CTA Case No. 3978 (Decision)

aD'\JBLIC 0 C"H� 'PrULLPPiN:l� COURT OF TAX APPEA.LS QUEZON Cn'V ACOJE MINING COMPANY, INC., Petitioner, - versus - C.T.A. CASE NO. 3978 THE HONORABLE COMMISSIONER ;o(a! jg b OF CUSTOMS, Respondent. X- - - - - ------X DEC I S I 0 N The case presents no dispute as to the simple material facts but the parties seem trying to get the better of each other over by a quibble on the sense and scope of the customs valuation as a basis for the "gross FOB value at the time of shipment" in Section 514 of the Tariff and Customs Code as amended by PD 230, infra, for purposes of the assessment of export and premium duties on the exportation of mineral products. Petitioner a mining concern organized and existing under Philippine laws had exportations of chrome ore concen t rates with the corresponding export and premium duties paid under protests, viz., on January 15, 1979, the amount of e318,361.38 as export duty and 8265,485.70 25 9

DECISION CTA CASE NO. 3978 2 as premium duty for a total of 8583,847.08 covering a shipment of 10,000 WMT of chrome concentrates loaded on December 14, 1978 (M~nila Protest Nd. 23-79); and, on March 9, 1979, the sum of E333,664 . 85 as export duty and E277,595.73 as premium duty for a total of E611,260.58 covering a 10,000 WMT shipment of chrome concentrates loaded on February 7, 1979 (Manila Protest No. 76-79) . Petitioner claims a refund of 8116,271.12 and 8265,485 . 70 representing a ll eged excess payments of export and premium duties, respectively, for a total E3Bl,765.82 included in the collection of E583,847.08 in the first shioment, and the sums of El23,387.65 and 8277,595.73 alleged excess payments of export and premium dut~es, respectively, for a total of 8400,983.38 included in the collection of 8611,260.58 in the seccnd shipment, aggregating a grand total of 8782,740.20 refundable amount. The Collector of the Port of Manila after due hearing, decreed and ordered the dismissal of the protests in a decision rendere~ on August 7, 1984 . On appeal by the petitioner, re spondent the Commissioner of Customs found "no cogent reaspns to disturb the decision" affirmed 260

DECISION CTA CASE NO. 3978 3 the same (Customs Case No. 84-41, July 25, 1985). Hence this action. The liabilities for the payment of export and premium duties on the exportation of chrome ore concentrates are mandated in the following: Tariff and Customs Code as amended by ~D 23_0, July 1, 1973 "Section 514. Export Products Subject to Duty and Rates. - There shall be levied, assessed and collected a duty on the gross F.O.B. value at the time of shipment based on the prevailing rates of exchange of the following products in accordance with the following schedule: MINERAL PRODUCTS: (l) Mineral ores and concent~ates: Ch rami tes � . � . � . *.e. o. $ � � � � � � L-�t otO' XXX xxx" Executive Order No. 425, February 2~1974 "In addition to the export duLy herein referred to as a basic rate, levied under Section 514 , Title III, Book I of R.A. No. 1937. as amended by P . D. No. 230, there shall be levied a premium duty on the difference between the current price as established by the Bureau of Customs and the base price of the products as established in Section II hereof in accordance with the following schedule: MINERAL PRODUCTS: (1) Metallic or es and concentrates: (c) Chrorni t es 20 ?~ XXX XXX xxx." 26 1

DECISION - CTA CASE NO. 3978 4 Pursuant to Section 514, supra, in relation to Section 2 of PD No.230, amending the Tariff and Customs Code, re: "The Commissioner of Customs shall promulgate the rules and regulations necessary for the implementation of this Decree, subject to the approval of the Secretary ( now Mi n i s t e r ) o f Fi n an c e,. " , t h e Bu r e au o f Cu s t o ms e s tab - lished the value of $115/DMT for chrome concentrates exported out of the country for the periods December 1 to 30, 1978 and February 1 to 28, 1979 per Customs Export Valuati~n Circulars Nos. 106-78 and 16-79, respectively. The National Economic Development Authority (NEDA) set $95.82/DMT as the base price of the said product for the assessment of the additional premium duty under Executive Order No. 425, supra. By and large the petitioner holds on to the propo- sitions that, l) the "gross FOB value at the time of shipment" in Section 514 supra as a basis for the assess- ment and collection of the 4% export duty should exclu- sively refer to the actual selling price stipulated in the contract of sale between the petitioner and buyer, in the instant case, an entered value of $73.00/DMT vis a vis $115/DMT, the current Customs' valuation; 26 2

