CTA Case No. AC-3092 (Decision)

;�� n.JV � . ~�' . flF..PU or U~ THit PtiiLH~Ii"IN\Efi /(:~)URT OF TAX APl?EJJ..,S l'lti"O~ Cl1'V PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP), Appellant, � - versus - C.T.A. CASE NO. 3092 RAMON .J . FAROLl\.N, Appe l lee. X- - - - - - - - - - - - - X PAPER INDUSTRIES CORPORATION - OF THE PHILIPP I NES (PICOP) , Appellant, � - versus - C.T.A . CASE NO. 3126 RAMON J. FAROLAN, Appellee. X- - - - - - - - - - - - - X PAPER INDU ~ TRlES CORPORATION OF THE PHILIPPINES (PICOP) , Appellu.nt, � - versus - C.T.A. CASE NO. 3 1 3 0 RA HO~i J. FAROLAN, X- - Appellee. �- - - - - - - x DE C I S I 0 N Pa p er Indu s tries Co rpor tion of the Philippines (PICOP) ~ appellant (p~titioner) in these three cases, poses a single issue before us: Whether the dutiable val u e of an i mported ~~r ticle subject tc an ad valorem 27

DECISION - CTA CASES NOS. 3092, 3126 & 3130 - 2- rate of duty should be based on the home con- surnption value or price as reflected in the consular or commercial invoice or the published horne consumption value as established and indi- cated in the pertinent customs import valuation and classification circular (CIVCC) _of the Bureau of Customs. Paper Industries Corporation of the Philippines (PI COP for short) contends that the dutiable value of the imported article for purpose s of the assessment and collection of customs duty should be based on the horne consumption value as declared in the consular and commercial invoices while t he Commissioner of Customs asserts that it should be based on the published horne consumption value as established and indicated in the customs import valuation and classification circular of the Bureau of Customs. PICOP is a corporation duly organized and existing under the laws of the Philippines with principal offices at 6th Floor, JMT Building, Ayala Avenue, Makati, Metro Manila. Reprodciced below are the U!).disputed findings of facts in the decisions appealed from: 28

DECISION - CTA CASES NOS. 3092, 3126 s, 3130 - 3- CTA CASE NO. 3092 This is an appeul from the decision dated September 26, 1978 of the Collector of Customs of the Port of Bislig, Surigao del Sur, on the protest filed by PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP) against the assessment and collection of custcims duties and taxes based on pub- lished home consumption value on appellant's importation of sodium sulphate anhydrous. Subject shipment consisting of 750 bags of sodium sulphate anhydrous arrived at the Port of Bislig on October 8, 1976 from Tokuyama, Japan, aboard the M/S "Eastern Clipper" consigned to PICOP. Import Entry No. 1506-76 was filed on November 2, 1976, supported by the following documents: (1) Bill of Lading No. TCBI-1 dated Septembei 26, 1976; (2) Consular Invoice No. KBO 84933 dated September 26, (3) Packing List dated August 31, and (4) Central Bank Release Certificate No. 76/5647 dated October 31, 1976. The entered value of subject ship- ment was $88.76 per metric ton pursuant � to the value indicated in its covering consula�r and commercial invoices. However, the Collector assessed the same at $140.60 per metric ton in accordance with the published HCV for such kind of articles per CIVCC No. 270-76 dated July 1, 1976, and accordingly required PICOP to pay th e sum of ~86,573.00 in customs duties and taxes. PICOP paid the said amount on March 29, 1978 under O.R. No. 3310774 and filed a formal protest the following day. CTA CASE NO. 3126 This is an appeal from the decision dated September 19, 1978, of the Collector of Customs, Port of Bislig, Surigao del Sur, dismissing the protest dated June 6, 1978, of the PAPER INDUSTRIES CORPORATION OF THE 2 0.) )

