CTA Case No. 2828

DECISION -

- 2 - 2.

Petitioner opened a l ett e r of credit No. F-4702-73 to cover t he cos ts of the said importations . 3.

On March 6, 1974, the General Electric ~o. finally sold to the petitioner t he above import ed items p e r its invoice No. 82735 for US $18•'64 8 54 o r at the price of $0 9 08 per piece. 4 .

On March 14, 1974, the Consulate General of the Philippines in New York issued consular in- voice No. 48023 for the aforesaid imported goods. ·. s.

The above imported goods arrived at the port of Manila via S/S

11Trade 16W-" Trade V/Rafael

Semmes" unde r bill of lading No. 993-328720 on March 31, ~974.

6.

That on Apri l 1, 1974• petitioner filed with t he Collector of Customs a request for value/ classification No. 00011216 for t he approval of the unit price the c orresponding Home Consumption Value (HCV) for duty value purposes.

7 .

That the above request was denied and the imported goods were re-appraised at us $1.35 per piece as the Home Consumption Value, allegedly based on the alert notice received from the Finance Attache abroad.

8 That on April 30, 1974 9 petitioDer fi led Import Entry & Internal Revenue Declaration No. -r; ' :

0103-196 under Entry No . 38051/74 for the above 182

DECISION

CTA CASE NO . 2828 - 3 - imported goods at the alerted price of $1~35 per piece with the tota l DUTY AND TAX AMOUNTING TO 9.

The petitione r paid this tax amounting to P67.525. 00 under protest on May 7• 1974 as evidenced by Customs Order of Payment No. 298158 and Central Bank Official Re ceipt No. 313104 . 10.

That beca use of the re-appraisal of the unit price of the impqFted items from $0 .908 to $1.35. per piece allegedly bas ed o n the alert noti ce by t he Finance Attache• petitioner was made to pay an a dditional duty of Pl5.657.00 and additional ad- vance sales tax of P5.526.00 or a total duty and tax ' 11.

The petitioner filed a formal protest with the Collector of Customs on May 17• 1974 agains t the aforesaid re-app~sal of the i mported goods. who on October 16. 1974• without conducting any hearing dis - missed the a foresaid protest allegedly f o r lack of merit.

12.

On November 20. 1974• the petitioner appealed the decision of the Collector of Cust oms to the Honorable Commissioner of Customs. who. on July 30, 1978 issued an order affi rming the d e cision of the Collector o f Cust oms .

This d ecision of the Honorable Commissioner of Customs is now the subject 183

DECISION -

CTA CASE NO . 2828 - 4 - o f this p etitione 13.

In its answer to t he petition, r espondent interpos ed the d efense t hat t he duty that mus t be paid by petitioner shoul d be based on the "Alert Notice" sent by the Phil ippine Commercial Attache. Howev e r. respondent fai led to present in the trial of this case any alert notice.

The only i ssue posed f o r resolution in t h e instant appeal is the determi nation of the basis of the dutiable v a l ue of the shipment of GE s ealed beam lamps f o r purpos e s of the assessme nt a nd col- • lection of duties and t axes due thereon. The parties a r e not in dispute on the compu- tati on of the customs duty and internal revenue tax (advance sales tax) payable by, or t he amount r efund- able to, petitioner as the case may b e . As stated earlie r, because of the r e-appr a i sal of the unit price of the i mported item f r om US$0 . 908 to US$1 .35 per p iece based on an alleged alert notice from the Philippine finance attache at San Francisco, California, petitione r was made to pay by the Bur eau of Customs an additional customs duty of ~15.657.00 arid additional advance sales tax o f ~5,526 . 00.

The applic2ble p rovision of law on •the deter- mination of the basis of the dutiable value of an i mporte d ar-t i cle is Section 201 of t he Tariff and 184

- 5 - Customs Code, as amended ey_Presidential Decree No . 34 ~ now Section 20 1 also of Presidential Decree No . 1464 otherwise known as the 11Tariff and Customs Code of 1978", which states that:

• Sec. 201.

Basis of Dutiable Value.- The dutiable value o f an imported article subject to an ad valorem rate of duty shall be based on the home consumption value o r price (exclud ing internal excise t axes ) o f same, like or similar articles , as bought and sold or offered f o r sale freely in the usual wholesale quantities in the ordinary course of trade, in the principal markets < of the country from where exported o n t he ,date of exportation to the Phil ippines, or wher e there is none on such date, then on - the home consumption value or price neares t to the date of exportat ion including the value of all containers, coverings and/or packings of any kind and all other costs, charges and expenses incident to plac ing t h e 'article in a condition ready for s hipment to the Philippines, plus ten (10) per cent o f such home consumption value or price. / The home consumption value or price under this section shall be the value or p r i ce declared in t he consular, commercial , trade or sales invoice .

