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WHEREAS, Article 18 of the Japan-Philippines Economic Partnership Agreement (JPEPA) provides that each party shall eliminate or reduce the customs duties on originating goods of the other Party designated for such purposes in its schedule in Annex 1, in accordance with the terms and conditions set out in such Schedule;

WHEREAS, Part 3 Section 1 of the Notes for Schedule of the Philippines provides for the tariff rate quota (TRQ) and other preferential tariff treatment that shall apply to originating goods of Japan;

WHEREAS, the DTI is mandated to implement the TRQ availment rules and regulations;

NOW, THEREFORE, for and in consideration of the foregoing premises, this implementing rules and regulations is hereby promulgated to implement the TRQ availment for Philippine imports of tinplate, hot rolled and cold rolled steel from Japan under the JPEPA.

SECTION 1. Accreditation of Importer -

A. Eligibility Criteria

1. The applicant shall be an existing manufacturer (herein referred to as “importer”) for at least one year that uses TP, HR and/or CR steel, in the form of coil, sheet, or plates, as an input raw material to produce any but not limited to the following:

a. Electrical appliances/electrical devices/electrical machinery/power equipment;

b. Motor vehicles and parts thereof;

c. Cans for foodstuff and beverages;

d. Ships and parts thereof;

e. Mechanical devices, machinery, and machinery parts; and

f. Downstream steel products, such as cold rolled and coated sheets, welded pipes, and similar or like products.

2. The term “importer” shall exclude a mere trader and/or stockist which engage in purely buying and selling.

3. A service center may be considered a manufacturer if it cuts and shapes steel plates and sheet (coils) in preparation for processing into a product covered by Section 1.a to 1.e above.

4. The importer may either be a sole proprietorship, partnership, or corporation established and duly authorized do business in the Philippines, in an activity indicated in the foregoing.

B. Accreditation Procedure

1. The importer, prior to filing of its first request for an Authority to Import (ATI), shall submit the following documents to the Department of Trade and Industry - Bureau of Import Services (DTI-BIS):

a. Accomplished and Notarized Application for Accreditation Form, containing information including, but not limited to:

a.1 Products being manufactured;

a.2 Annual operating data for the past three (3) years immediately preceding the importer’s application for accreditation, or for the actual number of years in case of less than three (3) years of operation, whichever is applicable:

a.2.i. Annual rated capacity and corresponding annual requirement for TP, HR and/or CR steel.

a.2.ii.Actual Annual Production Volume

a.2.iii Annual Sales Volume and Value

a.2.iv Annual TP, HR and/or CR steel purchases (local and imports, the latter with breakdown as to country of origin: from Japan; and from other countries.)

a.2.v Beginning and ending inventory of the following items, as of 31 December for the year prior to application:

-TP
- HR and/or
- CR steel
- Finished products;

b. Certified true copy of the following:

b.1 Valid Department of Trade and Industry (DTI) Certificate of Registration; or Securities and Exchange Commission (SEC) Certificate of Registration, whichever applies;

b.2 Articles of Incorporation/Partnership and By-Laws; and,

b.3 Customs Accreditation Service (CAS) Registration;

b.4 In cases where the importer manufactures a finished product covered by the List of Products Under Mandatory Product Certification, he shall submit a certified true copy of the Philippine Standard (PS) Quality/Safety Certification Mark license issued by Bureau of Product Standards (BPS).

c. Certified true copy of importer’s latest Audited Financial Statements (AFS) and Income Tax Return (ITR);

d. Importer’s Notarized Board Secretary’s Certificate stating that the importing company’s Board of Directors authorizes its named officer to represent, act, and to sign on behalf of the importer enterprise;

e. Undertaking to be issued by the importer that it is not in arrears in the payment of outstanding national tax and duty obligations.

2. Prior to official acceptance, the DTI-BIS shall check the completeness of documents submitted. The process shall take no more than two (2) working days. Incomplete application documents shall be returned to the importer.