DECISION - CTA CASES NOS. 309 2, 3126 & 3130 - 4- PHILIPPINES (PICOP, for short) against the assessment and collection of c~stoms duty and tax based on published home consumption value instead of on the wholesale home consumption value decl a red in the consular and commercial invoices. The record of the case shows that in April, 1978, PICOP imported from Tauranga, New Zealand, 8 ,544 bales (2,136 MT) of kinleith unbleached kraft pulp for use as co~ponent material in its manufacture of kraft paper and newsprint. Said importation was shipped on board the ve ssel "NEDLLYED FREETOV'lN", arriving in Bislig on April 28, 1978. On May 11, 1978, Entry No. B-448-78 was filed therefor together with the necessary supporting documents and entered the same at $229.983 per air dry metric ton. The shipment was however, assessed at $247.00 per metr i c ton based on the published home consumption value ther evf for wh i ch PICOP was required to pay ~804,791.00 in customs duty and tax on Hay 25, 1978 per O.R. No. 9076007. Formal pro t est was filed on June 6, decided on September 19 and from which this appeal was take! on October 4, 1978. CTA CASE NO. 3130 These are appeals from the decisions of the Collector of Customs of Bislig, Surigao del Sur, both dated August 28, 1979, which, owing t o the similarity in the kind and volume of the importations a nd the issues and parties involved, the same are herein being consolidated in a single decision for the sake of convenience. It appears on record that the PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP, for shor t) , on two separate occasions, imported from Japari, 600 metric tons per importation of sodium sulphate anhydrous, 98% min. pulp grade, to be used in its manu- facture of kraft paper and newsprint. I. CUSTOMS CASE NO. 79-39 (Bislig Protest No. 9-79) .- In May, 1979, PICOP imported from Nisiho-Iwai Co., Ltd. of Tokyo, 600 flexible container bags (600 metric tons) of sodium sulphate anhydrous, 98% min. 30

DECISIOL1 - CTA CASES NOS. 3092, 312 6 [ 3 i ~~' i: - 5- p~~2 - .L) <JrCJ.dc 1 lOCl(~ j.ng S[tP1e at Tac;hibana, J-pa.n on board the "U~JI')UE !�1J-,.RI.NER" al-,t'l. arriving at B.isli9 on June , 3, 1979. On June ~Gp 1979, PICOP filed Import Fntry No. B-588 - 79 covering said cargo tog~the~ with the necessary supporting dccume)ts. Subject shiLment was entered at $19.687 per metric ton based on its consulC'r and commercial invoices . Hcwever, it was assessed by the Customs Appraiser thereat at $79.00/MT pursuant to the revised home consumption value thereof published undnr CIVCC No. 270-76 dated July l, 1976, as revised by Revision Order ~o. 12 dated Dec. 1, 1978. Consequently, PICOP was required to pay the amount of �71,843.34 in customs duty and tax per O.R. No. 764720 dated July 26, 1979. A formal protest was filed by PICOP on July 31, 1979. II. CUSTOMS CASE NO. 79-38 (Blslig Protest No. 10-79 ) .- In JGne, 1979, FICCP again i mportcid from the afore-cited company 600 flexible co ~ tainer bags (600 r\1'r) of sodiun1 sulr.)l'"late :!r~!-.t .:: -(lrct.l�1, sam~2 graC~ -~, an<J sl--liL)I.Jf:d on l:�:Jct~� d tl-12 ncAT'I~ ~~YA ACE", arriving at Bislig on July 2; 1979. PICOP accordi~gly filed therefor Import Entry No. B-648-79 als0 with the required supporting documents. Subject shipment was ente�ed at $18.829 per metric ton based on its accompanying consular and coDmerclal invoices. However, the same was assessed at $79.00 per met~ic ton based on the home c0nsumption valus there- of published under CIVCC No. 270-76 as re- v.ised by Rsvision Order No. 12, d.Jted Dec. 1, 1973, and consequently r0quircd PICOP to pay tL�e amount of !:~71,629.00 in customs ~uty and tax per O.R. No. 7640718 dated July 24, 1979. Formal protest was fL.ed on J"uly 3J.. 1 _1979. The Collector o f Customs of Bislig, SurjJao d e .'I.. d ~csm.issed the protests filed by PICOP in the above ~ases. So ~id appellee (res ponde n t) Commissioner of Customs. Hence the present r e cours2.

