CTA Case No. 1974 (Decision)

.. E'3SO STi\NDAF.D FEHrl'IL 1 ZE:H & i.\��;rncnuru:rr,L c:-m~nc,:;.r_, co., '.'NL"CJ' � ( -l:v:.nr I -I '-1 PJ?: .T� 'li''l'.F-nc.)�)' 1 Peti tione::, �- versus M C.T.A. CASE NO: 1974 COI1lJ~1ISSIONEP. OF TN'l'EI\.Nl\T_. �REV.wNUE , Respondent., X - - .��- .- �- - � �� -� y; p r:: c I s T 0 N At bar is the claim of petitioner Esso St ndard Fertil.izer & Agricultural Chemical Inc. (Philippines} .for. ::-efund or: tax credit of th:::: s1m of Pl2~333 . 00 as allesed excess payment of advance sales tax on its importations on October 27, 1966, No ember 20, 1966i l- .o(1J: 1~67 a.d. Febr'..lary 5, 1967 of urei:Ol, coated and pclletc d. There is no question as to the racts of the cas e . After petitione~ and respondent wcr0 no~ able to settle thiF appeal extrajudicially, i.e., on the administrativ1:: level, they su bE1i.t~:ed tb.c case for decision on the basis of the pleadings an3 the records of the Bure~u of Inter1 al Revenue bearing on this proceeding. And th2 pleadings and recor~s sLow t!:Jat: -.

DECISION - CTA c:..S!~ ~10. 19 7 4 - �- ''-)� 1. Petitioner is a corporation organized and existing under the laHs of tbe Ph.ilip;?ir es, wi.th principal office at Manila Banking Corporation Building, Ayala Avenue: Makati, Rizal. Respondent is the duly appointed Comm i ssioner of Internal Revenue vested wich aLthority to act as such for the Reputlic of the Philippines. 2. Petitio~er is a manufacturer of fertilizer and agricultur~l chemicals. ! n connection with this business, petitioner imported during the latter part� of 1966 and the early part of 1967 several bags of urea, coated and pelleted. The details of these importations are as follows: Date of Arrival No" of Bags of Import Entry Oct. 27 1 1966 No. Name of Vessel Urea , coated Nov. 20 1 1966 101808-1966 ;.21l~Ue.:..<Jj. s ~.fY~S?. � .0D:d .E!~l) e !~~d. _ Jar �� 10, 1967 100188-1966 Feb. 51 1967 S.S. "Toyo �.1aru'l 40,000 No. 1 , Reg. No. OJY)0-1.967 1880 12090-1967 s.s. "Eastern Visay21s," H.eg. No. 1845 . �"' .C' ('1 n;;,;qbic Bay" 301000 ;..') He'J. No. 54 pc .C~>. "Shi.nk. f.1a.r u" 40p000 l~f..~g ~ J.\]O" 204 On the above importations of urea, coated and pclleted, the Collector of Custons of the Port of

DECISION - CTA CASE NO. 1974 - 3- Manila, for and in behalf of respondent Commissioner of Internal Revenue, assessed and collected from petitioner the 7% advance sales tax computed on the basis of the 10% ad valorem d uty provided fo r in paragraph 29.26B of the Tar iff and Customs Code . Parenthetically, paragr aph 29.268 of the then in force Tariff and Customs Code imposed on urea an ad valo~ duty of 10 % if the nitrogen content of the importation is more than 45 %. However, if its nitrogen content is 45% or less, the duty is onl y 5% under tari ff paragraph 31.028. The Bureau of Customs appraiser classified the above importations under tariff paragraph 29.268 and imposed the higher tariff duty of 10 %. 4. The payme nts of the above advance sales tax which are evidenced by the fol lowing official receipts: Official Receipt No. Date Issued - - Amount 54871 Dec. 2 , 1966 1?86,122.00 56023 De c. 9, 1966 68,900.00 61531 Jan. 16, 1967 51,660.00 65231 Feb. 13, 1967 66,624.00 were made by petitioner in view of its immediate need for the shipments . However, petitioner lodged corres- pending protests against th e additional 5 % ad yalo�~ duty and the corresponding advance sales tax pend ing the results of the che mical a nalysis then being