3. An application shall be verified and evaluated within a period of three (3) working days from official acceptance. Upon approval of an application, DTI-BIS shall inform the applicant in writing, and issue the necessary accreditation certificate.

4. Disapproved/rejected applicants shall be informed accordingly and provided with the basis for such action.

5. The DTI-BIS shall reject an application on the following cases:

a. non-qualification under the eligibility criteria;
b. misrepresentation of claims or facts; Only one (1) request for reconsideration shall be allowed under this circumstance; or
c. such other analogous cases

Minor oversights such as typographical errors or unintentional omissions shall not constitute misrepresentation with intent to deceive.

SECTION II. Allocation of TRQ -

A. Product Criteria

Only importations of TP, HR and CR steel shall be governed by TRQ scheme as identified by their tariff headings in Annex A^[*].

B. TRQ Volumes

1. Total TRQ

The TRQ during the first three (3) years of the implementation of the JPEPA, shall follow the aggregate volume set in the JPEPA, to wit:

Year 1 - 175,000 metric tons
Year 2 - 187,500 metric tons
Year 3 - 200,000 metric tons

2. Sectoral TRQ Allocation

a. The aggregate TRQ volume will be allocated to each of the following sectors per quota term:

a.1 Electrical appliances/electrical devices/electrical machinery/power equipment;
a.2 Motor vehicles and parts thereof;
a.3 Cans for foodstuff and beverages;
a.4 Ships and parts thereof;
a.5 Mechanical devices, machinery, and machinery parts;
a.6 Downstream steel products, such as cold rolled and coated sheets, welded pipes, and the like

b. Computation of Allocations

The TRQ volume for a particular sector shall be based on the ratio of the sector’s imports from Japan to the total aggregate import volume from Japan for the year prior to the allocation:

__A __ B

X

C

Where:

A = Sector Importation of TP, HR and CR steel from Japan for the year immediately preceding the Quota Term

B = Total Importation of TP, HR and CR steel from Japan for the year immediately preceding the Quota Term; and

C = Aggregate Quota for the applicable Quota Term (i.e., 175,000 MT for the 1st year, 187,500 MT for the 2nd year, etc.)

c. In the absence of sectoral imports data for the first year, the volume of imports submitted in the accreditation process shall serve as basis for the sectoral importation.

d. The DTI shall monitor and review the actual ATI issuances and importations for each quarter. If it appears that there is a significant underutilization of a sector’s quota, based on two successive quarters of data, the DTI shall study the reason for the variance and upon its discretion undertake the necessary reallocation of unused quota in favor of those who need them more.

e. Any unutilized allocation by the end of the 4th quarter shall be forfeited and in no case shall carry-over of unutilized allocation be allowed.

3. Individual TRQ

a. The grant of the TRQ volume through the Authority to Import (ATI) issued to individual importers shall be on “first come, first served basis” but in accordance with the Sectoral TRQ allocation provided in the foregoing.

b. The total TRQ volume that may be granted to individual importer per quota term for each of the following (1) TP, (2) HR, and (3) CR steel shall;

b.1 not exceed the importer’s total annual requirement for (1) TP; (2) HR, and (3) CR steel, as the case may be, declared in the importer’s application for registration, unless there is prior proof of expanded capacity;

b.2 not exceed the available/remaining TRQ for the applicable year;

c. In case the importer sells the scraps or second-grade (i.e. inferior or unsatisfactory) imported steel products in the domestic market, the importer shall pay twice the corresponding duties using most-favored-nation applied rate at the time of importation.

The importer shall secure authority from DTI-BIS prior to any disposal of scraps or second-grade imported steel products.

d. In case the total TRQ volumes for the year are completely issued, the DTI shall automatically disapprove all requests for TRQ adjustments.

SECTION III. Availment Procedure

A. Eligibility to Import

Only accredited importers and their import representatives, e.g., indentors, traders and consolidators, are allowed to apply for ATI under the scheme.

