q<, et al. vs. unde r Entry No. 108751-74 and classified under Tar iff Heading No. 29. 35 at 10 %, et al.

DECISION -

CTA CASE NO.

274~ - 2 - of the Tariff and Customs Code , and under an Order of Payment , the customs duty , sales tax and Import Wharfage tax in t he total amoun t of ~24,293.00 was paid by petitioner as s hown by Central Bank Official Receipt No . 279549.

After payment of the afo r esaid taxes and Deli- very Permit No . 376089 had been i ssued , however, the Customs appraiser re-classified the shipment of Ethoxyquin Powder and made· it fa ll under Tariff Beading No. 3,8 .19 at 5J0% ad valort~·m .

On the basis of the re- classification of the shipment in question, additional import duty of ~59,021.00 and advance sales tax of ~ 3,68 9.00 were assessed a nd imposed thereon.

Petitioner paid under prote·st said amount on March 12, 197~ under Official Receipt No. 60286 .

(Exhs . "A" and "B" , pp. 7 & 8 respectively, CTA rec .)

On March 24, 1975, petitioner wrote the Collector

of Customs of the Port of Manila a

l ette~ r p1rotestin9J the irnpos.i tion of additional import duty in the sum of ~5>9,021.00 and advance sale s tax of P3,689 .00 on said s:hipment (Exh . "C", pp. 9-11, C'I'A rec:.) whic:h letter was alle91ec.U y r.e'ceived by the: Co1lector of Cu s toms: on March 2 5 , 19 7 5> .

The Collector of Customs rendered a decision on May 20, 1975! .dir~missing the: protest of petitioner , a copy o f wh ic:h was alle:gedly ~erved on pe:t .i tioner on

- ), - June· 2, 19 7 S. (E:-r.h . "D", pp. 12-14, CTA rec:.) On appeal made by petitione1, the Commissioner of Customs r endered a deci s ion on September 4,, 197:» (Exh . "D-2" , pp . 16·-17, CTA re:c:.) af f irming that of the Collector of Customs and was r eceived by petitioner on September 8 , l97 5l .

Hence, this appeal to this Court.

The sole issue to be resolved is whether or not subject ethoxyquin powder is. a compound fal ling, unde .lf Tariff He ading No. 29.3,0, s ubj ec t t o d u ty at 10 % ad valorem , or a mixture falling under Tariff Heading No . 38.19B, at SO% ~d valorem.

Petitioner claims that subj ect importation is a c:ompound since the re: wa s; no c:h e,mic:a l blending in the mixtur e of vermiculite and ethoxyquin liquid. It is asserted that while there is here a physical c hange , the compound however remained unchanged. R spondent , on the o t her hand, ma i ntain s the opposite view.

He

insists that ethoxyquin powder is a mixture a nd should be c~assified unde r Tariff He adi ng No. l8.19B at ~ 0% ad valorem as "chemical products xxx not else\'lhe·re speGified or included . "

We find the view of r espondent wel l ta ken . The noun mixture is defined as that which is mixed or mingled o r a mass or c ompound c onsisting of different i ngr edients blende~d togethe·r. ( 2 7 ~lords and Phr a£?-es 26~

DECISION -

CTA CASE NO.

274~ - 4 - 409 ) ~ Ethoxyquin powder, the shipme nt in question, is compos ed of· a mixture of ethoxyquin a nd mineral powder or vermic ulite as diluent, a nd, hence, s hould be classi- fied under Ta r iff Heading No. 38.198 at 50% ad valorem "as chem i cal p.roduc·ts xxx.: no t elsewhe r e speci fied or included".

Ethoxyquin in its pure state i s a viscous liquid and is a pure c:hemical compou nd, while· ethoxyquin powder is. not a pure· chemical compound. That e thoxyquin powder is a mixture was admitted by petitioner's own witness, Oscar Enriquez, who testified (t.s.n., Ma y 10, 1977, pp.27-29 ) _on cros.s. e~x .arni n ation thus- Q.

Just one or two re·cr.oss.-examination questions.

Now , you admit, Mr.

