CB FERDDY MARK SARDAN

EXCISE TAXES, LIQUIDATION OF

DUTY AND SURCHARGES
SUMMARY OF INCOTERMS
FORMULA
1)EXW = FOB/FCA - O/C
2)EXW = CFR/CPT - (O/C + FRT)
3)EXW = CIF/CIP - (O/C + INS +
FRT)

4)FAS= EXW + O/C

5)FOB = EXW + O/C
6)FOB = CFR - FRT
7)FOB = CIF - (INS + FRT)
INCOTERMS FORMULAS
8)FCA = EXW + O/C
9)FCA = CPT - FRT
10)FCA = CIP - (INS + FRT)

11)CFR = FOB + FRT

12)CFR = EXW + O/C + FRT

13)CFR = CIF - INS

INCOTERMS FORMULAS
14)CPT = FCA + FRT
15)CPT = EXW + O/C + FRT
16)CPT = CIP - INS

17)CIF = FOB + INS + FRT

18)CIF = EXW + O/C + INS + FRT
19)CIF = CFR + INS
INCOTERMS FORMULAS
20)CIP = FCA + INS + FRT

21)CIP = EXW + O/C + INS + FRT

22)CIP = CPT + INS

INCOTERMS FORMULAS
 23) DAP/DPU/DDP = EXW + Origin O/C + FRT + Dest. O/C

 24) DAP/DPU/DDP = FOB/FCA + FRT + Dest. O/C

 25) DAP/DPU/DDP = CFR/CPT + Dest. O/C

 Note:

1)Shipments by AIR/SEA –
use EXW, FCA and CPT
2)Shipments by SEA ONLY – use EXW, FOB and CFR
International Commercial Terms