DECISION - CTA CASES NOS . 3092, 3126 & 3130 -~ 6 - Inasmuch as these three appeal~ ~aise the sa e and co@mon qus3tio n of law, in accordance with the manifestatirn and motion of appellant (petitioner) dated Novembe r 28, 1980, they are consolidated in this Decision. There is no controversy between the parties as to the computation o f the amounts of customs duties clai ~d by appellant (petitioner) as refundable . The only question presented for the resolution of the Court is whether, under the provisions of Section 201 of the Tariff and Customs Code, as amended , the correct home con- sumplion vr:tlue of the ,;e:3pective subject imported articles, w~ich should be the basis of the assessment and ~ollection of customs duties due thereon, is the value or prj.ce declared in the commercial end consular invoices or the value or price establis hed a~d published by the Bureau of Customs in Customs Import Valuation & Classification Circular (CIVCC) No. 270- 76 dated July l, 1976 . Section 201 of the Tariff and Cu s toms Code SEC . 201. Basis of Dt tiabJ.e Value.- The dutiable value of an i? ~orted article subject to an ad valore ~ :onsurnption shall be based on the r y value or price (exclud~ ~r ~d ter11al excise ta x es) .of same, like o � � : ''1 i l a r a r. t i c l e s ; 32

DECISION - CTA CASES .' OS . 3092 I 31.26 & 3130 - 7- as bought and sold o~ offered for sale freely in the usual wholesale quantities i n the o~di n ary couLse of trade, ir1 tl17.: r;;r i. c ipal rnar i:~e ts of the country from where exported on tha date of expor tation to the Philippine s, or where there is none on s uch date, then on the home con- sumption val ue or price nearest to the date of exportation including t~~e "-Ialue of all cor1tai11ers, cov!~rings and/or packings of ~ny kind and all other costs, charges and expenses incident to placing the article in a condition r eady fo r shipment to the Philippine~, plus ten (10 ) per cent of such home cons~mption v~lue or price. The home consump ti on value or price un~er t h is sec tion shall be the value or pr i ce declared in the consular, comme~cia l, trade or sales invoice. Where the r e exists a reasonabl~ doubt as to the va l ue or price of the im- ported art icle declared in t he entry, the cor rect dutiable value of the article shall be ascertained from tl-:e r.eports cf the Revenue Attacbe or: Commercial Attache (Foreign Trade Promotion Attache), pur~uant t o i t " - He')' 11''c�� ,., fo, ' . t ....1. th..l f ,�~� �i - ..... r- d-..�.... N- 1-1~ fi�'lb-P c.._.. r...1... .'! ~. . ~ V.l.'. . ..... - hundred and sixty-six o r other Philir- pine diplomatic officers and from such other information that may be Jvailable to the Bureau of Customs. From the data thus gathered , the Commissioner of Customs shall a~certain and establ i sh the home consumption values of articles exported to the Philjppines and shall publish such lists of values fcom t i me t o time. When the dutiable value provided for in the preceding paragraphs cannot be asce~tained foe fa il ure of the im- porter to produce the documents mentioned in the second paragraph, or where there exists a reasonable doubt as to d~tiable 33 l

