CTA Case No. 3424 (Decision)

R F. PUR T. l <: (l f T H J: P H J T. f P P l H R B COPJ'T OJI TAX APPF./\I.S QUEZOH CITY PAPER INDUSTRIES CORr . nATIO,N OF THE PHILI PPINES (rtCOP )~ F' r t i t i .nne r� . C.T.A. CASE NO . 3424 lc i I' RAMON J. FARO AN, ,;,(/1 ({ ,. F\'espnr1d Pn t . !�! -- - - - - - -- -� - ~� ~ DE c I I 0 ...... Customs Co d<=>, i r.; ,7\ clr.r 1 v frcm l<atsum aya Co. � LhL of l ::" obe:>~ J apc7'l n. 79 s l : jd c; of i. n t e t- 1 a k e s t ee l s tt- ? r r i n g '=' vJ i t h a n e t \', P. i q h t cd 80~000 k ilograms. Th.i s sh::>e l st t- Fippi.ngs s hi pmPnt ~.,.hi e h i s co vp r-�erl by F n tr� y l\ln. B 696 ( fl.O ) � at- r i ve ri .in / 1/ : t tr \,I 9 7- Pr

DECISION CTA CASE NO. 3 q2~ - 2- .1 '180 ~ on 1� IT I TRAt~SP CJfn V - 1t.rJ ; 3 . PQtitionRr fil Rd an Abstrac t Im po rt rntry and Int. e n1 a l HevF' nL\r> L' ec l -=~r � a tion COVP r inq tllP ~- ubj ec t d ec larinq t.l1 r.> ~:::a mP lnt pur� pn<:�I?S o f p ayi.ng C \1 :-,t.omc:; �for�ms men t i n 11 e d in l lr-'Ar.linqs 1\!o . 73.06 '"'nd T !. . .1 "1- ) . Und e r t hi s c 1 '"' s s j 1' i c: at. ion ~ p c> t i t ionr'?r� ' s ca r� qo �s subje c t t o a j (l~~ ad va l or� e m dut y ra te~ and t he cu s tom s dul y ~ t 0x a nd other charg es due o n i t t o t a 1 P8 lJ. ~ 511�0. Uu ; 4. Th e Coll ec to t- of Customs o f the Port of c l assi �f i c a t i o n of t.h e s t. r~e l str� ap p ing CC\ I'� go~ and '"'"d l1on p c;; t . t - jp of .ir nn o,... stee l)~ to Co rl S'.t=' q'.lf'=' ' 1t J y , to pay� a t. o t: .:d of F1 7 �1 ~ ( .'!:� (). ( l(l i}S di t ty~ t.a: : i::'\ lld othP.r� c h a r� qes . r=� P. t i t .i r::m e r p ;:~ .i.d this a mn un t., �form a l p rote st ~o,)ith tll F.~ t: n l l ec to l- of Custnms of th e P ort o �f D.i s l i q . d e l Su r~ prot. est inq thr (\ I

DECISION CTA CASE NO. 3424 - 3- alleged "erroneous and unreasonable valuation and consequent imposition of excessive and unreasonable tustoms duty based on 30% Ad Valorem rate on imported carbon steel stra pp ing covered by Entry No. B-696(80)"; and prayi ng that the said Entry "be rel .iquidated and recompu te d" and the amount of P89,505.00 representing alleged eHcess payment by it of tax and other charges and fees~ b~ refundedr � � 6. On F ebr uary 27, 1981, the Cell ector of Customs of the Port of Bisl ig, Surigao del Sur dismissed the December 1~ 1980 protest for lac~ of merit~ declar i ng the " classi ficat i on of the subject steel strapping under heading 73.128 at 30% ad valorem" to be in order ; 7. Petitione r fil e d an e~ppeal wi th respond e nt from the Collector of the Port of Bislig February 27, 1981 d ec is ion. On December 4, 198 1 P respondent dismissed petitioner's and affirmed the February 27 , 1981 decision J antl 8. On February 15, .1981, petitioner f lied i tl;s "Petition �f o r Rev .i.e 1~". with this court, praying for the setting a s ide of respondent's December 4,1981 decisi on , the reliquidation of Entry No. B-696(80), and the refund to i t of P89,505.00~ .. repr-esent ing an alleged excess payment of duties (fj) and ta xes.