B. Authority to Import (ATI)

a. Every shipment shall be covered by an ATI.

b. Each ATI shall be covered by an individual control number that clearly refers to year and specific issue number. Partial shipments within the volume covered by the ATI may be allowed subject to the rules and regulations of the BOC.

c. The original ATI with security strip shall be issued by the DTI to the importer or its import representative, with one photocopy each for the DTI-Records, DTI-Implementing Office, DOF and BOC.

d. The validity of an ATI shall be for six (6) months from the date of issuance. Shipment covered by an ATI shall be loaded on board within the validity of such ATI.

DTI may, upon the request of the importer, extend the validity of an ATI that is unutilized and about to lapse under any circumstances, either force majeure or non force majeure. Such request for extension must be filed at least 15 days prior to the expiry date of the ATI’s validity. Provided, that in cases of force majeure occurring on the last day of the ATI’s validity, the request for extension must be filed within 48 hours from cessation of the event that caused its non-utilization.

Provided further that any extension granted shall in no case exceed thirty (30) days from the last day of its validity; Provided finally, that any such extension granted shall be within the same quota term that the ATI was issued.

C. ATI Application Procedure

a. The importer or its import representative shall apply for an ATI prior to importation or opening of the letter of credit.

b. When applying for an ATI, the importer or its import representative shall submit the accomplished ATI Application Form that contains the following information:

b.1 Complete name and address of the importer
b.2 Complete name and address of the supplier
b.3 Complete warehouse address
b.4 Volume (in MT) of the importation
b.5 Description of TP, HR and/or CR Steel to be imported-complete with exact quality specifications
b.6 Purchase Price - clearly indicating whether FOB, CNF, CIF, or the like
b.7 Period within which the importation is to be made, including latest shipment date(s).
b.8 Port of origin

c. The Application Form shall be accompanied by the following supporting documents:

c.1 Importer’s Notarized Affidavit of Intent as final user indicating end-usage and application, among other things; and

c.2 Photocopy of sales contract, sales/purchase order, pro-forma invoice, or like documents, covering the importation, issued in the name of the importer or its import representative as consignee to whom the shipment will be released by the BOC; provided further that the applicable PNS in the case of the products being covered by the List of Products Under Mandatory Product Certification to which the TP, HR and CR steel being imported conform to (as specified by the importer or its import representative) is indicated in the said sales contract, sales/purchase order, pro-forma invoice, or like documents, covering the importation.

c.3 In case the ATI application is accomplished by an import representative, a copy of the contract of agency or the relevant document providing the contractual relationship between the accredited importer and the applicant import representative.

d. The DTI-BIS shall accept an ATI application only if documents and information are complete. Otherwise it shall be returned to the importer or import representative for correction and/or completion.

SECTION IV. ATI Approval and Disapproval

1. For an ATI application to merit approval, the article to be imported shall meet the following criteria;

a. The imported TP, HR and CR steel products shall conform to the applicable Philippine National Standards (PNS).

b. It shall not be for re-sale or trading.

c. It shall be used exclusively as raw material by the importer for the manufacture of goods as declared in its application for accreditation.

d. It shall comply with the Rules of Origin governing JPEPA.

e. It shall not be locally produced. As reference, Annex “B”^[*] shall contain the HS codes and description of not locally produced steel products. Annex B shall be subjected to review and modification periodically or whenever necessary.

2. ATI applications covering products found in Annex “B”^[*] shall be approved.

3. In the event that the local industry is unable to produce the said item(s) or is unable to meet the quantity, quality, price and delivery requirements of the user, DTI-BIS reserves the right to allow importation of the said items after determination of the said conditions.

4. Importation of products that are locally produced may nevertheless be allowed if the local product in question does not meet (a) the required quantity; (b) the required quality; (c) reasonable price; and (d) timely delivery.

5. If the application is approved, the ATI shall be issued within three (3) working days from the acceptance of the application. In the case referred to in the preceding paragraph, the issuance of ATI shall be within ten (10) working days.

