CTA Case No. 3382 (Decision)

. ~ -- - u.PUBl , �., 01' Tlllt HUUPP~ CDUR'f OF Ti\X A.PPEAU f'U ~lt:f..l'Jit' (tt~ / PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP ) , Petitioner, - versus - C.T.A. CASE NO. 3382 THE COMMISSIQNER OF CUSTOMS, ;o)xj/0 Respondent. X- - - - - - - - - - - X D� E C I S I 0 N Petitioner seeks to vacate respondent's decision of Januar y 24, 1980 (Customs Case No. 79-35) .susta ining t h e Collector of Customs ' of the Port of Bislig, of Aug,ust 8, 1979 (Bislig Protest No. 5-79) .denying the refund of P278,201.00 representing payments for the tax liabilities on imported machinery and spare parts. As it appears 1) .Petitioner corporation is a pioneer enterprise registered with the Board of Investment under Re public Act No. 5186. (Investment Incentives Act) .and � by virtue of Section 8 (a) .t hereof as implemented by the NEDA Resolution No. 21 series of 1976 , accorded the privilege of a 100 % tax exemption on its importations of cap i tal equipment and parts for an integrated pulp and paper mills for the years 1975 to 1978 and 75% for the years 1979 to 1980 and so on up to 1987 when the rates of exempti on is reduced to 10 %; 2) .Petitioner 2'7 0

DECISION CTA CASE NO. 3382 - 2- had imported mac h inery and pa rts which arr ived on December 23 and December 31, 1978 at the Port of Bislig under the correspon~ing i mport entries Nos . 5-9 , 11, 15-22 , 24-28 , 87, 101-102, fil ed in Januar y , 1979; 3) .the Collector ' of Cu stoms a ssesse d and colle cted the tax of 25% of the full rates due on the importati on per the diminishing schedule in \he resolution amounting to Pl53 , 110 . 00 and anothe r 5% tax on the exe~pt porti on in the sum of ~131,843.00 pursuant td Presidenti al Decree No. 1395 as implemented by Finance Department Order No. 13- 78 , wh ich petri tioner p aid under prote st as formalized in Bislig Protes t No. 5-79 by way of claiming a refund of t axes er rone ously collected on the su bject import.at.ion ; 5) .the protest was di s mis se d by the Collector. o f Customs a nd o n appeal sustained by the re s pondent. Commi s sioner of Customs on January 24 , 1980 . Hence this petition. In the light. of the circumstanc e s br iefl� summarized above the case prese nts no dispute as to the r e latively simple material facts bu~ the p arties are tLying to get the better of each o ther over by a quibble a s to the date of the accrua l of the tax or the time ly avail- ment of the benefits o f e xemption. By in la.rge , petitioner con tends that th e ass e ss- ment a nd i mpo sition o f 25% tax was at c ompl e t e variance ~ with t he NEDA resolut.ion considering that. the i mport- ation arr i ved at the Por t o~ Bislig in 1978 and there- fore entitled to a 10 0% tax exemption. It. averp� that 271

DECISION - CTA CASE NO. 3382 - 3- "to constitute importation i t . is necessary that. the me rchan dise a~rived wi thin the jurisdictional waters of the Philippines with i nte n t t o unload. " (Ma riano Martin v. Ins ula r Collecto~ of Customs, Tariff Decision circular 502 1 cited in Tej am I Commen t:.a.r ies on th e rrar iff and Customs Code , 1978 ed., p . 13) ~ \. Respondent main tai n s that the impor.t:.ations i n que s tion were subject:. t:.o 25% tax pursua n t to t he same NEDA Resoluti on No. 21 on t he gro un d that the date th e I mport Entries wer e fi l e d and a ccepted was in 1979 the date the importation s were deemed " e nt e r ed " as. provided for under Section s 205 and 206 of the Tariff and Customs Code, as amended, in part. r ead: "S ec . 205. Eff ect:. i v.e Date of Rates of. Import. Duty. - Impor t .e d articles shall be subje c t:. to t h e rate or rates of import duty e xisting at the ti me of entry or withdrawal from the warehouse in the Philippines for con sumpt ion . XXX XXX XXX "Sec. 206. Entry or Withdr aw al fr-om the Warehouse for Consumption. - . I mported ar ti cles shall be de eme d ' entered' in the Philippines for con s umption whe n the s peci- fied entry f orm is properly filed and ac.c.epted, toge the r with any related doc u- ments required by th e provi sion s of t his Cads and/or iegulations to be fil ed with s uch form at the t ime of entry at the polf t or �sta tion by the customs offic ia l d esignated tc:.o rec.eive such e n tt.r y papers and a ny duties, taxes , fee.s a nd/o r ot.he r lawful charges required to be paid at the time of 'making such entry or secured to be paid with Customs official designated to receive s uch monies ,' provided that the articles has previously arrived

