SAFEGUARD DUTY: Answer:

Sample Computation for Safeguard Duty for Coffee Given: P203.74 - 61.18

Trigger Price Php 203.74 = P142.56 x 7,350 kgs

CIF value 61.18 (per kg) = Php1,047,816 (Safeguard Duty) 

SEC. 1400, CMTA UNDER CAO No. 1-2020 Solution : 

Sample Computation (to compute for surcharge) Php 800,000 less php 600,000

Given: = php 200,000 / php 800,000

Dutiable Value as declared Php 600,000.00 = 25% (Percentage Difference) 

Dutiable Value as found php 800,000.00 Above 10% = Surcharge of 2.50%

Misc. Expense for LC computation Php 15,000.00 To compute for Customs Duty 

Compute the following: As Declared As Found

a) Percentage (%) difference DV in Php 600,000.00 DV in Php 800,000.00

b) Amount of surcharge and additional duty x Rate of CuD 30%          x Rate of CuD 30% 

Other Info: 1. Rate of customs duty at 30% CuD Php 180,000.00 CuD Php 240,000.00 

To compute for Value Added Tax 

DV as declared Php 600,000.00 To compute for VAT DV as found Php 800,000.00

+ CuD as declared 180,000.00 + CuD as found 240,000.00

+ Misc. Exp. 15,000.00 + Misc. Exp. 15,000.00

= Landed Cost Php 795,000.00 = Landed Cost Php1,055,000.00 

x Rate of VAT 12% x Rate of VAT 12%

= VAT php 95,400.00 = VAT php 126,600.00 

Summary of Duty and Tax To compute the surcharge

CuD 180,000.00 CuD 240,000.00 CuD 240,000.00

VAT 95,400.00 VAT 126,600.00 VAT 126,600.00

Total 275,400.00 Total 366,600.00 Total 366,600.00 x 2.5 (250%)= Surcharge 916,500.00 

Par. F- Exemption for Returning Residents (Section 800 CMTA) 

• Mr. Ramon Garcia arrived from United States where he stayed for 1 year. Total FOB value assessed by the BOC amounted to Php250,000.00. Compute the customs duty and tax, if any. Other info: Rate of CuD 30% and Misc. Expenses is Php280.00 

Solution:

Php 250,000 less 150,000 = Php100,000,00 (considered dutiable) 

Since the value is just FOB, 100,000.00 x 1.12 (to add frt and ins.) 

= Dutiable value Php 112,000.00 x .30 = CuD php33,600.00 

To get VAT 

DVphp112,000.00 + CuD33,600.00 + ME php280 

= Landed Cost php145,880.00 x .12% 

= VAT php17,505.60 

• A defective lathe machine with CIF value of US$ 24,500.00 (3% rate of duty) originally from Spain was returned to the Philippines after it has undergone repair. The importer in the Philippines complained that the motor is slow starting, thus the need for repair to its supplier abroad. The cost of repair amounted to US$500 while the component parts added is US$2,500 while freight and insurance premium totalled US$1,200.00 (duly certified). Exchange Rate is Php43.50= US$1.00. Compute the customs duty and VAT, if any. Rate of CuD is 3% ad val. Other charges amounted to Php3,000 

Solution: 

US$2,500 + 1,200 = US$3,700 x php43.50 

= php160,950.00 x .03 

CuD = Php4,828.50 

To get VAT

DV in php160,950.00 + CuD php4,828.50+ ME php3,000

Landed Cost Php168,778.50 x .12%

VAT = php20,253.42 

SAMPLE COMPUTATION OF DRAWBACK UNDER SEC. 900 of the CMTA 

Given : Customs duty paid at Php 7,000,000.00 VAT was paid at Php 12,000,000.00 Out of 200 MT only 175 MT of raw materials were used in the manufacture of pallets which were re- exported Compute the amount of duty drawback, Compute the amount of VAT subject to drawback claim 

Solution: Solution:

Customs Duty = Php 7,000,000.00 divide by 200 MT VAT = Php 12,000,000.00 divide by 200 MT 

Customs duty = Php 35,000/MT x 175 MT = Php60,000 MT x 175 MT

Customs duty for drawback = Php 6,125,000.00 = VAT for drawback Php10,500,000.00 

If the manufacturing process allowed 2% for spoilage and wastage, Solution:

compute the volume (in kgs) of the raw materials Total Qty. 200 MT less 4 MT (2% of the qty) 

remain unprocessed in kgs. = 200 – 4 = 196 less 175 MT

= 21 MT x 1,000 =21,000 kgs unprocessed 

Section 1124 SETTLEMENT

by Payment of 30% Fine based on L/C by Payment of Redemption Value/100% of LC 

Given:  Solution:

Dutiable Value Php500,000.00 under Seizure (WSD) Dutiable Value Php 500,000.00

Rate of Customs duty at 10% + Customs Duty 50,000.00

Misc. Exp. at Php 25,000.00 + Misc. Expenses 25,000.00

Solution: = Landed Cost 575,000.00

Dutiable Value Php 500,000.00 x Multiply by 100% 

+ Customs Duty 50,000.00 = Redemption Value Php575,000.00

+ Misc. Expenses 25,000.00 

= Landed Cost 575,000.00 

X Rate of Fine 30% 

= Amount of Fine Php 172,500.00

COMPUTATION OF SURCHARGE UNDER SEC. 1425 of the CMTA 

Given :

