CTA Case No. 992 (Decision)

STUr IAS SUGAR CENTHAL', INC o, c. T.A. Petitioner, CASE 1--fOo 992 - ver su s ... C \USSICNE OF CUSTOMS , Re s pondent o X- ~ - ~ - ~ ~ - - ~ ~ - - - X DECISION Petitioner s eek s to re c over the t otal sum of 2"'8 , 629 . 42 paid under prote st a s customs duty and s pe c ial impor t tax on imported jute bag s. Petitioner, a corporation organized under Phil- ippine laws, i s engaged in the production of centri- f ugal sugar from sugar cane . It imported jute bag s f or use in it s produce which arrived in two shipment s: thf f i rst , c on s i sting of 44 , 8'00 jute bags, arrived on I January 3 , 1957 F and the se c ond ~ c onsisting of 75 , 200 J jute bag s, arrived on February 2, 1957. These ship- ments were provis ionally passed by the customs authori- tie s free of custom s duty and s pe c ial import tax upon the filing by petitioner of _�e- exportation Bonds and pe c ial Import Tax Bonds No so 1 and 6 on January 8 and February 8 1 l957p respe ctively , conditioned upon the exportation of the jute bag s "within one ( 1) year from the date ( s) of the arriv al of the ( c arrying) ve ss el(s)~o Of the total number of imported bag s, 33 , 647 bags were exported within one (1) year after their importa- - tion , thereby leavi g a balan c ~ of 86 1 353 bag s whic h ,

DECISIOI - C. T�� CASE NOo 992 - 2- however , were exported within three (3) years from their importation. In this connection , it must be stated that on February 6, 1958 , or one (1) day prior to the expiry date of Re-Exportation Bond and Special Import Tax Bond No o 6, petitioner requested respondent one week's ex- tension of these particular bonds on the grounds of delay in the arrival of the loading vessel and the picket- ing of the railroad line from November 16 to December 21 , 1957o This request was denied by respondent on April 15 , 1958o In the interim , petitioner paid under protest on March 21, 1958 the respective amounts of ~11 , 912. 82 and 16 , 7~"6 . 60 , or a total of 28,625 . 42, as customs duty and s pec ial import tax on the 86, 353 bags which were not exported within the one (1) year periodo Subsequently, petitioner requested for the refund of the amount of 28 , 625 o42, whic h request was deniedo Henc e , the in stant petition for review seeking the re- c overy of said sum of money. The legal basis upon which the imported jute bags in question were provisionally passed free of customs duty and special import tax is Section 23 of the Phil- ippine Tariff ct of 1909 (now Seco 105(x) of the Tariff and Customs Code) , which providesa 11 SECo 23. That containers , such as casks , large metal , glass , or other re- ceptacles which are, in the opinion of the collector of customs, of such a cha- racter as to be readily identifiable may be delivered to the importer thereof upon identification and the giving of a bond with sureties satisfactory to the col- lector of customs in an amount equal to double the estimated duties thereon , con- ditioned for the exportation thereof or pay-

DECISI � o. 992 C. ToA. CASE - 3- ment of the corresponding duties thereon within one year from the date of impor� tation , under suc h rules and regulations as the Insular Collector of Customs shall provide.," Having failed to export the 86, 353 jute bags within one year from the date of their importation, it is obvious that, under the afore-quoted statute, petitioner is liable for the payment of customs duty and special import tax thereono But , pet it ioner argues that it s letter of Feb- ruary 61 1958 requesting one weekis extension of bonds No ,. . 6 had the effect of suspending the running of the time within which to re-export the jute bagso Granting , ' thou gh without ruling so, that it had a suspensive ef - fe ct , petitioner cannot escape liability for the customs duty and spec ial import tax on the 86 , 353 jute bag s whic h were not exported within one year from the date of their exportation, for the requested suspension was only for one week. Furthermore , the request referred only to bonds No � � 6, and finally , the exportation of the 86 , 353 jute bags was effected beyond the req~e sted one week period . As an alternative to the refund of the whole amount of �:28 , 626"42, which as afore -stated , wa s paid as customs duty and special import tax on the 86 1 353 jute bags , petitioner , in its memorandum 1 prays for the re c overy of the said sum of ~28 , 629o42 minus one one per cent in form of a drawback under the provi- s ions of Section 106(b) of the Tariff and Customs Code .

DECISIOl'-J ... C. T. A. CASE NO. 992 -4 - Section 106(b) of the Tariff and Customs Code is a substantial repxoduction of Section 22 of th, e Philippine Tariff Act of 1909 , whic h at the time the importations at bar took place governs the allowance of drawbacks on articles of imported materials , in - cluding the packing or c overing thereof , whic h were exported within three years from th~ date of their importations. The pertinent provision of Section 22 of the Tariff Act l o. 1909 reads: 11 SEC . 22. That upon the exportation of ar~icles manufactured or produced in the Philippine Islands, including the packing , covering , putting up , markingg or labelling thereof , either in whole or in pa,rt of imported materials, or from simil ar dome stic materials of equal quan- tity and productive manufacturing quality and value , suc h question to be determined by the Insular Collector.)of Cu stoms , there s hall be allowe d a drawback eaual in amount to t he dutie s paid on the imported mate- ria l so used ~ or where s imilar domestic mat erial s are used , to the duties paid on ~ t he equ ival ent imp orted simi~terials 2 l l e ss one per c entum thereofl Provided , t hat the exportation shall be made within three years after the importation of the foreign material used or constituting the ba sis for drawback; x x x." Vle believe that petitioner, having duly paid the duties on the 86~353 jute bags upon its failure to c omply with the condition of the bonds to export s aid bags Within the one year period provided for in Section 22 of th~ Philippine Tariff Act of 1909 , c an - not now avoid the full effect of su c h failure by being allowed a drawback under Section 22 of the s ame Tariff Act . It is quite improbable that the Congress of the

DEC I S I Q\J CoT. o C E NO o 992 - 5- Unite d tates, in enacting the Philippine ariff Act of l909 p intended to provide Section 22 thereof as a loophole through which the full effect of failure to comply with Section 22 of the same ct may be evaded or avoidedo hat was doubtless meant was to make final and irrevocable th~ payment of customs duty upon fa~lure to e xport the imported articles within the one year period o ~HEBE. RE , the de cision appealed from is hereby affirmed with costs against petitionero EJ:i.F.D o ':anila, !ovember 20 , 196lo --~~ Presiding Judge le concur.: ----