consolidated import purchase orders of all participating eligible agriculture and fisheries enterprises for each import transaction.
Application/Certification Procedures
Section 1. Agriculture and fisheries enterprises interested in 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 B. However, the CE shall be an accountable form and shall not be transferable.
The DA or its deputized agency shall, in consultation with the Department of Finance and the Board of Investments in appropriate cases, issue the CE.
Section 2. The offices deputized to issue CEs are:
a) The DA's Regional Field Units (RFUs),
b) The CDA's regional offices.
c) The Department of Trade and Industry's (DTI) regional and provincial offices, and
d) The BOI and its regional offices.
The Head of the above-listed offices shall be the only signatory in the CE.
Section 3. The DA or any of its deputized offices upon evaluation of the application letter and supporting documents as follows shall issue certificates of eligibility (CE) to agriculture and fisheries enterprises:
a) In the case of corporation and partnerships, certified copy of the registration documents of enterprise issued by the SEC; or
b) In the case of single proprietorship, a certified copy of the registration documents enterprise issued by the DTI or a certified copy of Business/Mayor's Permit, as the case may be; or
c) In the case of a cooperative, a certified copy of the registration documents issued by the CDA; or
d) In the case of farmers'/fisherfolk's organizations and associations, a certified copy of the registration documents of enterprise issued by the SEC or an accreditation by appropriate government agency; and
e) Audited financial statements for the previous year in cases where the limit for the value of the tariff-exempt transaction will be based on the enterprise's declared assets, and
f) Pro-forma invoice, and
g) A sworn statement that the input, machinery, and equipment to be imported tariff-exempt will be for the exclusive use of the importing agriculture/fisheries enterprise.
The CE shall be valid throughout the effectivity of this AO, unless invalidated or revoked under Rule VIII.
Section 4. The peso value of each import transaction shall not exceed the declared assets of the eligible agriculture and fisheries enterprise as evidenced by the audited financial statement of the enterprise for the previous year, or the authorized capital stock as evidenced by the SEC registration documents.
Section 5. The CE, a sample of which is attached as Annex C, shall contain the following information:
a) Name of the agriculture or fisheries enterprise;
b) Type of agriculture activity engaged in;
c) Date of issuance of the CE;
d) Total allowable pesos value of import transaction, as set in Section 4 of this Rule; and
e) Tables recording the requested and actual tariff exempt import transactions made by the entity.
Tariff Exempt Import Procedures
Section 1. Upon arrival of the imported agricultural and fisheries inputs at the point of entry into the Philippines, the importing agriculture or fisheries enterprise and/or import consolidator shall present the following documents to the Customs Collector to facilitate the exemption of the imports from tariff;
a) Commercial invoice;
b) Bill of lading; and
c) In the case of agriculture and fisheries enterprise, original plus two copies of the CE with supporting documents listed under Section 3 of Rule V of this set of IRRs; or
d) In the case of an import consolidator, original plus two copies of the documents listed under Section 2 of Rule IV and Section 3 e) to 3 g) of Rule V of this set of IRRs.
Section 2. In processing the import transaction, the Customs Collector shall record on the space provided in the CE the value, quantity and the commodity code of the imported agriculture or fisheries input.
Section 3. One copy of the CE to be retained by the BOC and the other forwarded to the issuing office. The original CE shall be returned to the agriculture or fisheries enterprises for future use.
Monitoring And Reporting
The DA shall in collaboration with the DTI, CDA and BOI monitor the domestic markets to document and guard against the diversion of imports under this set of IRRs for resale in the domestic market. The DA shall promote the collaboration of NGOs and the private sector in the monitoring process. Where violation are suspected, these agencies shall collaborate so that investigation and prosecution by the police and the Office of the Solicitor General (OSG) may proceed. The DA, CDA, DTI, BOI, DOF, BOC and DOJ shall meet and agree on the mechanics of such monitoring. The monitoring arrangements shall be jointly approved and issued by the concerned agencies on or before 31 December 1998.
Penalties
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 organization 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 certificate of eligibility 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 were violated.
General Provisions
Section 1. Separability Clause — If any provision of the Act and this set of IRRs is held invalid or unconstitutional, any other provisions not so affected shall continue to be valid and effective.
Section 2. Repealing Clause — Any law, executive order and its rules and regulations, or any part thereof, which is inconsistent with any of the provisions of RA 8435 and this set of IRRs is hereby repealed or amended accordingly.
Section 3. The DA in consultation with the DOF and DTI to be consistent with the Agriculture and Fisheries Modernization Plan (AFMP) shall review this set of IRRs every year until August 2002.
Section 4. Effectivity Clause — This set of IRRs shall take effect 15 days upon publication in a national newspaper, and shall take effect for five years from the date of the effectivity of this AO.
Adopted: 07 December 1998.
Secretary, Department of Finance
(SGD.) JOSE T. PARDO
Secretary, Department of Trade and industry
(SGD.) WILLIAM D. DAR
Acting Secretary, Department of Agriculture
* Text available at office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.