Wi tne'ss, that there was a physical change when this plain ethoxyquin and ve:rmic.uli te powder were mix.ed tog:ethe·r, is i t no_t?

A.

The re was ·; a physical change of the ethox:yquin liquid.

Q.

And thi s is due to the mix t ure of the plain ethoxyquin a nd vermiculite powder, is it no~?

A.

Yes .• Q.

And , in fact, as pointed out by your c ounse l, there was extracted certain substance which you terme d as plain ethoxyquin , and this clearly s hows that ther e was a previous mixture so that yqu were able to extract this ethoxyquin from the etho· yquin powder , is it not?

A.

Yes.

26 l>

- s - '-.

Q.

This plain ethoxyquin includes, claimed to be i mported separately, is a chemically separate organic corn- pound, is it no~?

A.

Vermicul i te powder.

Q.

It is compound?

A.

It is an inert material.

Q.

It is a cornpoun~?

A.

That is a compound.

Q.

As compound, inert compound.

And when these two compounds were mixed together you formed a mixture, is it not?

You created, or the re- sult ~hereof is a mixture?

A.

Mixture.

The addition of the diluent is not for convenience and ease in handling, nor acts as a preservative or stabilizer, but rc;ther for ease in the manufacturing process in the preservation of animal feed.

(Exh. I, Resp . p.3.0, Customs r ec . )

We cannot adhere to petitioner's gratuitous state- rnent that there was no chemical blending in the mixture of vermiculite and ethoxyquin liquid. Precisely, the purpose in mixing ethoxyqu in 1 iqu i d and mineral pm-1der: or vermiculite as dilue nt i s foE the easy mixing and even distribution of the powder with the ?nirnal feed. Eve'n petitioner himse lf admits that the reason r1>1hy it imports ethoxyquin in powder form is that it is easier to mix and to ev~~ distribute the powder wi t h the

2C 'I

I

- & - animal feed (Memo of Pet., p.

1~3, CTA rec. ) ~thereby bolstering .the stand of respondent that it is not a pure chemical compound.

Furthermore, petitioner's witness Oscar Enriquez, not only admitted one~ but on several instances (t.s.n., ibid, pp. 17 ·& 20, respectively.) .on c .ross. examination, that ethoxyquin powder is a mixture. Q.

No.

Yo u mentioned a while ago , Mr. Witness that there ar e three types, or three classification of substances, that is, e lement, compound, and mixture .

This etho- xyquin powder which you import how would you classi fy that?

Is

it an element, compound, o~ a mixtur e?

A.

That is a misture?

XXX

XXX.

XXX

Q.

Is it not true that there are three clas- sifications of matter, and the substances mainly are:

element, compound, and mixture?

A.

Yes .

Q.

And yet you contend that the mixture can be compound and vice versa?

A.

Well, I was saying - to the best of knowledge; yes.

Q.

But you admit that this ethoxyquin powder that wa s imported by your company into the Philippines in the state that it was brought in is a mixture, is it not?

A.

Ye s .

Q.

Because it is a co~bination of etho- xyquin in its plain form and vermiculite which is another substance intimately jumbled to- ge t her, is it no~?

26d

DECISION -

CTA CASE NO. 27 4 6 - 7 - A.

Yes .

Moreover , i n a laborator y analysis of ethoxyquin imported by Sarmi n to Agricultural and Development Corporation , it has been s hown that said chemica l ha s been class ifie d and subject to duty unde r Tariff !leading No . 38 . 19-B at the rate of 50% a d valor em . (Exh. 2 , Resp . , p. 3 0 , Cus toms r ec .) IN VIEW OF THE FOREGOING , the decision appealed from is hereby affirmed.

With costs a g,a i11st petitio :1er. SO ORDEHED.

Quezon City , October '> , 1983. / \.--{2-c"'~

COt~ANTE -"

~/--;~AQU I N / As soc ia te Judge

WE CONCUR:

a..,~mv AMANTE ~z~;-·

Presiding Judge tO~L~

. ~ 7 Pr~. i&YES 1/ Associate J udg:e

2GJ