DECISION - CTA CASE NO. 3382 - 4- within the limits of the port of ent~y. XXX XXX XXX 11 We f~nd nothing cr~ptic in the language of the said provisions as to pose any ambigu i t:.y in t:.lJe ir- application. The first stamps a definite resolve as to what the imported article shall be subject:. which is the rate ~r rates of import duty existing at the time of entry or withdrawC!l from the warehouse for consumption. The secon�d explicitly reckons- as to when the merchandise �shall be deeme d 11 entered 11 with such requisitions, viz.: 1) .Previous arrival within the limits of the port of entry ; 2) .forms and documents . filed and accepted by the Customs' authorities; and 3) .duti e s, taxes and other lawful charges paid or se- cured to be paid. Suffice it therefore, the fact of arrival alone of the merchandise is l ess significant than it is made to seem. Any such posture would have s tretched too faJ: the effective ran]e of ex.pedienc:y and gravely impairs the ~nd for which the stat.ute was in tended. Relevan 1!:. is the rule that 11 the mere posse s- sion of merchandise on board vessel in Philippiae waters is not sufficient in itself to amount. to the importation of the same (U.S. v . Chu Loy, 37 Phil. ~10) ~ and the use of the term 11 import" should rather be restricted t~ goods as are actually releas e d from cus- toms custody into the commer<;:e of the country (May co. v. U.S. , 12 CCA 1 T. D. 4 02 7 0) �. 27J

~ DECISION - CTA CASE NO. 3382 - 5, - It is not short of authori ty nor logic that the imported article must have to be " e ntered" as legally contempla\ed in Sections 205 and 206 of the . Tariff and Customs Code, supra, for the ascertainment of the corresponding. imposition or the exemption therefrom. And for more reasons, with the shipme nt on a tax free basis of "ma6hinery, equipment and spare parts shipped with such machinery and equipment" tolled under. suc:h conditions: 1) .are not: ma nufac:tur e d domestically in reasonable quantity and quality at reasonable prices~ 2) .are directly and actually n eed ed and will be used exclusiv e ly by the registered ente rprise~ 3) are covered by shipping documents in the na me of the re- gistered enterprise~ and 4) .have the prior approval of the Board be fore importation thereof (Sees. 7(d) and 8, R.A. No. 5186) �. No les s une x pect.:.ed therefore is that such importations are not impervious to the constr aints requiring validating acts to firm up the eligibility for the entrY. thereof. In short, the mere breaking of the carrying vessel within the jurisdictional. water s brooks no ins t ant tax burden in terms of appli- cable specific rates of import liabilities upon which tacked the pe~centage of diminishing exemption until such time of the satisfaction of the legil proscriptions fotz. valid ent..ry. It may be necessary to repeat what so plainly apply to such cas~s, that. - . I.

DECISION - CTA CASE NO. 3382 - 6- "It:. should likewise be underst.ood tha t sh i pments of machinery and s pare parts thereof and raw materials autho ri zed to be imported under the grant thq.t are e ntered or withdrawn from �warehouse for consumption in accordance with Section 206 of the Ta riff and Customs Code after 12:00 o'clock midnight of De cembe r 31, 19&1 s hould be subjected to the payment of ninety (90%} per cent:. of the full rate s of duties a nd int.er.nal revenue taxes in addition to the special import taxes and other charges due the~eon even if such shipments are covered by a uthority to release in the form letter addressed to that Office which indicates that only 50% of the customs dut.i e s and internal revenue taxes in a.dd i t .ion to the special import taxes thereon may be collecte d." (Let.t.er of the S e cr.�etary of Finance to t.he Commission e r of Cust.oms dated November 9, 1961} �. The record makes it c l ear that in sofar as the same i s brought to bear upon the circumstances of the peti- tioner in the case a t bar, the import entries of the subject importation were fil e d and acce pted by the Cus- toms a uthorities and the taxes paid on l y in January 1979 or beyond the period prescribed for the enjoyme nt of ful l tax exemption privilege. Pursuant therefore to the statute above quoted the articles in question were deeme d "entered" in 1979 �and accordingly entitled to /a. partia l exemption of 7 5% of the full rates of dut.y and internal revenue tax under the diminishing, schedule o f the resolution. � The failure of petitioner to haue its goods "entered" before 1979 bars its claim for t he full enjoyment of the tax privilege. Th~ respo ndent 's reasons for t he levy of the 25% of the rightful dues seem a little more than a statement of the obuious.

DECISION - CTA CASE NO. 3382 - 7- We uphold. Then again a nd quite evident, the tax prescribed under PreSidential Decree No. 1395 for "All importations which are at present totally or partially exempt from Customs duties and internal revenue tax under the pro- vision of any general or special law shall be subject to 5% customs duty and 5% internal revenue tax. xxx (Sec. l) ". as implemented by Finance Department. Order No. 13-78, providing, insofar as pertinent, that "The customs duty and internal revenue tax imposed under the decree shall be applied to the importations entered or withdrawn for consumption on or after April 21, 1978 wh ether th e y enjoy total or partial exemption and shall be paid before release of the shipment from Customs' custody (S e c. 7) ". likewise bears directly on pet.i tioner 's importation. No reason is apparent and none is vouch- safed why the payment as decreed cannot be enforced. This Court will not deem itself authorized to depart from the plain meaning of the statute so explicit in terms and so searching in extent. So it appears and we so hold that the petition iS/ Without merit: a nd the same i s dismi s sed and the re- fund of the amount s o ught denied, with costs. 27G

� DECISION - CTA CASE NO. 3382 - 8- SO OB,DERED . Quezon City , Met ro Manila, October 14, 1983. WE CONCUR: ) ~/ C0~ ,t.)f�.T:A'CN::T:E.,~~ . \ot.QUIN Associate Judge 27 '.1