r DECISION �- CTA CASES NOS. 3092? 3126 & 3130 - 8 -- value oi the imported article decl ared i n the entry , it shall be the domestic whole sale selling price of such or similar article in Manila or other p!incipa l ma r kets in the Philippines on the date the duty becomes payaule on the article under appraisement , in the usual wholesale quantities and in the ordinary course of trade, minus -- (a ) Twenty (20 ) per cent thereof �for expense~ and profits ; and (b) Duties and taxes paid thereon. It is clear f om the p~ovisions of se~tion 201 that the home consumption value of the imported article shall be the value a~ price declared in the commercial , consular, trade or sales invoice. e~ists a reasonable doubt aG to the correctness of the value or price declared in the entry, the corcect dutiable value of the article shall be ascertained from the reports of the Revenue Att~chc or Ccmmercial Fl.ttache or other Philippi!le dipL)�- matic officers and from such other i nformation that may b0 a;,.;:e:.ilable to the Bur~.au cf Custcn ;G , And from the dat~ th us gathered, the Commissioner of Customs sh~l l ascertpin and establish the home consumption values of articles exported to the Philippines and shall publish s~ch lists at values frcm time to time. (Nationa l Dental Supply, Inc.

' DECISIO~�J - CTA CASES NOS. 3092 , 3126 & 3130 - 9- .]1:;-,.e 2.9 , 1979 , ce r tio r ar i den i ed i.n G.R. No. 51236, dated J a nuary 18 , 198 0; Pr octer & Gamb l e Philippine Manufacturing Cor porat 1o. vs . Commissionet of Customs, CTA Case No. 278 8, February 27 , 1981.) In othe~ wor d s 1 while the law orescribea the rule that "':he home c onsump tion val1.1e of the im- ported article shall be t he value or price declaLed in the commercial , consula r, trade or s~les invoice, the same should not be app l ied in case the corre~t- ness of such v a lue or p~i c e dc~lared in the invoice is vitiated by reasonable doubt. And what hould then be consideted as t he co rrect horne consumption value, in such case, sho u l rl be the value or price ascertained by the Bureau o f Customs f~om the r epor :.:;-.; of t he Rsve::~ue l-\ tt c;l c be or Conunercial Z\.tt.ache or other Phil i ppine diploma tic officcrsr and which va l ue has been established <And published bv.. sal'.a., Bure~u from ti me to time . ( Na~ion~ l Den~al Supply, Inc . vs. The Commissioner of Customs, CTA Case No. 2816, June 29 , 1979; certiorari denied in G.R. No. 51236, Janu~ry lB, 1980; Pro=ter & G2mble Philit-'Pi~e i'l<.:l.:ll!:facturing Corporation V";;;~, Com- missioner o~ Customs , CTA Case No. 2788, February 27, 1981.)

DECISION - CTA CASES NOS. 3092 3126 & 3130 - 10 �- Here, in the inst ~ nt cases, which were in e f fect submitted for decision based on the pleadings, i ncluding the a nnexes thereof after the parties have marked and pre s e n ted the m as their respective exhibits, and the records of the Bureau of Customs bearing on these proc eedings, it is not disputed tha t the customs duties were a s s essed and collected based on the �1:1bli.shed home consumption values of the impor t ed articles as contained in Customs Import Valuation and Classification Circular (CI VCC) ~o. 270-76 dated J uly l, 1976 of the Bureau of Customs. As alleged by appellant (peti- t ioner) in all its appeals (petit ions for review) t o this Cour t (par. 5 in CTA Case No. 3092~ par. 6 in CTA Case No . 3126; par. 14 in CTA Case No . 3130) a nd admitted by a ppellee (respondent) in his Answe rs, the Collector of Customs assess e d the custom s dutie s due on the subject shipments based on the Eublishe d home consumption values thereof as contained i n Cu stoms I Mpor t Valuation and Classification Cir- CIJ lar (CIVCC) No. 270-76 dated July 1, 1976. The s ~ id Customs I mpo rt Valuation and Classificat i o n Circ ular No. 270 - 76 dated July 1, 1976, publishing the list of ho me co nsumption v alues and tariff 3G

