(A series on how smuggling is done and how it can be solved)
Smuggling comes in many forms. As mentioned in my two earlier columns, smuggling is being done at the Bureau of Customs (BOC) through undervaluation, underdeclaration, misdeclaration and misclassification. All these smuggling schemes are done within the BOC premises, from the time an entry is filed to the time the shipment is released from BOC regulated ports.
But there are other smuggling schemes being done at Customs Bonded Warehouses (CBW). A CBW is a warehousing facility approved by the BOC where manufacturers store their imported raw materials or intermediate products, less its payment for duties and taxes, to be manufactured or processed into finished products for re-export. As such, the volume of finished products to be re-exported by the manufacturer should be proportionate to its volume of imported raw materials withdrawals from the bonded warehouse, less its approved wastage allowance. Thus, all CBWs are supposed to be guarded 24/7 by Customs officials, and its flow of imported raw materials, both inbound and outbound, closely monitored.
How is smuggling done in CBWs?
Smuggling in CBWs is a scheme that is, perhaps, not getting sufficient public scrutiny because it is being done outside BOC regulated ports and premises. And yet, despite its being a low-profile smuggling scheme, the government is losing hundreds of millions of pesos in duties and taxes each year to smugglers at CBWs.
And the most common forms of smuggling in CBWs are done in the withdrawal of duty-free imported materials from the warehouse and in the formula of manufacture or formula of conversion.
In the withdrawal of imported materials from CBWs, smuggling happens when the BOC official tasked to monitor and regulate the materials withdrawals from the bonded warehouse connive with the manufacturer and allows the latter to withdraw more than its declared volume of withdrawal. This would enable the manufacturer to produce…