Shell to file cases vs Customs officials

By Paul Anthony A. Isla, Business Mirror

Posted at Oct 20 2010 10:03 AM | Updated as of Oct 20 2010 07:06 PM

MANILA, Philippines - Pilipinas Shell Petroleum Corp., one of the country’s refiners, is set to file cases for gross negligence, gross incompetence and defamation against those who had misled the government.

The Bureau of Customs (BOC) is demanding that Shell remit P24.5 million in back taxes for alleged technical smuggling.

Roberto Kanapi, Shell vice president for corporate communications, said they will file cases against BOC officials, but declined to identify who they will be filing cases against.
Kanapi said Shell has yet to receive a copy of the formal complaint lodged against them by the BOC. 

“We view this development as reinforcement of President Aquino’s assessment that the biggest challenge facing his administration is trying to replace a system that has been in the country in its worst form for practically the last 10 years,” Shell said in a statement.

The company added that the company has always acted according to its business principles and has built and protected its reputation for many years. 

Shell, however, remains hopeful and committed to help the present administration in the continued fight to change the system and to expose corrupt and incompetent government officials.  

Shell said the BOC filed a complaint against officers and employees of Pilipinas Shell Petroleum Corp. last week, alleging that the latter intentionally misdeclared its 2005 to 2009 catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCGG) importations by using the tariff heading tetrapropylene to evade the payment of the proper taxes and duties.

Shell said, worse, customs officials held a press conference and distributed media releases where it publicly accused Shell of technical smuggling and made it appear that Shell evaded the payment of excise taxes and the required VAT. 

The company said it has paid all appropriate taxes and duties on all its imports. Even if the tariff heading number of tetrapropylene (2710.11.30) was used for CCG/LCCG importations, Shell consistently declared that the product imported was CCG/LCCG in the documents it submitted to the BOC.

Shell said the BOC then reviewed and assessed proper tariffs and taxes to be paid by Shell, based on the product declaration of CCG and LCCG. Shell said it paid the tariff duty assessed by the BOC and as such, there was never any revenue loss to the government since it collected either the higher duty of 3%or the relevant tariff rate for CCG and LCCG based on the applicable executive orders.

Shell also noted that there were no excise taxes due on these 2005 to 2209 CCG and LCCG imports since each importation is covered by a Bureau of Internal Revenue (BIR) directive to the customs not to assess Shell excise taxes on these imports. 

Shell said CCG and LCCG are not subject to excise taxes since these are not final products but raw materials used by Shell’s refinery to produce Clean Air Act-complaint petroleum products. 

From 2004 until December 2009, the BIR did not assess excise taxes on these imported raw materials upon importation but collected the excise taxes from Shell upon the withdrawal of the finished products from Shell’s refinery. 

Shell said the issue of double taxation particularly on whether CCG and LCCG imports are excisable by BOC upon importation in addition to BIR assessment upon withdrawal of the finished products, is already pending before the Court of Tax Appeals (CTA). 

“It is very clear that Customs Commissioner Angelito Alvarez has been misled by holdovers from the previous administration to believe that Shell committed fraud by misdeclaring its CCG/LCCG importations; there was evasion of the payment of taxes and loss of revenue for the government; and that the facts of this criminal complaint are different from the current case pending in the CTA,” Shell said.