A Bepublic of the Fulippints Court of Tax Appeals Aan HVCV ' © Polyphosphates, Inc vs. Commissioner of Customs

DECISION -

CTA CASE NO. 3199 - 2 - The home consumption value (HCV) ?f said importation which was declared by petitioner and as appearing in the bill of lading, commerc ial, and c onsular invoices is US $30 2.5S per metric ton.

The .Collector of Customs however asse·ssed the subject importation based. on the HCV $382.84, pursuant:. to Customs Import Valuation and Classifi- cation Circular (CIVCC ) .No. 270-76 dated July 1, 1976, i ns t ead of t he home consumption value of US $302.55 at: the time of the arrival of said ship- ment , based on the 3,545.953 metric tons as shown • in the vessel's manifest instead of the quantity actually received by petitioner.

Conse:quen tly, on July 27, 1978, peti t .ioner • filed with said Collector of Cust.oms a protest (Protest No. 35-78) _disputing, the assessment and collection of the total amount of P2,390,253.00 as duties, taxes and other charges on "the said ship- ment computed on the basis of US $382.84 per metric ton and 3,545.953 metr ic ton per manifest. It daimed that: the dutiable value of it:s shipment should have been based on the home consumption value of US $302.5S .

per metric ton as de:clared in all its i mportat ion papers and on 3,236.721 metric tons only as that 2 -·

DECISION -

CTA CASE NOs 3199

- .3 - was what was actually discharged from the vessel to pet:it.ione1i:'s shoe storage tanks, and, hence, en ti t:.le:d to a re:fund of an alleged excess. payment - of P663,564. 00 .

On Ap1r:il 3, 1979, the Collector of Customs of the: Port of Batangas rendered a decision upholding the cor r ectness of the assessment. and collection of duties, taxes and other charges on petitionervs shipment amount ing to P2,390,253.00. On appeal , the respondent Commissioner of Customs :rendered a decision on Decembe':r 12, 1980, • affirming that of the Collector of Customs. of the Pert of Batangas..

Hence, this prese:nt rec<;>urse to this Court.

The issues posed before us to be I"esolved are , to wit :

(1) . Whether the correct basis of ·t:he dutiable value of petitioner's ship- ment should be the home consumption value as published in CIVCC Noo 270-76 dated July 1, 1976 in accordance with Se:ction 201 of the Tar iff and Cus.toms Code of the Philippines or t he home consumption value as stated in the bill of lading, commercial and consular in- voices; and (2) Whether t he correct basis of the customs duti'es, charges and taxe3 on aforestated shipment is the quantity , aS i ndicated in the VeSSel I S manifest, or quantity actually . d ischarg,ed from the carrying vessel to petitioner ' s shore storage t ank ; and c onsequently, 3 --------

DECISION -

CTA CASE NO. 3199 - 4 - (3) Whether or not petitioner i s entitled "to the refund of the additional cu9oms duties and taxes in the sum of P663,564. 00 it alleg,edly paid on the subject i mportation.

' With re:spect to the first issue, petitioner claims that there exist. no doubt that t he value of petitioner's shipment is that reflected in the bil l of lading;, commercial and consular invoices ; hence, the basis f or determining the dutiable value of its shipment should be on the home consumption value of US $302.55 per metric ton as reflected in all its importation papers, the bill of lading, • consular and commercial invoices, pursuant to Section 201 of the Tariff and Customs Code. We find the contention without merit.

Section

201 of the Tariff and Customs Code reads as follows: "Section 201.

Basis of Dutiable Va lueo- The dutiable value of an imported article subject to an ad valorem rate of duty shall be based on the home consumption value or pr:ice (excluding internal excise: taxes, of same, like or similar articles as bought and sold or offered for sale freely in the usual wholes.ale quantities in the marke t s of the country from wher-e exported on the date of exportation to the Philippines, or whe r e there is none on such date, then on the home c onsumption value or price near-est to the date of exportation i ncluding the value of all containers , coverings and/or packings of any ~ind and all other costs, charges and expenses incident to placing the article in a condition ready for shipment to · the Philippines, pl us t en (10) per cent of such home c onsumption ' value or -price. 4

DECISION -

CTA CASE NO. 3199 - 5 - The home consumption value or price under t h is section s hall be the value or price ·declared in the consular, commercial, trade or sales invo i ce..

Where t her.e ex.ist a reasonable doubt as to the value or price ·of the i mported article declared in the entry , the correct dutiabl e value of the ar ticle shall be ascertained from the r eports of t he reve:nue attache or commercial attache (Foreign Trade Promotion Attache) pursuant to Republic Act Numbered Fifty-Fo~r Hundred and Sixty-Six or other Philippine diplomatic officexs and f r om such other infor mation that may be available to the Bureau of Customs.

