1. The Core Reason: BOI Regulations and Duty Exemptions

• BOI-Promoted Factories: Companies operating under BOI promotion receive significant privileges, including exemption on import duties for raw materials, components, and machinery used for exported products.
• The Conditional Nature: This duty exemption is conditional. The imported materials must be used in the production of exported goods. They are not meant to be sold domestically in their original or waste form without settling the deferred duties.
• PCBA Scrap as “Controlled Waste”: Defective or obsolete PCBAs are considered “controlled waste” or “rejected materials.” They still contain the imported components (chips, capacitors, etc.) that entered the country duty-free. Simply throwing them away or selling them without oversight would be a breach of the BOI contract and customs laws.

2. Why a BOI-Authorized Scrap Inspector is Mandatory

The inspector acts as an independent, third-party auditor to ensure compliance and prevent revenue loss for the government. The certification process involves:

• Verification of Origin: Confirming the scrap genuinely came from the BOI-promoted company’s production line.
• Quantity and Weight Audit: Precisely measuring the amount of scrap to be destroyed or processed. This quantifies the material that originally entered duty-free.
• Destruction or Processing Oversight: The inspector must witness and certify the destruction process. For PCBAs, this is often shredding/crushing to a specific size that renders them non-functional and irreparable. This step is crucial—it transforms the “controlled waste” into “industrial waste” or raw material for recycling, nullifying its original duty-liable status.
• Prevention of Leakage: The core purpose is to ensure these duty-exempt materials do not leak into the local market, which would disadvantage non-BOI companies that paid full duties and disrupt the local market.

Without this certificate, the BOI company is in violation of its agreement, risking:

• Heavy fines and penalties.
• Loss of BOI privileges.
• Back payment of import duties with interest.
• Legal action from the Customs Department.

3. The Critical Role of the Scrap Certificate

The document provided by the inspector is not just a receipt; it is a legal document that serves as:

• Proof of Compliance: For the BOI company to show to the BOI and Customs Department during audits.
• Release from Liability: Once certified as destroyed, the company’s obligation for those specific materials is cleared.
• Chain of Custody Record: It documents the transfer from factory to destruction/recycling vendor under official supervision.