CTA Case No. 3788 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY LAU LAI WING, doing business under the name and style "Commerc ia l Auto Supply" Petitioner, - versus - C.T.A. CASE NO. 3788 HON. RAMON I. FAROLAN, in his capacity as Commissioner of Customs, Respondent. N- - - - -----X DECI S I 0 N The case is about the forfe iture of an i mp or�ta t.i.on of 206 cartons found to contain autoparts declared for Customs purposes as follows: 700 pes. lamps .. ........... @ $0.70 . . . . . . fog lamps 400 pes. . . . @ $2.00 400 pes. .. .. . .. l ens: I<B- 71 @ $0.40 . . . lens: KB -�4085 200 pes. . . @ $2.50 992 pes. . ..... Air cleanser @ $0.25 200 pes. . . . . . Mouldi ng 576 . @ $2.00 500 pes. . ... .. Moulding 3 C)3 @ $0.80 900 pes. Moulding .......... @ $0.50 The fae ts befor�e Us are brief 1y reeoun ted as �follow s: 319

DECISION CTA CASE NO. 3788 - ,.,.<� - .1. That the petitioner is a commercia 1 enterprise operating and doing business in the Philippines under a business name and style "Commercial Auto Supply"; 2. Tt1at on December l9, 198(,, a shipment of 206 cartons autopar ts ar�rived at the Port of Manila from Kobe, Japan, on board the SS "Easter�n Mariner", Reg. No. 2344; 3 . That the said shipment was dec 1a red under Import Entry No. 100864, 8. of 1980, wit h support documents (Commercial Invoice No. K-3903, Bill of Lading No . KMA - 67); 4. That in the c overing Entry, subject importation was declared as having a HCV of F'23,4.15.37, and that the amount of F'11,623 . 00 was due thereon as duties and taxes ; upon being appraised, the shipment wa s required to pay as c ustoms duty in the amount of F'104,937.00 in lieu of P11,623.00, based on a higher value or HCV for each of the artic l es comprising the 206 cartons autoparts; 5. That the entire shipmen t wa s ordered forfeited by the Collector of Customs in Man ila ( S.I. No. 8 - 81 dated June 16, 1982) for mi s - dec 1aration thn..1 gro ss under - valuation pL1rsuant to Section 2503 in re 1a tion to Section 2530 ( 1) 3 ,4 8~ 5 of the Tariff and Customs Code, as s ubs equently affirmed by the Commi ss ioner of Customs i n his decision (Cus toms Case No. 8 2-19 dated January 2 4, 1984. Hence the petitioner 's recourse. By and large, petitioner-c l ai mant con s iders the subjec t shipment sufficiently covered and 320

DECISION CTA CASE NO. 378 8 �- 3 supported by the requisite genuine and proper documents, viz. : Bill of Lading, Commercial Invoice, F'ac king List and Import En try, ref 1ec ting the corr�ec t dec 1 a red va 1 ue upon which based the payment of the corresponding duties and taxes amounting to F'11,623.00. And, that the alleged undervaluation was brought about by the arbitrary, capric icJLIS and whimsic a 1 app 1 ica tion of a higher� Home Consumption Value (HCV) imposed by the Customs' appr�aiser�s in disr�egar�d o �f the per� tinent provision of Section 201 of the Tariff and Customs Code. Respondent's unvarying asserti.on is that the law imposes upon Customs appr�aisers the duty to determine the accurate appraisal of imported goods and such appraisal so determined under Section 1405 of the same Code, may be equa 1, higher or 1Oli'ler than the invoice and/or entered value of the article. Thus as between the dec 1a red va 1ue and the value as determined by the Customs appr�aiser concerned, that of the latter must prevail, it appeari.ng that there was no showi.ng in the records that the discretion was abused. The case before Us presents no dispute as to the relatively simple material facts but the 321

DECISION CTA CASE NO. 3788 -- 4 - parties seem trying to get the better of each other over by a quibble on the propriety of an appraisal made by the Customs' appraiser in disregard of value or price declared in the invoice. The applicable provision of Section 201 of the Tariff and Customs Code~ as amended, provides: SEC. 201. Ba ::: i:.=: ot" Dutiable Value. -- The dutiable value of an imported artic le subject to ad valorem rate of duty shall be based on the home consumption value or price (excluding internal excise taxes) of sa me, like or si milar�� articles, as bought and sold or offered for sale freely in the usual wholesal e quantities in the onj inary cour�se cJ �f tr� ade, in the principal ma rkets of the country from where exported on the date of exportation to the Philippines~ or wher e there is none on such date, then on the home consumption value or price nearest to the date of e>:portation including the value o�f a 11 con tainer�s, coverings and/or packings of any kind and all other costs, charges and expenses incident to placing the article in a condition ready for shipment to the Philippines, plus ten ( .10) per cent of such home consumption value or price. Thf.,:) home consumption value or price under this section shall be the value or price declared in the consular, commercia 1 , trade or sales invoice. Where there exists a reasonable doubt as to the value or price of the impor�ted ar�tic 1e dec 1a red in the en tr� y ~ the correct dutiable value of the article shall be ascertained from the reports of the Revenue Attache or Commercial Attache (Foreign Trade Pr� omotion Attache) , pLwsuant to Republic Act Numbered Fifty- four hundred and sixty- six or other PhilippirH? diplomatic officers and from such other infonnation that may be available to the Bureau of Customs. 32 2

