Mapublic of the Philippines Gourt of Tax Appeals Manila = 7 Asturias Sugar Central, Inc. vs. = Case No, et al.

DECISION

c.T.A.

CASE 1--fOo 992 Petitioner seeks to rec over the t otal sum of "' 28 , 629. 42 paid under prote st as customs duty and special impor t tax on imported jute bags. Petitioner, a corporation organized under Phil- ippine laws, i s engaged in the production of centri- f ugal sugar from sugar cane .

It imported jute bag s f or use in it s produce which arrived in two shipment s: ' thf f i rst , cons i sting of 44, 800 jute bags, arrived on

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January 3 , 1957 F and the s e c ond ~ consisting of 75 , 200

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jute bags, arrived on February 2, 1957. These ship- ments were provisionally passed by the customs authori- tie s free of customs duty and special import tax upon the filing by petitioner of _•e- exportation Bonds and pecial Import Tax Bonds Noso 1 and 6 on January 8 and February 8 1 l957p respectively , conditioned upon the exportation of the jute bag s "within one ( 1) year from the date (s) of the arrival of the (carrying) ve ss el(s)~o Of the total number of imported bags, 33 , 647 bags were exported within one (1) year after their importa- tion , thereby leavi g a balan c ~ of 86 1 353 bags which , -

DECISIOI -

C. T •• CASE NOo 992 - 2- however , were exported within three (3) years from their importation.

In this connection , it must be stated that on February 6, 1958 , or one (1) day prior to the expiry date of Re-Exportation Bond and Special Import Tax Bond Noo 6, petitioner requested respondent one week's ex- tension of these particular bonds on the grounds of delay in the arrival of the loading vessel and the picket- ing of the railroad line from November 16 to December 21 , 1957o This request was denied by respondent on April 15, 1958o In the interim, petitioner paid under protest on March 21, 1958 the respective amounts of ~11 , 912. 82 " and 16 , 7~6 . 60 , or a total of 28,625. 42, as customs duty and special import tax on the 86, 353 bags which were not exported within the one (1) year periodo Subsequently, petitioner requested for the refund of the amount of 28 , 625o42, which request was deniedo Hence , the instant petition for review seeking the re- covery of said sum of money.

The legal basis upon which the imported jute bags in question were provisionally passed free of customs duty and special import tax is Section 23 of the Phil- ippine Tariff ct of 1909 (now Seco 105(x) of the Tariff and Customs Code) , which providesa 11 SECo 23. That containers , such as casks , large metal , glass , or other re- ceptacles which are, in the opinion of the collector of customs, of such a cha- racter as to be readily identifiable may be delivered to the importer thereof upon identification and the giving of a bond with sureties satisfactory to the col- lector of customs in an amount equal to double the estimated duties thereon , con- ditioned for the exportation thereof or pay-

DECISI

C. T oA. CASE ··o. 992 - 3 - ment of the corresponding duties thereon within one year from the date of impor• tation , under such rules and regulations as the Insular Collector of Customs shall provide.," Having failed to export the 86, 353 jute bags within one year from the date of their importation, it is obvious that, under the afore-quoted statute, petitioner is liable for the payment of customs duty and special import tax thereono But , pet it ioner argues that it s letter of Feb- ruary 61 1958 requesting one weekis extension of bonds No,. . 6 had the effect of suspending the running of the time within which to re-export the jute bagso Granting , ' though without ruling so, that it had a suspensive ef- fect , petitioner cannot escape liability for the customs duty and special import tax on the 86, 353 jute bag s which were not exported within one year from the date of their exportation, for the requested suspension was only for one week.

Furthermore , the request referred only to bonds No •• 6, and finally , the exportation of the 86, 353 jute bags was effected beyond the req~e s ted one week period.

As an alternative to the refund of the whole amount of ¥:28 , 626"42, which as afore-stated, was paid as customs duty and special import tax on the 86 1 353 jute bags , petitioner, in its memorandum 1 prays for the recovery of the said sum of ~28 , 629o42 minus one one per cent in form of a drawback under the provi- sions of Section 106(b) of the Tariff and Customs Code .

DECISIOl'-J ...

C. T . A. CASE NO. 992 - 4 - Section 106(b) of the Tariff and Customs Code is a substantial repxoduction of Section 22 of the , Philippine Tariff Act of 1909, which at the time the importations at bar took place governs the allowance of drawbacks on articles of imported materials , in- cluding the packing or covering thereof , which were exported within three years from th~ date of their importations.

The pertinent provision of Section 22 of the Tariff Act l o. 1909 reads:

11 SEC. 22. That upon the exportation of ar~icles manufactured or produced in the Philippine Islands, including the packing , covering , putting up , markingg or labelling thereof , either in whole or in pa,rt of imported materials, or from simil ar dome stic materials of equal quan- tity and productive manufacturing quality and value , such question to be determined by the Insular Collector.)of Customs , there shall be allowed a drawback eaual in amount to t he duties paid on the imported mate- rial so used ~ or where similar domestic mat erials are used, to the duties paid on ~ t he equival ent imported simi~terials 2 l l ess one per centum thereofl Provided, t hat the exportation shall be made within three years after the importation of the foreign material used or constituting the basis for drawback; x x x."

Vle believe that petitioner, having duly paid the duties on the 86~353 jute bags upon its failure to comply with the condition of the bonds to export said bags Within the one year period provided for in Section 22 of th~ Philippine Tariff Act of 1909, can- not now avoid the full effect of such failure by being allowed a drawback under Section 22 of the same Tariff Act .

It is quite improbable that the Congress of the

DECISIQ\J

CoT. o C E NOo 992 - 5 - United tates, in enacting the Philippine ariff Act of l909 p intended to provide Section 22 thereof as a loophole through which the full effect of failure to comply with Section 22 of the same ct may be evaded or avoidedo hat was doubtless meant was to make final and irrevocable th~ payment of customs duty upon fa~lure to export the imported articles within the one year period o ~HEBE .

RE , the decision appealed from is hereby affirmed with costs against petitionero EJ:i.F.D o ':anila, !ovember 20, 196lo --~~

Presiding Judge

le concur.:

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