 Defines seller’s and buyer’s

obligation to each other regarding an
import and export transaction

 It explains the division of costs and

risks between buyer and seller.
 GENERAL OBLIGATION:
SELLER BUYER
 Supplies goods  Pays for the
subject of sale agreed price
with commercial
invoice and other (when and
documents that how)
may be agreed
upon with the
buyer like
packing list, CO,
AWB or B/L
 SIGNIFICANCE AS TO WHEN AND
WHERE THE DELIVERY SHOULD BE
MADE
1. Risk is transferred from the seller to the buyer.
(loss, damage, deterioration)
2. Buyer assumes all expenses to bring the goods to
final destination depending on contract price which
is expressed in INCOTERMS 2010
• Most basic ex-works: ready for pick up at the sellers
premises.
• Most complete DDP: delivery is made by the seller to the
name place of destination ready for unloading at buyer’s
expense and risk
3. Except “C” terms: Point of transfer of risk different
from starting point buyer assumes costs
 The purpose of the Incoterm rules is to
reflect contemporary commercial practice
and to offer the parties the choice among:
 The seller’s minimum obligation only to make
the goods available for the buyer at the seller’s
premises (EXW)
 The seller’s extended obligation to hand over
the goods for carriage either to a carrier
nominated by the buyer (FAS, FCA, FOB), or to
a carrier chosen and paid for by the seller
(CFR, CPT) together with the insurance against
risks in transit (CIF, CIP)
 The seller’s maximum obligation to deliver the
goods at destination (DAT, DAP, DDP)
 EXW = COST OF GOODS
1. (EXW) Ex-Works named place of
delivery (origin)
Delivery : Seller’s Warehouse at Origin
Main Carriage : Freight Prepaid/Freight
Collect
Import: ExW-Malaysia factory
Export: ExW-Limay factory
 Ex works means that the seller
delivers when he places the
goods at the disposal of the
buyer at the seller’s premises or
another named place (i.e. works,
factory, warehouse, etc.) not
cleared for export and not loaded
on any collecting vehicle.
EXWORKS represents
the minimum obligation
for the seller, and the
buyer has to bear all
costs and risks involved
in taking the goods from
 However, if the parties wish the
seller to be responsible for the
loading of the goods on
departure and to bear the risks
and all the costs of such loading,
this should be made by adding
explicit wording to this effect in
the contract of sale
NOTE:
This term should not be used
when the buyer cannot carry
out export formalities directly
or indirectly. In such
circumstances, the FCA term
should be used, provided the
seller agrees that he will load
 FCA = EXW + OC
2. (FCA) Free Carrier named place of delivery (origin)
May be a carrier (main carrier, or another person)
for direct carrier or forwarder for consolidation
Delivery : Forwarder’s/ Carrier’s Warehouse
at Origin
Main Carriage : Freight Collect at
Destination
Mode of Transport : Multi-Modal
a) Import: FCA Korea
b) Export: FCA San Fernando
- Applicable to all types of cargo
Free Carrier means that
the seller delivers the
goods, cleared for
export, to the carrier
nominated by the buyer
at the named place.
 NOTE: Chosen place of
delivery has an impact on the
obligations loading and
unloading the goods at the
place. If delivery occurs at the
seller’s premises, the seller is
responsible for loading. If
delivery occurs at any other
 CPT = FCA + FRT
3. (CPT) CARRIAGE PAID TO named place of
destination
Delivery : Forwarder’s/ Carrier’s
Warehouse at Origin
Main Carriage : Freight Prepaid at
Origin
Mode of Transport : Multimodal
a) Import: CPT NAIA
b) Export: CPT India
- Applicable to all types of cargo
 Carriage Paid To means that the seller
delivers the goods to the carrier
nominated by him but the seller must in
addition pay the cost of carriage
necessary to bring the goods to the
named destination. This means that
the buyer bears all risks and any other
costs occurring after the goods have
been so delivered.
• Insurance is buyer’s responsibility
• BL must show “freight prepaid”
 CIP = FCA + INS + FRT
4. (CIP) Carriage and Insurance Paid to
named place of destination
Delivery : Forwarder’s/ Carrier’s
Warehouse at Origin
Main Carriage : Freight Prepaid
Mode of Transport : Multimodal
a) Import: CIP Manila
b) Export: CIP Shanghai
- Applicable to all types of cargo
 Carriage and Insurance paid to means that
the seller delivers the goods to the carrier
nominated by him but the seller must in
addition pay the cost of carriage necessary
to bring the goods to the named destination.
 This means that the buyer bears all the risks
and any additional costs occurring after the
goods have been so delivered. However , in
CIP the seller also has the to procure
insurance against the buyer’s risk of loss of
or damage to the goods during the carriage
 FOB = EXW + OC
5. (FOB) Free On Board named port of
shipment (origin)

Delivery : On Board carrying Vessel at

Origin
Main Carriage : Freight Collect at Destination
Mode of Transportation : Sea only

Import: FOB Port of New South Wales

Export : FOB Davao
 Free On Board means that the
seller delivers the goods pass the
shop’s rail at the named port of
shipment. This means that the
buyer has to bear all costs and
risks of loss or damage to the
goods from that point. The term
FOB requires the seller to clear
the goods for export.
 FAS = EXW + OC
6. (FAS) Free Alongside Ship
named port of shipment (origin)
Delivery : Alongside Vessel at the
Pier or Wharf at
Origin
Main Carriage : Freight Collect
Mode of Transport : Sea Only

Import: FAS, Port of New South

 Free Alongside Ship means that the seller
delivers when the goods are placed
alongside the vessel at the named port of
shipment. This means that the buyer has to
bear all costs and risks of loss or damage to
the goods from that moment, the FAS term
requires the seller to clear the goods for
export.
 However id the parties wish the buyer to
clear the goods for export , this should be
made clear by adding explicit wording to this
 CFR = FOB + FRT
7. (CFR) Cost and Freight named port of
destination

Delivery : On Board Carrying Vessel at

Origin
Main Carriage : Freight Prepaid a Origin
Mode of Transport : By Sea Only

Import: CFR, Sual

Export: CFR, Hong Kong
 Cost and Freight means that the
seller delivers when the goods pass
the ship’s rail in port of shipment. The
seller must pay the costs and freight
necessary to bring the goods to the
named port of destination but the risk
of loss or damage to the goods, as
well as any additional costs due to
events occurring after the time of
delivery, are transferred from the
seller to the buyer.
 CIF = FOB + FRT + INS
8. (CIF) Cost, Insurance, Freight named port of
destination