DECISION CTA CASE NO. 3788 - 5 -- From the data thus gathered, the Commissioner of Customs shall asc ertain and establish the home consumpti on values of ar� tic 1es e>:ported to the F'hili ppines and shall publ ish such lists of values from time to time. When the dutiable value provided for in the preceding paragraphs cannot be ascertained for failure of the importer� to produce the documents mentioned in the second paragraph, or where there e xists a reasonable doubt as to dutiable value of the i mported article declared in the entry, it shall be the domestic wholesale sel ling price of s uch or similar article in Man i 1 a or� other pr inc ipa 1 markets in the Philippines on the date the duty becomes payabl e on the article under appraisement, in the usual wh o le s al e quantities and in the ordinary course of trade minus Construed in the light of Our decision in the Lovsted & Co. case, the Supreme Court in af firman ce said - The law is clear and mandatory. The dutiable value o f an i mpor ted article subject to an ad valorem rate of duty is based on its home con sumption va 1ue of price as freely offered for sale in wholesa le quantities in the ord i nary cou rse of trade in the principal markets of the country from where ex ported on the date of e>: porta tion to the Phi 1 i ppines. That home consu mp tion v a lu e or price is t he va lue d eclared in the con su lar, commercial, trade or sa l es invoice. But wh ere there is a rea s onable doubt as tn the va 1ue of the imported artie 1e dec 1a red in the en try, the correct dutiable value is to be ascertained from the reports o f the Revenue Attac he or Commercial Attac he and 323

DECISION CTA CASE NO. 3788 ... 6 - fr-om such other- infor-mation that may be available to the Bur-eau of Customs. The Commissioner- of Customs is r-equir-ed, however-, to publi s h fr-om time to time the lists of home c onsumption value. (Co��issioner o~ Custo�s v. Lovsted & Co., Inc. & C.T.A � .� G.R. Nos. 72CJ69 and 72070, Hay 21, 1988) Br-ought to bear- upon the cir-cumstanc es obtaining We find nothing to take the case out of the oper-ative effects of the statutor-y pr-oscr-iption as under-stood and appl iec:l. Petitioner- quoted the pr-ices of the impor-ted autopar-ts in the cor-r�esponding Impor-t Entr-y as declar-ed in the c ommercial invoice and as r-equir-ed by Section 201. It is har-dly nec ess ar-y to obser-ve that the r-espondent points neither- to any J r-r-egul ar- i ty n c.1r- er-r-or- of r-elevance and competence r-equir-ed to bash that patina of legality over- petitioner-'s declar-ation. "Reasonable doubt r-egar-ding the declaration was not shown to have existed such that r-ecourse to r-epor-ts fr-om commer-cial attaches or- other- infor-mation became necessar-y. Neither- was ther�e compliance wi t.h the r-equir-ement in Section 201 r-egar-ding publication of the lists of dutiable va 1ues of impor� ted ar-tie 1es fr-om time to time." (Co��issioner o~ custo�s vs. C.T.A. & Ca�pos Rueda Corporation, 152 SCRA 647). The basis for- the r-e- 3 2~

DECISION CTA CASE NO. 3788 - 7 ���- appraisal appeared neither here nor there, much 1ess, the Bur�eau' s records of the case remained unavailing even to this Court. Suffice it to state, this Court's decisions in cases similar in many or so in terms and circumstances involving the same issue as now raised and sustained by the Supreme Court provide a feel of the basic aspect of a re-apprai sa l under Sec. 1405 of the Tariff and Customs Code, thus - While it is true that appraisers of the Bureau of Customs are given ample leeway in determining the correct customs duties under Section 1405 of the Tariff and Customs Code, Section 201 of the same Code, which pr�escribes the criteria for� the determination of the dutiable values of imported a r-tie l es, has not been complied with . What is more, adminis- trative pr�oceedings ar�e not e:�:empt �from the operation of due process requirements one of which is that a finding by an administrative tribunal should be supported by substantial evidence presented at the hearing or at least contained in the records or disclosed to the parties affected. (Air Hanila, Inc. v. Balatbat, L -.2906 4 .� Apr.il .2'.~ .� 1:'~71.: .38 SCRA 489 --9 0). In this case the "Alert Noti ces" on which petitioner (Bureau) based on its reappraisal were not disc lased during the proceedings before the Bureau of Customs nor presented in evidence before respondent Court. The reappraisal made by petitioner, there- fore, can be fau 1ted with arbi trci:\r iness in disregci:\rd of the standard of due process to which all government action should conform to impress upon it the stamp of valid ity." (Co��issioner of Custo�s v. C.T.A. & Ca�pos Rueda Corpo-

DECISION CTA CASE NO. 3788 - 8 -- ration .� L--70648 f ,7u 1 y .J 1 f 1':~87, 152 SC RA 646 ; Co��issioner of Custo�s v. C.T.A. and Bell Hobart Hanufacturing, Inc., G.R. Nos. L-48144-47f June 28f 1988) The import of these decisions are unmis- takable. We he sitate to further fashion an is s ue mu ch less graft a precipititious distinction i n to a satisfactori ly settled legal question. WHEREFORE, respondent's decision is hereby set aside and the bond earlier posted for the release of the shipment, discharged. No pronouncement as to costs. SO ORDERED. Quezon City, Metro Manila, June 30 , 1989. ~- WE CONCUR: ILLER F'r�esid � (on leave) CONSTANTE C. ROAQUIN Associa te Judge 3 2 f)

DECISION CTA CASE NO. 3788 - 9- CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Constitution. AMANTE F. Pn~sid in Judge Court of Tax Appeals