DECISION - CTA CASE NO. 3978 2) the price of $115/DM T applied by the Bureau of Customs was based on a~ old contract of the petitioner dated February 1977 and therefore needs adjustment to realistic levels by reaso n of the "greatly reduced chrome ore pr i ces and the consequent serious predica- ment of the chrome industry ." (Petit"oner ' s represent- ation wit h the Minister o f Finance dated June 7, 1978) . As a consequence, the " Bureau of Customs erroneously levied the premium du ty on the difference between the old and� inapplicable price of U.S. $115/DHT and the hase price of US$95.82/DMT as established by the National Economic Development Authority. Nb such duty should have been assessed inasmuch as the price of US$73/DMT prevai l ing at the time the goods were shipped was less than such NEDA-established base price. This price of US$73/DMT represented the actual F.O.B. value of Acoje's chrome conce ntrates when they were shipped out in December 1978 and Februar y 1979, hence, export duty should have been assessed on the basis of such price pursua nt to Section 514 of the Tariff and Customs Code , as amended by PD 230 , pa rt icularly Section )14 thereof. 11 ; 3) the sub j ect Customs Ci rculars were promulga t ed and 26 3

DECISION CTA CASE NO . 39 7 8 6 implemented without the authority of the Minister of Finance. The first question requires no tortured ratio- cination. As against the claim of the petitioner that the "gross FOG value at the time of shipment" exclusively refers to the actual selling price agreed upon .between the parties in the sales contract, i.e . , $73.00/DMT (F.O.B) at the time the chrome concentrates were shipped out of the country, the respondent Commissioner of Customs aptly maintains that, "Section 514 of the Tariff and Customs Code, as amended, is clear and explicit when it provides that export duty on the gross FOB value shall be levied, assessed and collected at the time of the shipment based en the prevailing rate of exchange. Thus, the imposition of export duty on subject chromite concen- / trates accrue from the mome n t the articles are actually shipped out and or exported out of the country, not on the date the contract of sale was perfected at $73.00/DMT, Definitely, at the time of the shipment, Customs Export Valuation Circulars Nos. 106-78 and 16-79 v<ere in effect." We do not think any differe nt conclusion ought be reached as we find nothing cryptic in the language of Section 514 , ibid . as to pose any ambiguity in its application. 26 4

DECISION CTA CASE NO. 3978 7 Related with the question just discussed, pcti - tioner's starveling agitation for infusing valid cog- nizance to a price of a $73 . 00/DMT vis a vis the Customs appraisal of $115 . 00/DMT as a basis for th~ valuation for the chrome concentrates, can hardly be a reassuring prospect that can easily be reconciled with the statutory intendment. Petitioner's own dec- laration of an entered price of $73/DMT as stipulated in a contract of sale is non-seguitor and brooks no instant� imprimatur o f a cqui esc ens e for assessment pur- poses, consi dering that "The basis in the collection and imposiLion of export duty and premium duty is not dependent on a contract entered into by and between private parties but rather on the mandate of the law, and in the absence of any excessiveness, harshness and abiurdity in the imposition of export and premium d:J ties , the same s h o u1 d be up he 1 d � 11 This has to b e , otherwise by such an expediency the enforcement of Customs' laws can be flouted with impunity and the efficacy defused in a cul de sac of impotency, so to speak. It is hirdly necessary to stress that consi- deration of the convenience of the petitioner, or any 26 5

DECISION CTA CASE NO. 3978 8 taxpayer for that matter, stands as an aberration from the otherwise intended imperative. Obviously, we cannot substitute and indulge in any amo r phous rule as to leave solely to petitioner's own indulgence a valuation u~on which to base the assessment and altogether suffer the cornerstone of effective collection to dissipate in the quicksand of self-interest . Petiti oner further nibble at faulting the valid appli- cation of the Customs' circulars ~s the Hinistry's approval comes as an expedient piffle. "The fact that the petitioner's earlier request on June 7, 1978 with the Hinister of Finance to use $73.DO/OHT as basis for the computation of customs duties and taxes was not favorably acted upon, proves that the Hinister affirms that the value of $115.00/DHT stated in the CEVC's should be followed." Horeover, the records shol'/ that "despite repr e sentation by Acoje Mi ning Co., Inc. (peti- tioner) with the Ministry of Finance and other authorities that the existi ng export valuation were not realistic, said officials did not heed the same. This strongly indicates that the protestant (petitioner) failed to establish its cause and that the existing e xport valuation was in accordance with the lai'J." ~le do not readily 266

DECISION CTA CASE NO. 3978 9 uproot s uch kind of issuances tinged with strong issues of public policy for speculative purposes or simply to gratify petitioner's own c onvenience as there is no reason apparent ~rom the record why the subject CLJstoms Export Valuation Circulars could be iqnored. ACCORDINGLY, we feel compelled to affirm the import and force of the respond e nt Commi ssio ner of Customs' a s s e s s me n t a n d c o 11 e c t i o n o f t h e r i g h t f' u1 d t 1e s ltJ a r r FJ n t i n q the dismissal of the instant petition with costs against the petitioner. SO ORDERED. Quezon City, Metro Manila, Oct~be~ 31, 1986. WE GONCUR: r{)~~Q) AMANl~ Presi � .L ng Judge 26 7