Delivery : On Board Carrying Vessel at Origin

Main Carriage : Freight Prepaid at Origin
Mode of Transportation: By Sea Only

Import: CIF, Sual

Export : CIF, Hong Kong
 Cost, Insurance and Freight means
that the seller delivers when the
goods pass the ship’s rail in port of
shipment. The seller must pay the
costs and freight necessary to bring
the goods to the named port of
destination but the risk of loss or
damage to the goods, as well as any
additional costs due to events
occurring after the time of delivery,
are transferred from the seller to the
 CIF the seller also has to procure marine
insurance against the buyer’s risk of loss
of or damage to the goods during the
carriage.
 Consequently, the seller contracts for
insurance and pays the insurance
premium. The buyer should note that
under CIF term, the seller is required to
obtain insurance only on minimum cover.
Should the buyer wish to have the
protection of greater cover, he would
either need to agree as much expressly
with the seller or to make his own extra
DPU = FCA/FOB + FRT + Dest. OC
 9. (DAT) Delivered at Terminal named terminal at port of
Incoterms DPU: Delivered at Place Unloaded
 Named Place Required: Place of Destination, Where Seller
Unloads
Applies to:
 Delivered at Place Unloaded (DPU) (formerly referred to as DAT for
“Delivered at Terminal” requires the seller to deliver the goods at
the disposal of the buyer after they’ve been unloaded from the
arriving means of transport.
 DPU is the only Incoterms rule that requires the seller to unload
goods at the place of destination.
 DPU can apply to any—and more than one—mode of transport.
The buyer and seller should specify and agree upon a named place
of destination.
 DPU requires the seller to clear goods for export, where applicable,
without any obligation to clear the goods for import, pay import duty
 Sellerdelivers the goods, once
unloaded from the arriving means
of transport, are placed at the
disposal of the buyer at a named
terminal at the named port or
place of destination.

“Terminal” includes quay, warehouse,

container yard or road or air terminal.
 DAP = FCA/FOB + FRT + OC
10. (DAP) Delivered at Place named
Place of Destination

Delivery : Buyer’s / Importers designated

Place/Warehouse
Main Carriage : Freight Prepaid at Origin
Mode of Transport : Multimodal