6. If the application is denied, the DTI-BIS shall issue within three (3) working days from the acceptance of the application, a letter stating the reasons for the denial.

SECTION V. Import Procedures - The BOC shall issue a separate Customs Administrative Order (CAO) to implement the procedure under this IRR.

SECTION VI. Monitoring -

1. DTI-BIS shall conduct ocular inspection of the plants of the importers of TP, HR and/ or CR steel, at least once a year, or whenever necessary, for purposes of obtaining and/ or verifying information previously submitted to the DTI-BIS.

2. The DTI-BIS shall prepare and maintain a database of the following:

a. A current roster of accredited importers; and
b. A master list of issued and cancelled ATIs

3. The importer or its import representative shall submit to DTI-BIS orderly and timely reports.

a. On a per shipment basis, an importer or its import representative should submit to DTI-BIS not later than five (5) working days after release of the imported articles from BOC, an accomplished Shipment Report Form, together with the following documents:

a.1 Original ATI issued to the applicant.
a.2 Copy of the Import Entry Internal Revenue Declaration (IEIRD)
a.3 Copy of Bill of Lading
a.4 Copy of Commercial Invoice
a.5 Copy of the Mill Certificate that contains information such as, but not limited to:chemical composition and physical properties.
a.6 Copy of the Certificate of Origin
a.7 Copy of Conditional Release or Import Commodity Clearance (ICC), as may be applicable.

b. The importer or its import representative should submit to DTI-BIS within fifteen (15) days after the end of each year, an accomplished and notarized Annual Report Form. This Form shall provide information on the following:

b.1 On TP, HR and CR Steel -

b.1.1 Quantity purchased (imported and locally-sourced);
b.1.2 Actual quantity used in the manufacture of products and quantity of generated scrap and waste materials and inferior goods; and
b.1.3 Quantity on hand, including those in the bonded warehouse (if any), at the beginning and end of each year.

b.2 On Finished products -

b.2.1 Quantity of finished products manufactured from the imported articles
b.2.2 Quantity of finished products sold from the imported articles

b.3 On scraps and inferior goods

b.3.1 Quantity of scraps and inferior goods sold
b.3.2 Quantity of scraps and inferior goods stored

c. The DTI may require more frequent reporting or other additional reports, whenever necessary.

SECTION VII. Violations and Penalties

1. Grounds for Cancellation. The accreditation may be withdrawn for any of the following grounds:

a. Diversion of steel materials to entities other than those stated in the application for accreditation;
b. Re-use of a cancelled ATI;
c. Misrepresentation of facts;
d. Falsification of documents;
e. Misclassification of steel products; and
f. Criminal acts and other acts of fraud

2. Grounds for suspension. The ATI may be suspended for any of the following grounds:

a. Late or non-submission of reports; and
b. Failure to surrender ATI on time

3. The acts constituting violations with their corresponding penalties shall be without prejudice to prosecution by the BOC under the Tariff and Customs Code and other penal laws.

4. Imported steel products that are used not in accordance with this IRR shall be subjected to the payment of twice the taxes and duties that should have been paid on the importation.

SECTION VIII. Withdrawal from Business; Cessation of Operations

1. An accredited importer who decides to withdraw from business or suspend its operations for six (6) months or more in the specific activity stated in the application for accreditation shall submit a written notice of such intention to the DTI-BIS at least one (1) month before the decision is implemented.

2. An importer’s accreditation shall be cancelled in the event of withdrawal from business in the specific activity stated in the application for accreditation; or suspended in the event of suspension of operations.

3. Upon cancellation or suspension of an importer’s accreditation, DTI-BIS shall immediately issue a formal notice to the importer copy furnished the BOC. Subsequently, all privileges attached to it shall cease to be operative.

