In support of the Gintong Ani Program and other related programs of the Department of Agriculture (DA) geared toward increased food production and achieving food security, the import duty incentive (IDI) for imported fertilizer has been approved. The Department of Finance through Secretary Roberto F. de Ocampo in a letter dated 25 March 1997, approved the release of fertilizer shipments from the Bureau of Customs without prepayment of duties and other charges pursuant to Sec. 12 of the General Appropriations Act of 1996 otherwise known as R.A. 8174 in relation to DOF-DBM Joint Circular No. 2-91. In connection therewith, the following rules, guidelines and procedures are hereby promulgated:

I. Definition of Terms

A. Fertilizer - Any substance, solid or liquid, inorganic or organic, natural or synthetic, single or a combination of materials that is applied to the soil or on the plant to provide one or more of the essential elements to improve plant nutrition, growth yield or quality or for producing a chemical change in the soil which will contribute to the improvement of plant nutrition or growth. Fertilizers are classified into two (2) general types, namely: inorganic and organic.

Fertilizer grade - The grade of a fertilizer is the nutrient content expressed in weight percentage in N P2O5 and K2O in that order. In most cases, the grade when used for commercial purposes, include only those amount of nutrient found by prescribed analytical procedures, thereby excluding any nutrient present in a form deemed to be unavailable for plant nutrition.

1.  Inorganic Fertilizer - Any fertilizer product which property is determined predominantly by its content of mineral matters or synthetic chemical compounds. It also refers to any chemical compound which is in solid or liquid form and contains considerable amounts of at least one of the essential plant nutrients, such as nitrogen, phosphorous, potassium, secondary macronutrients and micronutrients.

a. Conventional grades - shall include all inorganic fertilizers in solid or liquid form which are highly soluble, proven effective for specific crops and which have full registration with FPA.

b. New grades - shall include newly formulated or imported fertilizer registered with FPA.

c. Specialty grades - shall include finished products recommended to overcome a specific problem or supply the nutrient need of a specific type of crops.

2.  Organic Fertilizer - Any product of plant and/or animal origin that has undergone decomposition through biological, chemical and/or any other process as long as the original materials are no longer recognizable, free from plant or animal pathogens, soil-like in texture, contains not less than 20% organic matter (o.m.) in oven-dry basis and can supply nutrients to the plants. All other materials that fall short of these requirements shall be classified as either soil conditioners or amendments whichever is applicable.

a. Pure - decomposed plant or animal materials to which decomposing activators may have been added to hasten the process of decomposition and to which no chemical or inorganic fertilizer material has been added to finished product to affect the nutrient content.

b. Fortified/Enriched - an organic fertilizer material which had been enriched with microbial inoculants, hormones and/or chemical additives to increase its nutrient content.

B. Soil Conditioner/Soil Amendment - Any organic or inorganic nutrient that is applied to the soil to modify certain soil physical properties such as structure, moisture retaining capacity, shrinking and swelling capacity or resistivity to crusting or to improve soil chemical, and biological conditions. Strictly, a fertilizer is also an amendment but the term is more commonly used for materials applied for their fertilizing value.

C. Raw Materials - Any organic or inorganic material used in the production of intermediate or finished fertilizer products.

D. Plant Growth Regulatory (Promoter) - Any organic or inorganic compound, natural or synthetic, which in low concentration promotes or modifies any physiological process in plants.

II. Coverage

The import duty incentive for imported fertilizer shall cover finished fertilizer, raw materials, intermediates and additives that are used in the production of fertilizer intended to support the Gintong Ani Program and other related programs of the Department of Agriculture and are geared toward increased food production and achieve food security.

III. Exception and Qualification

As agreed between DOF and DA/FPA, the following fertilizer grades are not covered under IDI scheme:

a. Locally produced grades in adequate quantity, of good quality and at a price competitive to the world market;

1) 14-14-14
2) 16-20-0
3) 18-46-0

b.  Other grades that are equivalent and/or which may compete with the locally produced 14-14-14, 16-20-0, and 18-46-0.

IV. Procedures for Availment

A. All import documents shall indicate DA as the consignee for the account of the specific fertilizer importer.

B. All applications for coverage under the incentives shall be filed with the Fertilizer and Pesticide Authority (FPA). The request shall be supported by a true or certified copy of:

1. Bill of Lading;
2. Commercial Invoice;
3. Packing List; and
4. Clear copy of Bureau of Customs Import Entry Declaration indicating the amount of duty and other details on the respective shipment.

C. After evaluation by FPA, the corresponding DOF endorsement, Certificate of Official Importation and Certificate of Undertaking shall be prepared and transmitted by the officially designated FPA Liaison Officer to DA for consideration and approval of DA Secretary Escudero, Undersecretary Panganiban and additional designated signatory. This will then be forwarded to the DOF Mabuhay Lane for its final approval and endorsement to the Bureau of Customs.

D. Release of documents, for endorsement and final approval by DOF, shall only be made upon payment of the corresponding processing fees to FPA.

V. Additional Requirements

For effective and efficient control and monitoring purposes, all companies availing of the incentives are required, as a condition for the approval of application for coverage under the scheme, to submit to FPA, the following information:

1. All applications for availment of the incentive shall categorically specify whether the commodity being imported shall be used as raw material or for direct trading;

2. Monthly report of sales, importation, production (if applicable), stock inventory and ex-warehouse price of their fertilizer products;

3. Semestral liquidation report of all raw material imports, which availed of the incentives, utilized by local manufacturers; and

4. Periodic (quarterly, semestral, annual) projection of fertilizer importation.

It is understood that the final approval for the availment of the import duty incentive rests solely on the Department of Finance (DOF) such that, in the event of denial of a particular application and for whatever reason, DOF refused to favorably endorse the shipment to the Bureau of Customs, the amount of duties due, therefore, shall be borne by the concerned importer.

VI. Effectivity

All shipments which arrived after 25 March 1997, based on the DOF letter dated 25 March 1997, shall be eligible for coverage under the Import Duty Incentive scheme pursuant to the automatic appropriations provisions of Sec. 12 of the General Appropriations Act of 1996 otherwise known as R.A. 8174.

This Order, which supersedes all other issuances inconsistent with the provisions herewith, takes effect immediately.

Adopted: 14 July 1997

(SGD.) SALVADOR H. ESCUDERO III
Secretary