• The Final Demand Letter (FDL) in the amount of Php 10,500.00 Importer paid after one (1) month after receipt of the FDL Compute the total payment inclusive of surcharge 

Solution: 

Final Demand Letter Php10,500.00 Multiplied by rate of surcharge 1.1 

= Total payment (to include surcharge)Php11,550.00 

Given: 

• Amount of surcharge is Php 40,200.00 Final Demand Letter issued by the BOC Collector was paid by the importer after one year Compute the original amount to be paid to the BOC 

Solution: 

Amount of surcharge Php40,200.00 Divide by the rate of surcharge .25 

= Original amount Php160,800.00 

COMPUTATION OF SURCHARGE UNDER SEC. 1422 of the CMTA 

Given: 

• 100 cartons of raw materials illegally withdrawn from a CBMW Total duties and taxes amounted to php235,850.00 for the entire shipment. Compute the amount of duties and taxes, plus surcharge. 

Solution : 

Total duties and taxes Php235,850.00 Multiply by 1.50 (to include surcharge) 

= Total CuD and taxes w/surcharge =Php353,775.00 

Given: 

Out of 100 cartons of raw materials, it was found out that 80 cartons were illegally withdrawn from a CBMW Total duties and taxes amounted to php235,850.00 for the entire shipment. Compute the amount of duties and taxes, plus surcharge. 

Solution : 

Total duties and taxes Php235,850.00 Divide by 100 

CuD and Tax per carton php 2,358.50 Multiply by 80 

= Total CuD and Tax for 80 ctns php188,680.00 Multiply by 1.50 (to include surcharge) 

= Total CuD and taxes w/surcharge =Php283,020.00 

Sample Problem Solution:

Total Value Added Tax: Php237,418.00 php237,418.00 / 0.12 

Total Excise Tax: Php350,000.00 = Php1,978,483.33 – 350,000.00 

Total Misc. Exp: Php 16,750.00 = Php1,628,483.33 - 16,750

Rate of Duty: 20% = 1,611,733.33 / 1.20 

Compute the customs duty = P1,343,111.11 x .20 = P268,622.22

• Sample Computation:

50 boxes of cigars each box containing 25 cigars each cigar had a net retail price of P 300.00 Compute the total excise tax

To solve for the excise tax of cigar 

50 boxes x 25 cigars = 1,250 cigars 

P300.00 NRP x 20% = P 60.00 (AVT) + P7.10 (ST) 

= P67.10 x 1,250 cigars = php83,875.00 

• Sample Computation: 

Compute the amount of excise tax for imported heated tobacco where the total number of sticks is 15,000 

15,000 divide by 20 = 750 packs x P30.00 

= Php 22,500.00 

Sample Computation Computation of Excise Tax (Sugar)

• Carbonated Beverages Dulce Manufacturing Corp. imported 300 cases of Super Cola using HFCS and non-caloric sweetener from place of production. Each case contains 6 bottles of 1.5 liters each. Compute for the excise tax. 

Solution:

No. of Cases 300 Multiplied by no. of bottles per case x 6 Total no. of bottles 

=1,800 Multiplied by contents per bottle x 1.5L Total Volume in Liters 

= 2,700L Multiplied by Specific Tax Rate x P12.00 

= Total Excise Tax Due P32,400.00 

• Powdered Juice Sweety Import Corp. imported 500 cases of Four Seasons Juice using caloric and non-caloric sweetener containing 144 which can make 1Liter. Compute for the excise tax. 

Solution:

No. of Cases 500 Multiplied by no. of packs per case x 144 

= Total no. of packs 72,000 Multiplied by consumable yield per pack x 1L Total Volume in Liters 

= 72,000L Multiplied by Specific Tax Rate x P6.00 

= Total Excise Tax Due P 432,000.00 

A. 350 cases of brandy 6 bottles per case Volume capacity of 1,000 ml/bottle 42% alcohol content, NRP of Php750 per bottle. 

Excise tax for the Brandy / Specific Tax for Brandy 

NRP/Li = Php750.00 / 1,000 = .75 x 1,000 =750 x 22% = 165+52 =217

Total No. of Bottles = 2,100 (350 x 6 Bottles) 

1,000/1,000 =1 x 2,100 x .84(42x2/100)

= 1,764 PL x (.22 x 750) +52

=  1,764 x (165+52)

= 1,764 x (217)

ET = Php 382,788.00 

Borados Trading imported 20 cartons of Flower Pots with FCA Value of $30,000. Freight and Insurance charges were included in the entry as follows. $895.00 and $600.00. Each carton weighs 5 kilograms and measures 0.3m x 0.5m x 0.3m. Determine the Dutiable Freight if the IATA rate is $8.50/kg?

Solution: (DUTIABLE FREIGHT = $895.00)

VW = 0.3m x 0.5m x 0.3m = 0.045/0.006m         AW = 20 Cartons x 5 Kilograms IATA Freight = 150 Kilograms x $8.50/kg

= 7.5 x 20 cartons  = 100 Kilograms $1,275 x 0.70

=150 Kilograms (Chargeable Weight) = $892.50