Import: DAP, Tibungco, Davao

Export : DAP, Nagoya, Japan
Seller delivers the goods
when they are placed at
the disposal of the buyer
on the arriving means of
transport ready for
unloading at the named
place of destination.
Parties are advised to
specify as clearly as
possible the point within
the agreed place of
destination, because
risks transfer at this point
from seller to buyer.
 DDP = FCA/FOB + FRT + DTOC
11. (DDP) Delivery Duty Paid named place of
Destination
• Delivery : Place generally address of owner or
factory of the importer but may also be the
importer’s buyer in the country of destination.
Delivery is made when goods are transported to
place of delivery ready for unloading
• Main Carriage : Freight Prepaid
a) Import: DDP Sta. Rosa, Laguna (full address if
possible)
b) Export: DDP Cairo, Egypt
 Delivery Duty Paid means that the seller
delivers the goods to the buyer, cleared
for import, and not unloaded from any
arriving means of transport at the named
place of destination. The seller has to
bear all the costs and risks involved in
bringing the goods thereto including,
where applicable, any “duty” (which term
includes the responsibility for and the risk
of carrying out of customs formalities and
the payment of formalities, customs
duties, taxes and other charges) for import
in the country of destination.
While EXW term represents
the minimum obligation for
the seller.
DDP represents the
maximum obligation. This
term should not be used if
the seller is unable directly
or indirectly to obtain the
SEA AND INLAND WATERWAYS
INTRODUCTION TO DUTIABLE VALUE
 Unknown to many stakeholders, when member
countries signed the Agreement on Customs
Valuation (now known as the WTO Valuation
System) these signatories were given the option
whether to include or not the freight charges,
insurance premium and other charges associated
with transport of goods from the exporting country
to the importing country to determine the dutiable
value of the imported article.
 Needless to say, countries were made to choose
whether to use FOB or CIF Value in the
determination of dutiable value.
 The Philippines., as expected adopted
the inclusion of freight charges (sea or
airfreight), insurance premium and other
charges (CIF) in the computation of
dutiable value. Congress eventually
enacted R.A. 8181, which was later
amended by R.A. 9135 and the Bureau of
Customs caused the implementation of
CAO No. 5-2001 as the implementing
order to consolidate the regulations
concerning the WTO Valuation System
and at the same time implemented the
 In actual practice, the term Customs Value or
FOB Value or the theoretical Price Actually
Paid or Payable (PAPP) depends on the given
data per importation. Technically, the FOB
value does not include freight, insurance and
other charges, however pursuant to existing
customs regulations like CMO No. 43-93, etc.
which remain enforceable up to this date, the
other dutiable charges are deemed included in
the FOB invoice value when not stated
separately in the covering invoice. Under this
particular situation, the FOB maybe adopted as
the Customs Value or PAPP subject to certain
adjustments, when applicable, and less
 TheBureau of Customs governs the
manner by which customs brokers
make their initial “self assessment”
of customs duties and taxes in the
import entry. Declarations maybe
accepted or adjusted accordingly in
accordance with the guidelines
governing customs valuation.
I. ELEMENTS OF DUTIABLE VALUE
BASIS
A. TOTAL CUSTOMS VALUE FOB Value
(Boxes 22 & 42 SAD) (Incoterms 2020)

B. DUTIABLE FREIGHT By Sea / Air

(Box 9a, SAD) (CMO 22-2007)

C. DUTIABLE INSURANCE (CMO 22-2007)

(Box 9b, SAD)

D. DUTIABLE OTHER CHARGES Mandatory Additions

(Box 9c, SAD) (CAO 4-2004, Sec II. B3
Frt/Ins not included)

TOTAL DUTIABLE VALUE (A+B+C+D) = TV (PAPP WITH ADJUSTMENTS, Per Sec 700s, CMTA and Sec II. B2 of
CAO 4-2004)

63
A. DUTIABLE FREIGHT
(Box 9A, SAD – Refers to the charges paid for the transport of the cargo)

1) BY SEA (CMO 22-2007, SECTION 3.2)

a) Shall be the freight charges indicated in the Air Waybill or Bill of Lading.

b) If no freight charge is indicated in the bill of lading and/or invoice, then the
declared freight charge on the IEIRD/SAD may be considered, provided
that the said amount is not lower than 70% of either the IATA Rate or
Conference Rate for airfreight shipment or sea freight shipment,
respectively, the same shall be subject to further verification by the BOC.

c) If the freight charge is lower than 70% of either the IATA or Conference
Rate, the importer must present a Certification from the
Carrier/Forwarder and or Official Receipt as to the actual freight
charges paid.

64
d) In case of bulk shipment, the certified copy of Charter
Party document or Freight Contract, and Stowage Plan
shall be presented to show the actual freight charges, all
of which shall be attached to the working copy of the
Entry.

e) For bulk/general cargo shipments made by the National

Food Authority (NFA), the actual freight charge may be
accepted provided that it is not lower than 10% of the
CFR value of the commodity.

f) In case of refrigerated shipment, a certification from

shipping lines to the freight paid must be presented for
Customs verification.