DECISION - CTA CASES NOS. 3092, 3126 & 3130 - ll - classifications of ~rti cles exported to the Philippines from different countries was issued, as expressly stated therein, by the Commissioner of Customs pursuant to the provisions of Section 201 in relation to Section 602-a of the Tariff and Customs Code of the Philippines, as amended. (Exh . "1", pp. 33-34, CTA Case No. 3092; pp. 64 �- 65, CTA Case No. 3126.) And the p~_l:)J.~.sl?:_~Q home consumption values (HCV) under CIVCC No . 270-76 of the imported articles mentioned therein had been ascertained by the Commi ssioner of Customs, according to appellee (responde nt ) ~ from the reports submitte~ by the Revenue Attache, Commerci a l Attache and Cust oms Attac he. (See pp. 29-30, CTA Case No. 3092 re cor ds; pp. 48-49, CTA Case No. 3126 records; 'J pp. 57-58, CTA Case No. 313 0 records.) The customs \ authoriti es had to apply the published home con- sumption values under CIVCC No. 270-76 dated July l , 1976, in vie w of the fact that the entered values of the s ub ject shipments reflected in the consular and comme rcial invoices presented by appellant (petitioner) .were very m~ch lower than the published home consumption values ascertained and established by th e Commissioner of Cu~toms pu.rsua.nt to Section 201, E:l!P.E.E.:.~ tber(?.by cle~rly

DECISION - CTA CASES NOS . 3092, 3126 & 3130 - 12 - creating a. ~~,!?~_doubt as to the true home consumption values or prices of the imported articles. (pp . 28-29, CTA Case No. 3092 records.) As contended by appellee (r espondent ) ~ the pub- lished home consumption values strike the most reasonable values of the imported merchandise being the average values of s e veral transactions in a p ar ticular place. (pp . 51-52, CTA Case No. 3126 records; p. 60, CTA Case No. 3130 records . ) It appearing that appellee (respondent) Commissione r of Customs had reasonable doubt as to the values or prices of the subject imported articles declared in the entries, and the published home consumption values strike him as the most reasonable values, there seems no basis therefore for an asseition that the customs a uthorities erred in relying upon the published home con- surnption values of the imported shipments as contained in Cus toms Import Valuation and Class- ification Circular (CJ VCC ) No . 270-76 dated July 1, 1976, which published home consumption values had been ascertained and ~stablished by the Commissioner of Customs from the rEports submi tted by the Revenue ,. Attache, Commercial Att ache and Customs Attache; r 38 j

DECISION - CTA CASES NOS. 3092, 3126 & 3130 - 13 - instead of the hom ~ consumption values declared in the consular and com~e r cial invoices. The law is clear and specific. It merely calls for application as thus worded."The home consumption value or price under this section shall be the value or ~ice declared in the con- s;Jlar, commercial , trade or sales invoice." How- ever, ~where there exist s a reasonable doubt as to the value or price of the imported article declared in the entry, the correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache)~ pur- suant to Republic Act Numbered Fifty-four hundred and sixty-six or other Phi lippine diplomatic officers and from such other information that may be available to the Bureau of Custon~ s." "F ro m the data thus gathered, the Commissioner of Customs shall ascertain and establish the home consu~ption values of a rticles exforted to the Philippines and shall publish such lists of values from ti me to time." To the extent that the customs authorities adhere lilerally to such applicable legal provisions, the decisions appealed from cannot be as sailed as r. 39