.. DECISION - CTA CASE NO. 1974 - 4- conducted by the National I nst itute of Science and Technology (NIS T ) _t u determine the true nitrogen content of the urea of each of the four shipments . 5. In view of the findings of the National Institute of Science and Technology (NIST) _that neither of the urea of each of the four shipments contains more than 45% of nitrogen, p e titioner main- tains that it is subject only to 5% ad valorem duty on its above importations, inste ad of 10% imposed and collecte d by the Bureau of Customs . Petitioner , therefore,c l aims that it has overpaid the corresponding a dvance s ales tax thereof in the total amount of ~12,333.00 . 6. On August 22, 1 9 6 8 , pe t itioner f il e d separa t e c laims for refund of th e e xcess advance sales t ax paid on the importation s cover ed by Official Receipts Nos . 54 8 71 , 5 6023 and 61531. On September 6, 1968, petitioner f iled anothe r claim for refund of the excess advance s ales tax p i d on the importation covered by Offic i al Rec e i p t No . 65231 . Af ter n o sea so nable a ction wa s t aken b y r espon- dent on its cla ims fo r ref und , pe ti tione r f iled this petition for r e view with this Court for the purpose o f interrupting the r unning o f the p r escriptive

DECISION - CTA CASE NO. 1974 - 5- period for instituting judicial action for the recovery of the aforesaid overpayments of adva nce sales tax. The parties are not in controversy on the computation of the advance sales tax payable by, or the amount refundable to , petitioner as the case may be. Is petitioner Esse Standard Fertilizer & Agri- cultural Chemical Co., Inc . (Philippines) _entitled to the refund of the sum of Pl2,333.00 as overpaid advance sales tax on the imported urea involved in this case? The resolution of this iss ue depends upon the question whether said imported urea contains more than 45 % or less nitrogen. An analysis of the nitrogen content of said imported urea by t he National Institute of Science and Technology upon request by the Bureau of Customs shows the following : (pp � 55 , 57 , 58 , 60 & 68 , BI R records.) No . of Bags of Date of Arrival & Urea Coated & Nitroge n Analysis Import Entry No. Pelleted Content Number Feb. 5, 1967 40,000 42.48 % 2- 6.7- o.0 3- 3 1 2090 30,000 44 . 8% 1-6.7-0.03-1.43 Jan. 10, 1967 03300 Nov. 20, 1966 50 , 000 45% 1-6 7-00 3-7.0 100188 Oct. 27, 1966 40,000 45% 1-6 7-00 3-7.1 1018 08 247

.. DECISION - CTA CAS� . NO. 1974 - .6 - It appearing from the aforesaid a na l ysis r epor ts that error was committed by the customs appraiser i n imposing 10% ad valorem duty on the said imported ur ea instead of only 5%, resulting i n excess advance sales tax payments, to wi t: O.R . NO. Date Issued Amount Paid Excess 65231 2-13-66 p 66 , 624.00 fl 3 , 006 . 00 54871 12- 2-66 8 6,122 . 00 3 , 886.00 56023 68 , 900. 00 3 , 109 . 00 6153 1 1- 9-66 51,600 .0 0 2 , 332.00 1-16-6 7 T0 TAL petitioner ESso Standard Fertilizer & Agricultural Chemical Co. , Inc . (Philipp ines) _should have paid only fl260 , 973.00 instead of P273,306.0 0 advanc e sales tax on its ur e a importations. The records show that the aforesaid payments as we ll as the discrepancy reports duly approved �by t h e Bureau of Cu s toms have been v erified by the office of respondent. (p. 67, BIR records.) In the a bsence of contrary fin d ing and analysis a s to the nitrogen content of the urea involv e d in this case, we s e e no valid re a son for us not to gr a nt a tax credit in f a vor of petitioner the to t al amount of Pl2 , 333 . 00 as ex ces s p ayme nt of advan ce s al e s t ax on its import- ations of urea involved in this case . Paragraph 3l.02B of the then in force Tarif f a nd Customs Code

DECISION - CTA CASE NO . 1974 - 7- imposed on urea an ad valo~ duty of 5% if the nitr ogen conte nt of the importation is 45% or l ess . The law is clear and specific . Our plain duty therefore is t o apply the law as it is written . WHEREFORE, r espondent Commission e r of Internal Revenue is hereby ordered to grant a tax cr edit in fa vor o f petitione r Esso Standard Fertilizer & Agri- cultural Ch emica l Co. , Inc. (Philippine s ) _the amount of Pl2 , 333 . 00. Without pronouncement as to costs . SO ORDERED . Quezon City, Metro Ma nila, May 29 , 1981. vJE CONCUR : ~> Associate Judge