65
In the absence of a certification from the shipping lines, the following freight
charges may be used as reference:

Shipments coming from China should not be lower than:

PORT OF ORIGIN 1x20’ 1x40’
Guangzhou $ 1,300.00 $ 1,700.00
Xiamen $ 1,500.00 $ 1,800.00
Shanghai $ 1,800.00 $ 3,200.00
Dalian $ 1,350.00 $ 1,680.00

Shipments coming from:

Hongkong $ 800.00 $ 1,600.00
Singapore $ 900.00 (BAF $70) $ 1,850.00 (BAF $140)
Los Angeles, USA $ 3,050.00 $ 6,100.00

66
DUTIABLE FREIGHT
(SUMMARY)
 INVOICE
 BILL OF LADING/ AIRWAY BILL OF LADING
 INVOICE or BL/AWB (Whichever is Higher)
 IF NO INVOICE OR BILL OF LADING FREIGHT
 SAD WITH CERTIFICATION AND OR
 AISL/AIATA/GCR
 SAD or 70% of AISL/AISL/IATA/GCR (Whichever is Higher)
 BULK SHIPMENT
 Certified True Copy of Charter Part Documents/Freight Contract/BBA and
Stowage Plan attached with SAD
 GENERAL CARGO BY NFA
 Actual or 10% of CFR Whichever is Higher
 REEFER (Refrigerated Containers)
 Actual with Certificate from Shipping Lines
 If NO CERTIFICATE: Actual or Arbitrary Rate Whichever is Higher

67
B) DUTIABLE INSURANCE (CMO 22-2007)
(Box 9b, SAD – Refers to Cost of Insurance taken to
cover the cargo)

Sec. 3.1.

a) If the terms of sale are CIF/CIP, the amount of the

actual insurance premium shall be the assessment.

b) If the amount is lower than 2% of the FOB value for

general cargo and 4% of the FOB value for
dangerous/inflammable goods, the same shall be
subject to further verification by the BOC.

68
 Sec. 3.1.2.

a) If a shipment is covered by a local insurance, the amount

of insurance premium actually paid may be accepted for
assessment purposes.

b.) If the local insurance premium is lower than 2% of the

FOB value for general cargo to 4% of the FOB value for
dangerous/ inflammable goods, then a certification from the
insurance company indicating actual premium paid shall be
presented to the BOC together with the original official
receipt. A copy of that O.R shall be certified or a true copy by
the concerned Customs Appraiser who shall attach the same
to the original working entry.

69
c.) Importation not covered by any local insurance, the
amount of insurance premium, declared in the Entry may
be accepted, provided that if such amount is lower than
2% and 4% of the FOB value for general and dangerous
cargoes respectively, the same shall be subject to
verification by the BOC.

d.) For direct importation by the government, the original

copy of the Marine Open policy issued by the GSIS
together with true copy shall be presented to the BOC
( Attn: Import Assessment Service) certified by the latter.
The Bureau shall apply the actual GSIS insurance
premium rate.

If insured by a domestic surety company other than

GSIS, apply b)and if not covered by a local70
 DUTIABLE INSURANCE
(SUMMARY)
• CIF/CIP
– Invoice
– 2% FOB/FCA (General Cargo) / 4% FOB/FCA (Dangerous/Inflammable Goods,
Chemicals and other High Risk Cargoes)
• NON CIF/CIP
– Local Insurance Premium with OR and Certificate from Shipping Lines
– Local Insurance Premium or 2% FB/FCA (general Cargo) / 4% FOB/FCA
(Dangerous/Inflammable Goods, Chemicals and other High Risk Cargoes)
Whichever is Higher
• NON LIP
– SAD or 2% FOB/FCA (General Cargo) / 4% FOB/FCA (Dangerous/Inflammable
Goods, Chemicals and other High Risk Cargoes) Whichever is Higher
• GOVERNMENT
– Original Copy of Marine Open Policy by GSIS attached to SAD

-END-
71
EXERCISE NO. 1
For a cost and freight value of US$ 9,064.00, while other charges
were computed at 3% of ex works and freight is 10% of free on
board, determine:

 Ex Works Value
a. $9,000.00
b. $8,500.00
c. $8,000.00
d. $9,500.00

 FOB Value
a. $8,240.00
b. $8,420.00
c. $8,024.00
d. $8,042.00
 SOLUTION NO. 1
From formula CFR = EXW + O/C + FRT
CFR = EXW + 0.03 EXW + 0.10 FOB
CFR = 1.03 EXW + 0.10 FOB