From the date thus gathere:d, the Com- missioner of Customs shall ascertain and establish the home consumption values of articles exported to t he Philippine: and shall publish such lists ot values from time to time., • When the dutiable value provided f or in the preceding par agraphs cannot be ascert- ained f or fa i l ure of the importer to pr oduce the documents mentioned in t he' second para- •. gJraph or where there· exists a reasonable doubt as to dutiable value: of the i mported article declared in the entry, it shall be the domestic wholesale selling price of such or similar ar tic le in Man ila or other principal mar.kets in the Philippines on the: date the duty becomes payable on the article under appraisement, in the usu·al wholesale quantities and in t he ordinary course of trade:, minus -

(a) Twenty (20 ) per cent thereof ·for expenses and profits; and

(b) Duties and taxes paid thereon. " From the aforequo~ed provision of Section 201 of the Tariff and Customs Code , i t is clear that the home: consumption value of the importe:d article shal l be the value or price declared i n the commercial , ,-il

DECISION -

CTA CASE NO. 3199 - 6 - consular, trade or sales i nvoice . However, the s ame provision state s th a t where there exist a reasonable doubt as to the correctness of the value or p ~ ice declared in the entry p ape rs, t he correct du tiable value of t he article shall be ascertained fr om the repor t~ of t he Revenue Attache or Commerc·ial Attache or other ~h ilippine diplomatic officers and from such o the r information that may be available to the Bureau o f Customs.

And fr om the data thus gathered, the Commissioner of Customs shall ascertain and establi s h th& home consumption values of the • ar tic l es exported to the Philippines and shall pub- l ish such lists of values from time to t im~. (National Dental Supply, Inc. vs. The Commissioner of Cust.oms , CTA Case No. 2816 , June 29 , 1979, certiorari denied in G.R .. No. 512 36 , d ated January 18 , 1980 ; Procte r and Gamble Philippine Manufacturing Corporation vs. Commissioner of Customs, CTA Case No. 2788 , February 27, 198 l o) While the r ule presc ribed by the law is that / the hom~ consumption.value of an i mported article shall be that value or price declared in the commercial, consular, trade or sales invoice, the same should not be appl ied in the case where the correctness of such value or price declared in the invoic:e is vitiate d 6

DECISION -

CTA C~SE NO. 3199 - 7 - by :teasonable doubto What should tllen be con- sidered as the correct home consumption value, in such case, should be the value or. price ascertained by the Bureau of Customs from the reports of the Revenue Attache or Commercial Attache or other Philippine diplomatic officers, and which value has been established and published by said Bureau from time: to time ..

(National Dental Supply, supra.)

In other words, the primary dutiable value of an imported art.icle is its horne consumption value as declared in the importation papers. However, • when a reasonable doubt exists as to its declared value, the basis should be the home consumption value as published by the Commissioner of Custom~. In the instant case, the actual home consumftion value of the subject article of US $302.55. per metr ic t on as reflected in the consular and commercial i nvoices and presented by petitioner is much lowe r than i ts published horne consumption value of US $382.24 unde r Customs Import Valuation and Classification Circular (C IVCC) ~o • • 270-7 6.

A reasonable doubt, therefore, exists as to the true home consumption value or the price of the aforesaid imported goods _, Hence , the bas i s of the dutiable value of the imported goods should be the published home consumption value 7

DECISION -

CTA CASE NO. 3199 - 8 - under said CIVCC No. 270-76 pursuant to the afore- quoted parag.r::aph of Secti on 201 of the Tariff and Customs Code .

· ~he law is clear and specific. It merely calls for application as thus worded.

Needless to say;

t hat if Customs authorities were always bound by the invoi ce value , it is evident that they would be, to a consider able extent, at the mercy of f ore ign merchants and importers .

(Lim Quim vs . Coll . of Customs , 23 Phil. , 509 LI9.llf'; The Coca-Cola Export Corporation vs . The Commissioner of Inter nal Revenue and Collector of Customs , Manila , L- 23604, March 15 , 1974 , 56 SCRA 5 ~ ) Besides , the value of imported articles as fixed by t he Customs author ities in the discharge of their functi on of assessing and collec ting the lawful revenue s jus tly due on imported articles and confirmed by the Customs Commissioner is presumed to be correct anu therefore conclusive in the absence of fraud or illegallity or of an affirmative showin9 by the ... r otesting i ml?or ter that the customs author- i ties in fixing or assessing the value of the i mport- ation proceeded upvn a· wrong. principle anC.. contrary to l aw ., The burden t hus rests upon the i mpor ter disputing the customs valu~tion not only to prove the contrary and ove r come the pre sumption of correc t nes s 8