4. The importer shall submit to DTI-BIS within fifteen (15) days from the implementation of the decision to withdraw from business or suspend its operations, notarized report providing information including but not limited to the following data for the period up to the date of withdrawal from business or suspension of operations, from 01 January of the same year.

a. Actual Production Volume
b. Sales Volume and Value
c. TP, HR, and/or CR steel purchases (quantity & value), with breakdown as to type of raw material (TP, HR and/or CR steel) and source as follows:

c.1 Locally sourced
c.2 Imports

c.2.1 From Japan under the JPEPA Scheme
c.2.2 From Japan outside of the JPEPA Scheme
c.2.3 From other countries

d. Actual quantity of TP, HR, and/or CR steel used on the manufacture of products
e. Beginning and ending inventory of TP, HR and/or CR steel (quantity & value), with breakdown as to type of raw material (TP, HR and/or CR steel) and source as follows:

e.1 Locally sourced
e.2 Imports

e.2.1 From Japan under the JPEPA Scheme
e.2.2 From Japan outside of the JPEPA Scheme
e.2.3 From other countries

f. Beginning and ending Inventory of finished products, with breakdown as to source of raw material as follows:

f.1 Locally sourced
f.2 Imports

f.2.1 From Japan under the JPEPA Scheme
f.2.2 From Japan outside of the JPEPA Scheme
f.2.3 From other countries

5. Based on the foregoing information provided by the importer, DTI-BIS shall determine inventory of TP, HR and/or CR steel imported under the JPEPA Scheme, which remain unprocessed upon the implementation of the importer’s decision to withdraw from business or suspend its operations. The DTI-BIS will thereafter inform/notify BOC of such withdrawal from business or suspension of operations as well as the inventory of TP, HR and/or CR steel imported under the JPEPA Scheme so that appropriate import duty and taxes on subject inventory are collected.

6. Upon receipt of copy of DTI’s notification of cancellation or suspension of the importer’s accreditation, BOC shall take immediate action to ensure that all items awaiting BOC processing under JPEPA scheme should be declassified as such, with immediate effect, and that the appropriate import duty and taxes are collected.

7. The importer may apply for the lifting of the suspension of accreditation, upon resumption of its operations for at least three (3) months.

8. An importer’s accreditation shall be cancelled in the event of non-resumption of operations within one year from date of suspension.

SECTION IX. Cancelled and Expired ATI

A. All cancelled ATIs shall be considered null and void.

B. All ATIs shall be deemed cancelled after they have been fully utilized. An expired and unutilized ATI will likewise be considered cancelled unless they were properly extended.

C. The importer or the import representative shall immediately surrender all cancelled and expired ATIs to the DTI-BIS.

D. DTI-BIS shall issue a formal notice to an importer or its import representative immediately when cancellation of an ATI arises except in the case of full-utilization or expiration, copy furnished the BOC.

SECTION X. Schedule of Fees

Filing Fee for Application for Accreditation		P1,500
Filing Fee for Application for ATI		1,500
Amendment/extension of ATI		1,500
Certifications		1,500
Request for Reconsideration/Re-filing of Application		1,500
For late filing of reports
	Basic Fine	Daily Fine
1st violation	P1,000	P50
2nd violation	5,000	100
3rd violation onwards	50,000	200
For late submission of cancelled or expired ATI
	Basic Fine	Daily Fine
1st violation	P1,000	P50
2nd violation	5,000	100

For other later filings or submission of other requirements not mentioned herein, but otherwise required in connection with the accreditation of an importer or an import representative under the Scheme, and for other violations of these rules, a reasonable fine shall be imposed by the DTI-BIS.

SECTION XI. Review and Amendments - The DTI-BIS shall consult the industry and other interested parties and inform the Government of Japan whenever the procedures for administration of implementation of the TRQ under this Implementing Rules and Regulations need to be amended.

SECTION XII. Effectivity - These Implementing Rules and Regulations shall take effect immediately following its publication in a newspaper of general circulation.

Adopted: 17 April 2009

(SGD.) PETER B. FAVILA
Secretary

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^[*] Text Available at Office of the National Administrative Register, U. P. Law Complex, Diliman, Quezon City.