But: FOB = EXW + O/C

FOB = EXW + 0.03 EXW
FOB = 1.03 EXW
Thus: CFR = 1.03 EXW + (0.10 x 1.03 EXW)
CFR = 1.03 EXW + 0.103 EXW
CFR = 1.133 EXW

Substitute values: $ 9,064.00 = 1.133 EXW

EXW = $ 8,000.00

From given: O/C = 0.03 x $ 8,000.00 = $ 240.00

Thus:
FOB = EXW + O/C = $ 8,000.00 + $ 240.00
FOB = $ 8,240.00
EXERCISE NO. 2
A shipment of CIF value amounting to US$ 6,650.00 paid an
insurance premium amounting to $ 150.00. If freight per bill of
lading indicated at $ 500.00, determine the following:

 FOB Value
a. $6,000.00
b. $5,800.00
c. $6,300.00
d. $5,900.00

 EXW if O/C is $ 50.00

a. $5,590.00
b. $5,950.00
c. $5,095.00
d. $5,059.00
 SOLUTION NO. 2
From formula FOB = CIF – (INS + FRT)
FOB = $ 6,650.00 – ($ 150.00 +
500.00)
FOB = $ 6,650.00 – 650.00
FOB = $ 6,000.00

EXW = FOB – O/C

Substitute EXW = $ 6,000.00 - $ 50.00

EXW = $ 5,950.00
EXERCISE NO. 3
A shipment with an FOB value of $ 4,000.00 incurred a combined
amount of $4,200.00 for ex works and freight. If the other
charges paid for this shipment amounted to $ 50.00, determine
the following:
 EXW value
a. $3,950.00
b. $3,590.00
c. $5,390.00
d. $5,930.00

 CFR value
a. $4,250.00
b. $4,520.00
c. $4,025.00
d. $4,052.00
 SOLUTION NO. 3
From formula EXW = FOB – O/C
EXW = $ 4,000.00 - $ 50.00
EXW = $ 3,950.00

From given EXW + FRT = $ 4,200.00

$ 3,950.00 + FRT = $ 4,200.00
FRT = $ 4,200.00 - $ 3,950.00
= $ 250.00
CFR = FOB + FRT
CFR = $ 4,000.00 + $ 250.00
= $ 4,250.00
EXERCISE NO. 4
5x20’ reefer van STC: various poultry meat arrived
at the South Harbor from Singapore with the
total CIF value of $15,000.00. No certification,
as to the freight paid, was secured from
shipping line but invoice shows freight charge of
$900.00 per van, which excludes $70.00 fuel
adjustment when compared with BOC arbitrary
freight. Local insurance premium paid
amounted to P9,675.00 duly covered by
certification & official receipt issued by a
domestic insurance company. Based on
exchange rate of P45.00/$1.00, compute the
following:
 Dutiable freight charges per CMO 22-2007
a) $4,000.00 b) $4,500.00 c) $4,850.00 d) $5,000.00

 FOB value per 20’ van

a) $2,000.00 b) $2,030.00 c) $2,100.00 d) $2,057.00

 Dutiable insurance per CMO 22-2007

a) $400.00 b) $206.00 c) $420.00 d) $215.00

 Total Dutiable Value in Php.

a) P684,000.00 b) P685,135.00
b) c) P684,675.00 d) P690,750.00
SOLUTION NO. 4
Given: 5x20 reefer CIF = $15,000.00 FRT/INV = $900.00/20’
INS = P9,675.00 (w/cert) ER = P45.00

Compute for FRTd

FRTad = $900.00 x 5 = $4,500.00

per CMO 22-2007 Singapore: $970.00 per 20FCL ($900.00 + $70.00)
FRTd = $970.00 x 5 = $4,850.00

FOB = CIF – FRT – INS

FOB = $15,000.00 - $4,500.00 – (P9,675.00/45) = $10,285.00 / 5 = $2,057.00 per
20’ van

INSd = P9,675.00/45 = $215.00

DV = CIF = FOB + FRTd + INSd

DV = $10,285 + $4,850.00 + $215.00 = $15,350.00 x 45 = P690,750.00