REVENUE MEMORANDUM CIRCULAR NO. 56-2007 issued on August 30, 2007 publishes the full text of Department Order No. 23-07 dated July 26, 2007 entitled “Mandating the Marking of Imported Kerosene and Fuel Oils Which are Entered Tax and Duty Free to Prevent the Unauthorized Diversion Thereof Into the Domestic Market and for Other Purposes”.
The Order covers the implementation of the program of marking of fuel oils imported into the Philippines and/or manufactured and/or refined in the Philippines, which under Philippine laws are exempt from the payment of duties and taxes, whether the same was by reason of importation or manufacturing in a free zone, as proof that these fuel oils legitimately entered into Philippine territories and/or manufactured and/or refined in the Philippines and are, by law, exempt or not required to pay duties and taxes.
The following shall be marked with the official marking agent designated by the Department of Finance (DOF) in accordance with existing rules:
- All kerosene, including dual purpose kerosene, subject to zero Excise Tax;
- All diesel oil imported into the Philippines for which exemption from the payment of duties and taxes is claimed.
In the case of kerosene subject to zero Excise Tax, the person, entity or taxpayer who owns or enters the fuel or to whom the fuel oil is consigned, or whoever brings the same into the country, shall cause the marking of said exempt kerosene/fuel oil with the official marking agent and shall bear the cost of marking the same.
In the case of diesel oil, the person, entity or taxpayer who imports, manufactures, and/or refines said diesel oil shall cause the marking thereof with the official marking agent and shall bear the cost of marking the same. The failure or refusal of the person, entity or taxpayer responsible for the marking of the fuel oils as required within a period of 15 days from due notice shall subject such owner, consignee or importer and the articles to such sanctions as may be imposed in accordance with the Tariff and Customs Code of the Philippines, as amended, and other relevant existing laws and rules and regulations issued in pursuance of law.
In the event that diesel oil containing the official marker signifying exemption is found in the domestic market, or in possession of anyone or under any situation where said diesel oil is subject to duties and taxes, it shall be presumed that the same was imported or withdrawn with the intention to evade the payment of duties and taxes due thereon, and shall be proceeded against pursuant to law, unless the contrary be proven through the presentation of valid documents and/or other evidence to the contrary.
The same presumption shall apply in the event that kerosene subject to zero Excise Tax containing the official marker is found being used, transported, stored or otherwise labeled as aviation fuel in domestic markets, or in possession of anyone or under any situation were said kerosene is subject to duties and taxes.
The mandatory marking prescribed shall be implemented by the Bureau of Customs (BOC) on a pilot basis at the Subic Bay Free Port and the Clark Special Economic Zone and likewise at the Port of Batangas for imported kerosene. The BOC shall provide a monthly report and evaluation to the DOF on the progress of the pilot program with the end in view of having the marking program implemented on a nationwide basis.
A Program Implementation Officer (PIO), headed by a DOF Senior Officer to be designated by the Secretary of Finance, and with the Commissioner of Customs and the Commissioner of Internal Revenue –or their duly authorized representatives with the rank of Deputy Commissioner–as members shall directly coordinate and supervise the proper and effective implementation of the Order. The PIO shall be supported by personnel of the DOF, as well as those assigned or seconded from agencies attached to the DOF.
The PIO, which is authorized to call on any official of the DOF and its attached agencies for such assistance as may be necessary, as well as to require the participation of experts to help achieve the objectives of the Order, shall have the following duties and responsibilities:
In the case of diesel oil, the person, entity or taxpayer who imports, manufactures, and/or refines said diesel oil shall cause the marking thereof with the official marking agent and shall bear the cost of marking the same. The failure or refusal of the person, entity or taxpayer responsible for the marking of the fuel oils as required within a period of 15 days from due notice shall subject such owner, consignee or importer and the articles to such sanctions as may be imposed in accordance with the Tariff and Customs Code of the Philippines, as amended, and other relevant existing laws and rules and regulations issued in pursuance of law.
In the event that diesel oil containing the official marker signifying exemption is found in the domestic market, or in possession of anyone or under any situation where said diesel oil is subject to duties and taxes, it shall be presumed that the same was imported or withdrawn with the intention to evade the payment of duties and taxes due thereon, and shall be proceeded against pursuant to law, unless the contrary be proven through the presentation of valid documents and/or other evidence to the contrary.
The same presumption shall apply in the event that kerosene subject to zero Excise Tax containing the official marker is found being used, transported, stored or otherwise labeled as aviation fuel in domestic markets, or in possession of anyone or under any situation were said kerosene is subject to duties and taxes.
The mandatory marking prescribed shall be implemented by the Bureau of Customs (BOC) on a pilot basis at the Subic Bay Free Port and the Clark Special Economic Zone and likewise at the Port of Batangas for imported kerosene. The BOC shall provide a monthly report and evaluation to the DOF on the progress of the pilot program with the end in view of having the marking program implemented on a nationwide basis.
A Program Implementation Officer (PIO), headed by a DOF Senior Officer to be designated by the Secretary of Finance, and with the Commissioner of Customs and the Commissioner of Internal Revenue –or their duly authorized representatives with the rank of Deputy Commissioner–as members shall directly coordinate and supervise the proper and effective implementation of the Order. The PIO shall be supported by personnel of the DOF, as well as those assigned or seconded from agencies attached to the DOF.
The PIO, which is authorized to call on any official of the DOF and its attached agencies for such assistance as may be necessary, as well as to require the participation of experts to help achieve the objectives of the Order, shall have the following duties and responsibilities:
- To commence the pilot implementation at the Subic Bay Free Port, the Clark Special Economic Zone and the Port of Batangas on or before August 15, 2007;
- To ensure that all operational and technical written instructions are in place and properly disseminated to all concerned;
- To issue the Terms of Reference and Engagement of the pilot test marking provider;
- To identify and resolve operational and technical difficulties identified in the course of pilot implementation;
- Complete the pilot test within three (3) months from commencement and submit recommendation on the nationwide roll-out within the pilot test period;
- Submit monthly progress report to the Secretary of Finance on the pilot implementation.
The PIO, in recommending the nationwide roll-out of the program, in consultation with the BOC and the Bureau of Internal Revenue (BIR), shall submit, among others, the following:
- Specifications of the national marker;
- The marker to be used and the marking service provider;
- Terms of Reference and Engagement of the Provider;
- Performance Measures of the Program;
- Ports / Places where the Program will be rolled-out.
Except on matters falling within the competence and jurisdiction of the PIO, the
BOC and the BIR shall issue the relevant orders and administrative issuances necessary
for the proper implementation and enforcement of this Order.