January 22, 2014
CUSTOMS ADMINISTRATIVE ORDER NO. 001-14
SUBJECT : Guidelines on the Imposition of Surcharge under Section 2503
of the Tariff and Customs Code, as Amended
1. Repealing Clause
By authority of Section 608 of the Tariff and Customs Code of the Philippines (TCCP) as amended, and in order to ensure
a uniform implementation of Section 2503 of the TCCP, CAO 10-93 and CMO 64-1993 are repealed. All references to CAO 10-
93 and CMO 64-1993 shall be construed to refer to CAO 01-2014. Other rules, regulations, orders and rulings inconsistent
herewith are hereby modified and amended accordingly. If any part of this Order is declared by courts as unconstitutional or
contrary to existing laws, the other parts not so declared shall remain in full force.
2. Amount of Surcharge
The Collector of Customs shall impose the surcharge in Section 2503 of the TCCP in accordance with the following:
a. For Misclassification
 Where the percentage difference in misclassification is ten per cent (10%) or more but not exceeding thirty per
cent (30%) the amount of surcharge shall be as follows:
i. When the percentage difference is ten per cent (10%) or more but not exceeding twenty per cent (20%), a
one time surcharge of the difference in customs duty shall be imposed. CHIScD
ii. When the percentage difference exceeds twenty per cent (20%) but not exceeding thirty per cent (30%) a
two times surcharge of the difference in customs duty shall be imposed.
b. For Undervaluation, Misdeclaration in Weight, Measurement or Quantity
 When the percentage difference in undervaluation/misdeclaration in weight, measurement or quantity is ten per
cent (10%) or more, but not exceeding thirty per cent (30%), a surcharge of two times of the difference in
customs duty shall be imposed.
 An undervaluation, misdeclaration in weight, measurement or quantity of more than thirty percent (30%) between
the value, weight, measurement or quantity declared in the entry, and the actual value, weight, measurement
or quantity shall constitute a prima facie evidence of fraud penalized through seizure proceedings under
Section 2530 of the TCCP."
3. Determination of Percentage Difference in Undervaluation, Misclassification and Misdeclaration
For purposes of determining the amount of surcharge due to undervaluation, misclassification and misdeclaration, the
computation of the percentage difference shall be in accordance with following: aCTHDA
a. Undervaluation
 The percentage difference in undervaluation shall be determined using this formula:
duty using valuation as found - duty using valuation as declared
–––––––––––––––––––––––––––––––––––
–––––––––––––––––
duty using valuation as found
b. Misclassification
 The percentage difference in misclassification shall be determined using this formula:
duty using classification as found - duty using classification as declared
––––––––––––––––––––––––––––––––––––––â
duty using classification as found
c. Misdeclaration in weight, measurement or quantity
 The percentage difference in misdeclaration shall be determined using this formula:
duty using weight, measurement or quantity as found - duty using weight, measurement or quantity as declared
–––––––––––––––––––––––––––––––––
–––––––––––––––––––––––––––––––––
–––––––––––
duty using weight, measurement or quantity as found
4. Mandatory Imposition of Surcharge
Imposition of surcharge under Section 2503, TCCP is mandatory except in following cases: caSDCA
a. For Misclassification
 When the entered tariff classification is based on an advance tariff classification ruling issued by the Tariff
Commission pursuant to its authority under Section 1313-a of the TCCP which had not been reversed by the
Secretary of Finance as of the time of the entry of such tariff classification, but which is subsequently reversed
by the Secretary of Finance at any time between the time the tariff classification was entered but before final
liquidation of the import.
b. For Errors, under certain circumstances
 When the undervaluation, misclassification, and misdeclaration in entry described under Section 2503 of the TCCP
is:
i. Discovered before any payments are made on the entry; and
ii. The result of either of the following:
a. Manifest clerical error made in an invoice or entry SaDICE
b. Error in return of weight, measure, or gauge, duly certified to under penalties of falsification or
perjury by the surveyor or examining official (when there are such officials at the port)
c. An error in the distribution of charges on invoices not involving any question of law, certified to under
penalties of falsification or perjury by the surveyor or examining official
5. Surcharges Not Subject to Compromise
The imposition of surcharge under Section 2503 of the TCCP, as amended, may not be subject of compromise under
Section 2316 of the TCCP. Surcharge properly imposed cannot be waived. Good faith on the part of the importer is not a valid
defense.
6. Effectivity
This Order shall take effect immediately upon publication in a newspaper of general circulation or Official Gazette and
three (3) copies deposited to the UP Law Center. DSATCI
(SGD.) JOHN P. SEVILLA
Commissioner
Approved by:
(SGD.) CESAR V. PURISIMA
Secretary of Finance