Where there exists a reasonable doubt as to the value o r price of the import ed article declared in the entry,. the correct dutiable value of t he article shall be ascertained from the re- ports of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache), pursuant to Republic Act Numbered Fifty- four hundred and s ixty-six or other Philip- pine diplomatic offic ers and from such other informat ion that may be available to the Burea u of Customs .

From the data thus gathered, the Com- missioner of Cus toms shall ascertain and establish the home consumption val ues of articl es exported to the Philippi nes and s hall publish such lists of values from time to time.

185

...

- 6 - ~'ihen the dutiable v a lue provided f o r in the precedi ng paragraph s c annot be ascertained for failure of the im- porter to produce the doc uments mentioned in the second paragraph, or where there exists a reasonable doubt as to dutiable value of the imported article dec lared · i n t he entry, it shall be the domestic wholesale selling price o f such or simila r arti cle in Manila or other principal mar- kets in t he Philippines on the date the duty becomes payable on the article under appraise ment, in the usual wholesale quantities and i n the ordinar y course of trade, minus {a) Twenty (20) per cent thereof for expenses and profits; and

(b) Dutie s and t axes paid thereon . The provisions of the applicable law c learly and unequivocally state that t he dutiable v a l ue of '· an import ed articl e subject t o an ad valorem r ate of duty, like the s hipment in question, is based on its home consumption value or price (excluding in- ternal exc i se taxes), as freely offered for sale in t h e us ual wholesale quantities in the ordinary course of trade, in t he p rincipal markets of the country from where exported on t he dat.e of export- ation to the Philippines , i ncluding the value o f all container s, coverings and/or packings and incidental expenses to placing the article for shipment, plus ten {1 0) per ~ of such home con sumption value.

And the home c onsumption va ue or price i s the value o r pri ce declared in the consular . 186

- 7 - commercial, t rade or sales invoice . Where the re exists a reasonabl e doubt as to t he value or price o f the i mported a rticle declared in the entry, the correc t dutiable value of t he article should be ascertained from the reports of the Revenue Attache or Commercial Attache, p ursuant to Republic

Act No

5466 or other Philippine diplomatic officers and from such other i nformation tha t may be avail- able.

The Commissioner of Cus toms is required how- ever ·· to publish from time to t ime the home consumption values of art icles exported to t he Philippines as • ascertained and established from the data gathered • . In t he instant case. the price f or which t he General Electric co. of Glendale, N.Y., USA, offered to sell to petitione r t he 16. 800 pieces of GE sealed beam lamps wa s US$ 0.908 per piece, l ess 5% trade dis- count, or a n estimated total selling price of US$18.11 5.00 c & F Mani la, including ocean freight and forwarding charges.

(Exh.

11 B" • PP• 10-11• CTA

records.)

The commercial invoice of the s h ipment (Invoice No . 082735) dated March 6• 1974 sl)m'<'s that the General Electric co. of Glendale finally sold to petitioner t he 16,800 GE sealed beam lamps a t the P.rice of US$0 908 ·per piec e8 (Exh. e~c", pp. 12- 1 3, CTA reco r ds. )

And as declared in the c ons ular invo ice of merchandise. NY 48023 F, dated March 14• 187 1 !

DECISI ON

CTA CASE NO . 2828 8 19 74, c ertifi ed to by the Philippine Consulate General, Sa n Francisco, California, t he p r ice of the GE sealed beam l amps is US$14,491 . 58 0 l ess t r ade discount , or US$0. 908 per p i e c et that is. a t otal price of US$18,964 . 54, includ ing s hipping expenses.

(Exh . " D 11 , PP• 15-16, erA reco r ds . )

Since the provi s i on o f the l aw applicable i s c l ear and specific that the "home consumption value " upon which the dutiable value of an imported article should b e based is t h e value o r pr ice declared in t he consular, co~~erc ial, t r ade or sales i nvoic e , ..

the home consumption value of the 16,800 pieces of

GE

s e ~ l ed beam lamps should ther efore be US$ 18, 964 . 54 o r US$0 .908 per piece .

The l aw seems clear and mandatory. It me rely calls for applic ation as worded.

Given however that t here existed a r easonable doubt on the part of the Bureau o f Customs as t o the correct val ue or price of the shipment of GE sealed beam l amps decl ared by petitione r , was the r e- appzasal of such importation made by the s aid Bureau at US$1 . 35 per piece a s the home corisumption value based on a supposedly "Alert Notice" f urnished by th~ Philippine Finance Attache a t San·Fr ancisco, California, USA, proper?

As stated ear lier, the s ame appl icable statute pr ovides that, i n such case, 188

- 9 - the correct dutiable value of the imported articl 2 ' shall be ascertained from the reports of the Rev enue

Attache or Commercial Attache (Foreign Trade Pro

motion At tache) , pursuant to Republic Act No . 5466 • .