DECISION CTA CASE NO. 3424 - 4- The lone issue presented to the court ' for determination i s s Under what tariff heading does petitioner's shipment of interlake 1steel strappings covered by Entry No . B-696(80) fall? In . particular~ should i t be classified under Tariff ' Heading No. 73 .1 28 as petitioner insists, or under Tariff Heading No. 73. 1 5 as respondent contends? '' . The court f inds merit in the pos:i. tion of the respondent. . �' ,. 'I -Section 104, S c hedule XV, Chapter 73 of the Revised Tariff and Customs Code deals with "Base Metals and Articles of Base Metals", particul'arly 1� " I r o n and Steel and .articles Thereof", .,. Heading "No. �I 73.12B cove rs and imposes a 30% ad valorem �rate� bn: .- .. "Co ld - rolled hoo p and strip of iron or steel." . On the oth er h a nd, Headi ng No. 73.15 ~overs and ' '1 imposes a 10% a d val orem tax o n: l ! J . 1 "Alloy stPE'l F\nd h � gh c::~rbon stee l in th e form; me nti o n e d in heading ' No s . ~ � 'r- 73.06 to 73 .14." Cruci a l in the cour t' s determination of the � , '1 � issue now befo re it is not the undisputed assertion I' . of re s pond e nt that s ubject stee l strapping s are.' l� cold-rolled hoop or strip steel. Instead , by '' J ~ tl ' ..-:" ~eason of the above- quoted Hea ding No. 73.15, what II I -. is pivotal is the q ues tion of whe ther or not suc h . ' �-.

'� DECISION CTA CASE NO. 3424 - 5- !!\trappings are alloy or high carbon steel in the. form of c o ld - rolled hoop or strip~ for as petitioner corr-ectly argues in its "Memor-andum": "It is v e r-y clear that under (Tariff Heading No. 73.15), the articles cover-ed ther-eunder may be in the forms mentioned in headings nos. 73.06 to 7 3 .14, i.e., they could be hoops and s trips of iron or steel~ coated or un c oat e d, they could be used for hooping of boxes, casks and containers, a nd they ( c ould ) have the thickness and wid t h conforming to the definition of hoo ps a nd str-ips, but a s long as the y ar- e o f alloy steel (or) high carbon steel, the y must be class ifi e d under- Tar-iff He a di ng No . 7 3 .15 a t 1 0 % a d valor-em rate of duty." ( 1'1emor-andum, page 4, C.T.A. Recor-d s , page 161). Pertinently, accor-ding to the Explanatory Notes to .Head ing No. 73.12, the said heading does not cover-, among other- things, "hoops and strip alloy or hl.gh car-bon steel". That the subj ec t strappings are not hoop and str-ip alloy ste el is c lea r and undisputed by both par-ties to thi.s case. Therefore, the cour-t wi 11 focus on petitioner-'s contention that the str-appings ar-e made of high car-bon steel. Petitioner anchor-s its contention on two ar-guments: fir-st, the use to which the strappings ar-e put (as deter-mined by r-espondent), which is to tie togethe r finished plywood pr-oducts into bundles of sever-al sheets, shows that the str-appings are highly tensile and resistant to @l

/ DECISION CTA CASE NO. 3424 - 6- breakages, and are~ consequent 1y, of high carbon; and second, that the National Institute of Science and Technology or the NIST, has all~gedly found the subject strappings to ha ve a "predominant weight fof ' high carbon s tee l". Petition e r's ten s ility 1 argument augu~s � well ~ for its cause~ for the Explanatory Notes to Heading �� ~o: 73.15 state s ~ in pa~t~ that: �� t "H >: >: Hi gh ca r� bo n s te e l s have great � tensile strength a nd ha rdness a nd are u s ed for sprin g s~ cutlery~ .' too 1 s, etc . x >: l{ " � However, it d oe s n ot f o ll ow th a t sin c e the strappings a re t ens il e , then the y are necessari 1y high carbo n s t ee l hoops and strips. Suc h conclusion may only be d r awn if it is shown that the subject strappings conform to the technical . definition of high c arbo n s t ee l give n under Sec tion .. 104~ ' Chapter 7 3 ( e ) o f t he Rev is e d Tariff a nd Customs cod e~ thu ~ : "High CiO\rbon steel (headi ng No. 3 .1 5 ): St ee l co nt ai nin g~ by w e ight~ hot les s th a n 0 .6"1. of c ar h o n a nd ha vi ng a con tent~ by weig ht~ 1es s th a n 0. 0 41. o f phos phorous an d su i f ur t a ke n se pa r ate 1y and less th a n 0 . 0 71. of these elem~nts take n t oge ther ." Peti'tion e r fa.i.ls t o ma ke suc h s howing. Petitioner makes mu c h of the all ~ ged findings of the Nationa l Insti t ute of Sc ience and Technology