DECISION - CTA CASES NOS. 3092, 3126 & 3130 -- 14 - erroneous . There being fidelity to what are required by the legal provisions, what w~s done by appellee (respondent ) could not therefore be successfully chullenged as imprope r and illega l. It is hardly necessary to add that if the customs authorities were always bound by the invoice value, it is evident that they would be , to a cons iderable extent, at the mercy of foreign merchants and importers. (Lim Quim vs. Collec~or of Customs, 23 Phil. 509 [191�/; The Coca-Cola Export Corporation vs. The Commissioner of Internal Revenue and the Collector of Customs, Manila, L-23604, March 15, 1974, 56 SCRA 5.) The value of imported a rticle s as fixed by the customs authorities in the discharge of their function of assessing� .:lnd collecting the law[ul revenues justly due on imported articles and confirmed by the customs commissioner is presumed to be correct and therefore conclusive in the absence of fraud or illegality or of an affirmative showing by t he rrotesting importer that the customs authcrities in fixing or assessing the value of the importation proceeded upon a wrong principle and contrary to law. The burden thus rests upon the importer disput:Ln1:) the customs valuat:bn not only to prove 40

DECISION - CTA CASES NOS. 3092, 3126 f~ 3130 - 15 - the contrary and overcome the presumption of correctness of the valuation but also to show that the figures declared by him are in fact true and correct. (Te Chin Boo vs. Collector of Customs, vs. Commissioner of Internal Revenue & Collector of Customs, supra.) In the instant cases, herein appellant (petitioner) _fai led to discharge such burden. Where, as here, there was full and un- conditional compliance with the wordings of the law applicable, and there being no allegation of illegality committed by or fraud on the part of the customs authorit ies, the presumption of correct- ness of the dutiable values of the subject imported articles becomes conclus ive upon appellant (peti- tioner) �. Wise & Company, Inc . vs. Commissioner of Customs, CTA Case No . 2717, December 29, 1977; and NCR Corporation (Fhil.) vs. Commissioner of Customs, CTA Case No. 2599, February 28 , 1978, cited by appellant (petitioner) .are not in point. As clearly explained therein, this Court could not disregard the home consumption values of the imported articles involved in said cases as indicated and declared in their consular and 41

DECISION ��� CTA CASES NOS. 3092, 3126 & 3130 - 16 - commercial invoice::; because there wc.:rc no J.?J..0.?.~-L~l"l�f~9.. home consumption val ues of the imported articles ascertained and established by the Commissioner of Customs from the reports of tne Revenue Attache or Commercial Attache (Foreign Trade Promotion Attache) or other Philipp ine diplomatic officers , as required by law. Neither was there a showing of lhe exist- ence of a reasonable doubt as to the val ue s or prices of the imported merchandise declared in the entries in order that the home consumption values E;tatcd in the consuL:n o.c commercial invoices could be discegarded. In other worcL:;, since there was an absence of an affirmative showing of the existe nc e of publ ished home consumption val ues of the imported articles therein, ascertained a.d establi shed 'by the Commissioner of Customs from reports of revenue a ttache , commercial attache or trade attache, and there ex isted no re<Jsonable doubt as to the values or prices of the importerl articles declared in the entries, the Court ruled th~t was no justification for disregarding the home consumption values indicated and declared in the c011:~ular. and cornme rc ial invo i.ces. The appeal ed decisions must therefore stand. No error could ~e imputed against appellee's (respondent's) judgments Gus ta in ing for lack of 'I I 42

DECISION -� CTA CASES NOS. 3092, 3126 & 3130 - 17 -- mer1. t t h e o"1. sm.1ssa 1 b.y the Collector of Customs of the Port of Bislig, Surigao del Sur, of the pro- tests filed by ap~cllant (petitioner) .Paper Indust- ries Corporation of the Philippines (PICOP) against the assessment and collccti~n of customs duties based on the publ i s__hc:.~ home consumption vulues of the imported articles involved in these appeals as c ontained in Cu3toms Import Valuation and Class- ification Circulor (CIVCC} No . 270-76 dated July l, 1976, issued by the Co~~issioner of Customs in accordance with the requirements of the law appllcablc. WHEREFORE, finding no merit 1n thes e appeals (petitions for review), the appealed decisions are her eby affirmed in these three cases, with costs c:tgair:st appellant (petitioner ) in all 1nstances . SO OE0ER~D. Quezon .City, Metro Manila, Janu~ry 29 , 1982 . �