DECISION •·

CTA CASE NO. 3199 - 9 - of the valuation but also t o show that the figures declared by him are in fact true and correcto (Coca- Cola Export Corporation vs. Commissioner of Internal ReverlUe and Collector of Customs I surra. With respect to the second issue , petitioner contends that the assessment of the Customs duties, taxes and charges, on petitioner ' s shipment based on the quantity of 3,545.953 metric tons as declared in the vessel ' s manifest is erroneous. It claims that the basis of assessment should have been on the q uantity of 3,236.721 1netric: tons alleged to be • actually discharg,eo from the carrying. vessel and received by it pursuant to Section 1701 of ~he Tariff and Customs Code which provides that "duties .

wil l be assessed on the actual quantity imported, as shown by the return of weighers, g;augers, measurers, examiners, or appraisers, as the case may be." We find this contention untenableo The surveyor w S:

report submitted by petitioner to the Collector of Customs i s self-serving to say the least. The veracity ' of said rep9rt is placed under serious doubt on the ground that this was never officially brought to the attention of the proper authorities i n t he Bureau of Customs.

The report of Customs Examiner Oscar Boongaling show that he madG his

DECISION -

CTA CASE NO e 3199 - 10 - first findings on June 13 , 1978 and on that same date Reynaldo M. Alejandro , registered marine and cargo surveyor of Worldwide Marine and Cargo Survey Corporation, was there present he having, been hire'd by petitioner to s u ~ vey its cargo. Reyn aldo M.

Alejandro performed his task until June 16 , 1978, on which date Customs Examiner Boongaling, made his final findi ng s of the weight of the article:s which was 3,545.918 M/T, as indicated by i nstrument reading after s ounding.

It is quite unbelievable therefore that. surveyor Reynaldo Alejandro had • failed to contest or at least informed Customs Examiner Boongal ing about the di screpancy in his findings.

(1v1emo. to Collector, Port o f Batangas. dated March 28, 1979, pp. 43-44, BIR r ec.) In matt ~er of abatement of taxes and duties, it is incumbent upon peti tioner to show proof satisfactory to +-hP. rollec tor that wt:he deficiency occurred be,fore arrival of the shipment in the Philippines before abatement and/or refund of the customs duties and " barges may be granted. The records show that petitioner's surveyor was. already aware that there was ah alleged deficiency in their shipment as early as June 16 , 1978, the date of the fin a l dischar ge of its shipment. On this date, the 10

DECI SION -

CTA CASE NOe 3199

- 11 - surveyo r shou ld have brought such oeficie~ncy to the attention of the Customs Examine-r so that the latter, afte:r convincing proof, could· hav.e~ certified s uch deficiency to the· Collecto r as r:equ ir.ed under Section 170 3 of the Tar iff and Customs Code. In the instant case, neither t he report of the appraiser , nor the Customs Examiner on the shipment in ques:t ion shows that the quantity discharged from the~ vessel to pe~tit.i one r: s sho:re tank is le-s.s than 3,5.45 . .,953· metric ton as dec.lared in the ~es.se:l' s. manife s t .• (Po 4.2, Customs &:ec .) . MoreoveT, petitione r: had failed to reque~st the: pertinent amendment o~ t he man ifest and re:lated documents as a condition f o r its entitlement to a refund pursuant t o the above·- sta ted Section o f the Tar iff and Cus toms: Code, whic h textually re ads as follow.s:

"Sec. 1703., Abateme:nt o r. Ref und f o r deficiency in Contents of Packages. - . If , upon opening any of p art of the co ntents thelieof, as called for by the Invoice shall be f ound to exist, such <!:'leficiency shall be. cer:tified under penal ties of fals ifica t:ion or perjury, to the Colle~cto r or Appraise~; and upon the production of proof satisfactory to the Colle~tor showing; t hat the shor tas e oc:curred befo:re- the arrival of t he: article in the Philippines, the pr:oper a batement or refund of the duty s hall be made.

(J?.s amende-d by P. D. No. 34.) ". With re:spect to the· third iss.ue , we will no l onger discuss it, it having become moot ~ n d 11 ' I

I

DECISION -

CTA CASE NO . 3199 - 12 - academic ..

WHEREFORE, finding, no merit in the appeal, the a ppealed decision i s hereby af f irmed, with costa against petitioner.

WE CONCUR:

AMANTE

ILLER

Pres i ding Judg,e 12 - •