DECISION CTA CASE NO. 3424 - 7- or NIST ~ that the subjec t steel strapping has a "predominant weight of high carbon steel". Petitioner presented in evidence as Exhibit "F", an uncertified photocopy of what it claims to be the "CertiTit:ate/Report� on the Result of the laboratory test conducted. by th e National lnstitute � of S~iehcei t ., and Technology on the imported ans local steel strappings", for the pi..1rpose o �f showir1g "that the ' � 1l imported carbon steel str.!l.ppings have a higher tens.i le strength because it is a high t:arb'on steel classified und e r Tariff He ading 7 3.. 15". The exhibit cannot be given any ' weight by the ; court. '�� r � ~ ., � ,., o-l According to Rule . 130~ Sect.io~ 3 of '' the '� '. ' Revised ~ules of C6Jr~c I. � . . . ,. ''. I t .) ~� ..1 � f , I ; .. "Sec~ 3: l;,.lr:.!.9..!D.~J_ _9.9~..q.ffi.!?D~-.!!!.!:!SL..Pe. Pr.:1P.Q.!:J..<:::..~.P. l ........E?Y.. <:::. ~..Q_t:_i_Qfl..�_.__ - t.<Jhen the subject of inquiry is the contents of ' a documeHt, O.P~--~Yl9.!?..o. <::: �?.______ �.b.~J. L......!:?.~-----A9 mi-..?.~_!_b l.!?. _ .. Q..t.be r t h ~.o......J:..h~_9.. r.::J_gJ .r::tS~. .LJ;I..Q..!;. !:~.mgo.J:_ i t Sf?J...f .�_.~?,i!;_g.Q_t . ~1 'J in the follo~o>ling cases: Jr"n � .. r� (a) t.<Jhen the original has been 'los t:: ''"'' ~ ~�� or destroyed, or cannot be produced in � court~ ~o>lithoLit bad �f.:dth on the pe\~t of r' the offeror ; .: (b) When the original is in the custody or under the contro l of the party against who m the evidence is offered. and the latt e r fail s t o produce it ~fter reason a ble notice; I� ( c ) l!Jhen th e origi.nal consists of h u~~rous ac c6 unts of ottler ~ dot:Ltments ' � ~ which cannot be e>:amined in court

DECISION CTA CASE NO. 3424 - 8- I� � without great loss of time and the fact sought to be estab li shed from them is only the general resu lt of the whole; and (d) When the original is a public . , , . r-ecord in the custody of a public office r or .is r-e c orded .i.n a pub 1 ic off ice. 11 (Und e rscor-ing s upplied) Petitioner- obv Jou-:;1 y c:annot anchor its f ai 1ur-e to ! produce the or� igin a l of tt1e alleged NIST ' report on par-agraphs (b) and (c) above quotPd. If sue h failur e f<\lls under e>:cep tion (a) , th e n i t. s hould 1 have comp 1 ied v.d. th the pr- ov isions of Ru 1 e 130 ~ Section 5 of the Revised Rules of Court~ thus: II S ec . 5. ~Jhg.o.._..fl.r...t..g.:i.n.~..L ...Q.Q.~~Ille.ni___.!..?. blD..~Y~..tl..~ .h.L~. ~.. - Wtmn the original document has been l ost or d e stroyed, or cannot be , prod uced in c o urt, the offeror-, !:.-.\.Q9D.. Q.CQQ_f__ _Qf.. .___.j,__t_s_ _gr,_;.?_<;J,l t i _gn_ ___QL _ .�.!.:Li.?..t.en_~_fL-E..!J Q. !._tlg __ ~ c:l...l ~~P, ..__Q.f. ... ) . ,t<;?____ l,JD a. \l_a.JJ.~.!;!j.JJ...t.Y._~_,Ltb.P..1-!.t. '. 9..�1Q .. ___f. ~-Lth___pn_.____bJ .�____ ..P ~ r.::..t.s. may p t-o v!?. i t s contents by a copy, r>r- by a rec ita l of its contents in some aut h en tic ated . docum e nt~ or by the testimony of witn esses n the order- stated." : (Unde rscor-ing supp lied) Clearly~ although i t is permitted (under Section 5) to prove the contents of the alleged NIST r-eport by a copy thereof~ petitioner must first present proof of the original's e:�:ecution/existence and of the cause . of its unavai 1 ab.i 1 i ty. Petitioner- did not ' conform with such pr-erequisite duty, and therefor-e, cannot submit a photos tact.ic copy of the alleged NIST report to prove the carbon content of the subject shipment.