( or other Phi lippine diplomatic officers and from such other informa tion t hat may be available to the Bureau of Customs.

From the data thus gathered, the Commissioner of Customs shall ascert ain and establish the home consumption value of the article exported t o the Philippines and shall publish such l ist of value f r om time to t ime.

Here, in the c ase at bar. the valuation of the shipment of petitioner of GE sealed beam lamps was based on an alleged "Alert Not ice" , not on the pub- lished value the reof as required by law. As stat ed by respondent Commissioner of Customs i n his memo- randurn :

"Petitioner's declared price of $0 . 908 per piece was denied and a re-appraisal of the imported item was made by the Bureau of Customs placing the same at US$ 1.35 per piece as the Horne Consumption Value .

This re-appr aisal was based on the alert notice received from the Philippine Finance Attache at San Francisco, California, u.s . A. by the Bureau of Customs . ..

(p . 22 8, . CTA reco r ds .)

And as to peti- tioneres contention "that such notice was not s upported by doc umentary proofs such as Quotation of pri ce l ists, 189 , I . I

DECIS ION

CTA CASE NO . 2828 - 10 -~ prices of previous importatio ns of i denti cal or simil ar goods, . meaning established value, and price s of such goods a s published, mean ing publ i shed value" , respondent merel y avers that "While there are no price lists of s ubj ect imported seal ed beam lamps as e s tabl i s hed o r publ ished, t he same was evalua t ed by the Bureau of Customs based on the Al erted value" . (pp. 228-229, CTA reco r ds.)

I As a mat ter of fact , t he records of the c ase do no t show, as req uired by l aw, f rom what dat a the a l l eged " a lerted value" was gathered, how the Com- mii~i o n e r of ~u stoms ascer ta i ned and establ ished t he hyme consumpti o n v a l ue o f the imported arti c le, and where and when was such alerted v alue published. And while respondent was given ample time d ur i ng t he hearing of this case before this Court to produce or present as evidence s uch " aler ted value" or "alert not ice" wh i ch was the basis of the r e-appraisal of the shipment under consideration, no such alert notice or val ue, or evidence thereof, was presented or offered by respondent. " The bare averment of respondent that the bas i s of re-appr aisal of subject s hipment i s the "Alert Notice" furnished by the Philippine finance attache at San Fr ancisco, Californ~a, unaccompanie d by adequat e evidence as to t he exist ence o f such notice, the basis of t he value o r price stat ed 190

DECIS ION

CTA CASE NO. 282 8 - 11 - therein, as wel l as the publication thereof suggests as contended by peti t ioner, that t here was no such alert notice or value.

Clearly, there f ore, the ~asis of the re-appraisal of the dutiable value of peti- tioner 1 s shipment of GE sealed beam lamps was not i n accordance with the provisions of Section 201 of the Tariff and Customs Code.

There being no fidelity to what are required by the legal provisions applicable, this Court could not look with approval on the re-appraisal by the Bureau of Cus toms of petitioner 1 s imported GE sealed • beam lamps based on an alleged "Alerted value 11 at US$1.35 per piece. and t he assessment and collection of Pl5 1 657.00 as additional customs d uty and P5,526.00 as additional a dvance sale s tax on petitioner's im- portation.

Whe r e , a s here, t here is no adherence to the language of the stat ute, there is no bas is for the assertion t ha t there exists a reasonable doubt as to the value or price of the imported GE sealed beam lamps declared in t h e entry.

Considering the

mandate of the law that the home consumption value or price shall be the val ue or price declared in the consular, commercial, trade or sales invoic e , and the official character of these invoices; c ertified to as correct by the Philippine Consul at the port of origi n ; and there being no reasonable ground to 191

DECISION

CTA CASE NO . 2828 - 12 ~· deny to t hese documents the faith o r credenc e normal ly due thereto, the home consumpt ion value dec l ared in the commercial and consular invoi ces· of merchandise, as wel l a~ the suppl ier ' s sales i nvoice of the shipment in question, should be the basis of the &t iable value of the imported GE sealed beam lamps. v(Commissioner of Customs vs . Celdran, L-234 25, February 26, 1968, 22 SCRA 74 3 . ) The language of the law, which expresses a def inite and sensible meani ng , i s the safest guide as to the statutory policy, to wh i ch compliance is d ue • • (See Proct er & Gamble Philippine Manufacturing Corpo r a.t i on vs. Commissioner of Customs, CTA Case No. 2788, February 27, 1981.)

