Energy dept won't intervene in Shell tax case


Posted at Oct 18 2010 07:10 PM | Updated as of Oct 19 2010 03:23 AM

MANILA, Philippines - The energy department will not intervene in the P7 billion tax issue against oil retailer and refiner Pilipinas Shell Petroleum Corp. unless the tax bureau asks for assistance, energy chief Jose Almendras told reporters on Monday.

"It is a tax claim from [Bureau of Customs]. Its not [Department of Energy's] jurisdiction. It's a tax issue," Energy Secretary Jose Rene Almendras said when asked to comment on another tax liabilities' claim of the government against Royal Dutch Shell's unit in the Philippines.

"If we are called in, we will assist. We will get involved if they call on us or want us to participate in the discussions," he said, adding that he preferred not to deal on specifics as the case is already in court. "There is a case filed already so its sub judice to make any statement... I believe they (Customs and Shell) have to discuss this. There are some documentations that need to be discussed," he added.

Shell is facing a P24 billion smuggling case filed against it by the Customs bureau, on top of a P7 billion tax case from the Port of Batangas. Earlier this year, the oil firm threatened to close its Batangas refinery over the P7 billion tax case.

In a statement released over the weekend, Shell categorically denied that they have shortchanged the government on its 2005 to 2009 raw material shipments. The oil company said it did not defraud the government by not paying excise and value added taxes (VAT) for the import of catalytic cracked gasoline (CCG) or light catalytic cracked gasoline (LCCG), which Shell allegedly "misclassified" as tetra-propylene for the period 2005 -2009.

The CCG and LCCG are blending components used to produce Clean Air Act compliant unleaded gasoline.

As there is no customs classification code for CCG/LCCG under the Tariff and Customs Code of the Philippines, Shell said it used a comparable product tariff heading - 2710.11.30 (tetra-propylene) but the tariff description clearly states that the product is CCG/LCCG. Shell stressed that this classification passed through the process of assessment, review and approval by the Bureau of Customs.

Shell maintained that it has paid all the right taxes and strongly denied having engaged in any fraudulent activity, especially smuggling. It also highlighted that it had been consistently among the Top 10 Taxpayers list of the government and over the last 5 years when its annual tax payments has averaged at about P 26 billion.