l �/. DECISION CTA CASE NO. 3424 - 9- �.~� On the other h cim d, if petitioner-'s �inability to produce the orig inal of the � alleged NIST report is made t o fall under � Rule 130, Section 3 (d), �quoted abo ve, the n Rule 1 3 0, Sect i on 7 of the Reviged Rules of Court a pplies. ''Sec . 7. ~Y..i.c.L~r.:u;.f?_______~.Q.mJ . ~~JP.l..E!._____ \:'Ih~..o. Q.r. i gJ o~ t ___ q_q~,; qrn e~J.t .._ .i..!:?.....E........P.. ~t?..!.Js;___.r_~~.Q..cQ....._ - When the original of �a document is in the custod y of a pub 1ic o fficer or l s �� �� recorded in a public office, its 'cont~nts � may b e proved b y a �;__f?.r .t .t.f_t~.~- copy issued by the publ i c officer in � cu ~ tody thereo f." (Und e r scoring s u pplied) Therefo re, pe t it i oner 's un c erti f .ied photocopy �r ~��l; l ,,,,.. .. of the all e g e d NIST r e port ( E}:t-d.bit "F") cannot be admitted as e v idenc e of t he a lleged original ' s .' . I content. Clearly, r e titi o n P. r f ai l e d to follow the proper procedure in havi ng t he a ll eged NI ST report fI -! admitte d . .,-:; ' As a n aside , the court no t es t h at eve n i f Exhibit " F " we r e p roper l y ad mi s sible in ev i dence, it still wo ul d n ot be g iv e n e v id e ntiary we ight for �� f - � � II ... the f o l l. o. w i n g r easons : ~ 1. Although it was offere d in evidenc e - to l' '' . I .. .. ... show that the s ub jec t s tr- ap pings "h a v e a high e r- tensile str-e n g th be c ause it is a h i gh carbo n stee l cl as sified u ndei-- Tar-iff Head ing 73 .15", the e :-: hibi t ,... ; I ' f' does nothing of the sm-- t. The impo r ted samp l e 1'7- r

DECISION CTA CASE NO. 3424 - 10 - tested was found to have a higher tensile strength than the local s a mpl e , it is true; but, both local and imported strapping samples tested were found to have identic al 0.1% carbon content. Therefore, it fails to show any connection between carbon content and tensility; 2. AlthoLtgh t1�1e ().1/. carbon content falls within the meas ureme nts reqLiired by Chapte r 73(1)(c) of the Re vi se d Tarif f a nd Customs Code for high car-bon steel~ the other requ i t- ements the r-e i n contained reg a rding phos phorous and sulphur content are not s how n to have been met; 3 . There is no showing � that the imported strappings sampled by the NIST were taken from the subject shipment. In this regard, it must be no~ed that the samples tested were submitted . by petitioner to NIST on September 23, .1985, nearly five years after the subject strappings arrived in the Philippines, and . I 4. The remarks in the report spe~ifically . state that the same is "of no value >n:x as . basis for� Tariff or- Customs -classification of imported commodities" � . The court also notes that petitioner; r in its "Memorandum" states, in arguing its position, that:

DECISION CTA CASE NO �. 3424 - 11 - "So a l so ~ the s ubj e c t s hipme nt is o1 the same �type of steel strapping ~t-lhich petitioner had imported from J a p a n sometime in June~ 1985 which the Bureau of Cu s toms a ssessed under Tarif~ Heading 73.15 at 10% ad va lor-e m rat e of duty" (Memorandum, page 5; C.T.A. Re c o rds, p a ge 162 ). The court refuses to g i ve cre dence to this bare allegation of act by petitioner, as there is no showing at all that the s ubjec t strappings and � those importe d in Jun e , 1985, are of the same kind 1 and quality. From th e foreg o ing di s cussion~ i t can be seen that petitioner ha s failed to show that the subject strappings are of high carbon steel, as the term is defined under Chap t er 73 (e) of the Revised Tariff and Cu s t o ms Code . Con s equ e ntly~ the subject s trappings are no t al l oy or high ca rbon ste el in the form o f co ld - ro ll e d h oo p a nd st rJp~ wh ic h f a ll Ltnder Hea d i ng No . 7 3 . 15. In s t e ad~ th e y are cold - ro 11 ed ho op a nd s t r i p ~ and a re subject to 301. ad valorem tax und e r Head ing No . 73.1 2 8, as � respond e nt asserts. �� 1 ( WHEREFORE , in v ie w of the foregoing consideratio ns , t he hereby DENIES the

DECISION CTA CASE NO. 3424 - 12 petit ion er's Pet:ition tor Review, an d AFFIRMS the respondent C ommis~icne r dated Decemher 4, 1 981. SO ORDERED. ." Quezon Ci.ty, Me tr-o M<mila, March / 1 9 9 2 . CONSTA(N/?TEfit~);OAGUIN As.oc iate Judge I CONCUR1 <;:.._,. -i;;Q . ~ ER ESTO D. ACOSTA Pres .id ing Jud q e .. I. '' !� I I .-� '' .' I he reby certi. f y that this decision was reached after due con su lt a ti on betw eeH the me mb ers of the Court o f Tax App e~ l s in accord a n~e with Section 1 3 , Articl ~ VITI of th~ Con~ti tution . .' ' .. � l '! l '' I' ERNESTO D. ACOSTA Presi ding Judge Court of Ta x Appea ls I i' I' I :'It I, I .Ch!_Yu-�)