The pronouncements in Bell Hobart Manufacturing Incor por ated vs . Commissioner of Customs, CTA Cases Nos . 2750, 2751, 2752 and 2753, March 10, 1978;

Procter & Gamble Philippine Manufacturing Corpo-

r ation vs . Commissioner of I nternal Revenue , CTA Ca s e No . 2357 , May 9, 1978; Hiap Hong Tr ading co. , Inc. vs . Al fredo Pio de Roda, Jr. , CTA Case No . 2804 , June 27, 1980 1 which were sub ~ equently affirmed and reaff i r med i n other c ases , the latest of which is Procter & Gamble Philipp ine Manuf actur i ng Corporation vs . Commissioner of Customs, CTA Case No . 2788, February 27, 1981 1 are controll ~ ng i n t he case at 192

DECISION

CTA CASE NO . 2828 - 13 - baro We quote from Bell Hobart and Procter & Gamble : ~ 11Nonetheless. assumi ng argu~ that there e xists a r easonable doubt as to the value or price of t he import ed trichloro- c arbanilide declared in the consular, com mercial and sales invoices. as wel l as in the entry. and the cor•ect dutiable value of the a rtie e s hould be ascertained from the reports of the Revenue Attach e, Com- mercial Attache ( ~o r eign Trade Promotion Attache) o r other Philippine diplomatic office r s and f rom such other information that may be available to the Bureau of Customs. pursuant to Section 201 of the Tariff and ~ustoms Code, as amended by President ial Decre e No. 34 , as alleged by respondent, it is to be stressed that the Commissioner o f Customs is requi r ed by la\>.' to publ ish such list of values from time to t ime.

He does not only have to ascertain • and establish the horne consumpti on value, ( but must also p ublish such lists of v a l ues from t ime to time .

Public policy would seem to require that importers be informed in advance of t he home consumption values . or information values. of art i cles exported to the Philip- pines.

This would prevent uncertainty. let alone the exercise of purely personal dis- cre t ion. specially on the part of cus toms appraisers, in the matter of the ascertain- ment and determination of the price or value of i mported articles.

Furthermor e, if importers are i nfor med in advance of the home consumption values or information / values of articles exported to the Philip- pines, t hey can propP.rly d e clare the dutiable values of their shipments and thus avoid the heavy penaltie s i mposed f or rni sdeclaration, if not d elays in t he release of goods from customs custody which entail lose of time, money and energy."

Accordingly, the home cons umption value or price as bas i s of the dutiable value of the ship- ment o f GE sealed beam lamps consigned to petitioner 193

- 14 - and declared under ·Entry No. 38051-74. Reg. No. 935• which arrived in Manila on March 31• 1974, should be at US$0.908 per p i ece as stated in the commercial · invoice and consular invoice of merchandise. The ..

protest of petitioner against the assessment and collection of additional customs duty and advance sales tax on its shipment of GE sealed beam lamps is there for e meritorious.

We note howsver that with regard to the claim for refund of the amount of ~5 ,526 .00 as additional advance sales tax paid by petitioner on re-appra i sal of the subjec t shipment~ the same can not be passed ' upon by the Court in view of the fact that nothing in the records show that petitioner had filed its written cla im for re fund t hereof with the Commissioner of Internal Revenue and that the latter was made a party to this case.

Without satisfying these juris- dictional requirements provided i n Section 306 (now

Section 292) of the National Internal Revenue Code•

which in the instant case are lack ing, the same is fatal to the claim of petitioner for the refund of the overpaid advance sales tax on t he importation in question.

(Wise & Company vs. Commissioner of Customs, CTA Case No. 2717, December 29 1 1977; see also resolution dated January 15, 1979. certiorari denied in G.R. No. L-51242, March 7, 1980; National 194 "'"'· .

:UECISION

CTA r.ASE NO. 2828 - 15 - Dental 5upply Incorporated vs. Commissioner of C usto~, CTA Case No. 2826, ~ unA 30, 1980; r.amoos Rueda r.orpo- ration vs. Co~missioner of Customs, CTA Case No . ·2829, July 28, 1980: .Tardine Davies, Inc. vs. Cornraiss :1 onPr ..

o f Customs, CTA Case No. 2634. October 16, 1980; Procter & Gamble Philippine Manufacturing r.ornoration vs. Com- · missioner of Customs, CTA Case No. 2788, ~ebruary 27, 1981.)

~here being no controversy between thP parties that the additional amo 11nt of P15,657.00 assessed a,nd . collActed from petitionAr represents additional customs du~y because of the re- appraisal of its shipment of GF. ·• sealPd bPam l a mps at US$1.35 per piece, only said amount of ~15,657$00 is refundable to petitioner. \"JH't:'REFOOF., the decision appealPcl from is modified as indicated in the above opinion of the Court.

Res-

pondent Commissione r of Customs is hereby ordered to refund t o petitioner Campos Rueda Corporation the amount of P15,657.oo.

~ithout pronouncement as to costs.

~'IE CONCUR:

'"'

ROAQUIN

J udge ~~ -·· X '-' . REY

· Associate J

ge 195