CTA Case No. 4638 (Decision)

.._,. eo 11A. REPUBLIC OF THE PlllLIPPIHRS COURT OF TAX APPEALS QURZOH CITY PILIPINAS NISSAN INC., C.T.A. CASE NO. 4638 Petitio n e r~ ��� ve r sus - COMMISSIONER OF CUSTOMS, t . F< f.~s pond e n >! �- ...~ ���- DE C I I 0 N This is an appeal from the assessment and collection of duties and taxes on petitioner's importation of one ( 1 ) unit Nissan Model 045 Passenger Car. It appears that said subject motor vehic l e was shipped to petitioner to be used for display at the first motor show held at the Philippine Trade Training Center on May 20 to 29 ~ 1991 \..,i th an invoice value of Y3~450~000.00 Japanese Yen. The shipment \..,as covered Jay "Clean Report of Findings" of the Societe Genera le de Survei llan ce S.A . ~ the entity contracted by the Philippine Government to conduct inspection of articles imported into the Philippines prior to shipment~ and to report the actual price/Home Consumption Value in accordance with the criteria set forth in Paragraph 1 of 128

DECISION CTA CASE NO. 4638 2 Section 201 of the Tariff and Customs Code~ whic h was $20~014.00. Release of the vehicle without payment of duties and taxes was approved by the Department of Finance~ subject to th e filing of a re-export bond in the amount equivalent to 150% of the taxes and duties due (Annexes C & C - 1~ Petition for Revie~&J) . For purposes of the amount of re - export bond~ the Bureau of Customs computed the duties and taxes due (Annex D~ Petition for Review). The Bureau of Customs released the vehicle upon filing of Entry No. 20771-90 and Ordinary Re- export Bond No. C(a) 080120 issued by the Domestic Insurance Company dated tl.~r.:~.b..........:t. ~!I. .�......+9.9.Q in the amount of P2~139~093.00 (Annexes E & F~ Petition for Review). The Asian Investment and Finance Corporation~ having indicated an i nteres t in purchasing the motor vehicle~ secured the approval/clearance of the Board of Investment s (AnneN G~ Petition fot- Review) � Petitioner filed a request for payment of the duties and taxes on the motor vehicle (Anne xes H~ H - 1~ and I ) . The District Collector of Customs accepted the recommendation for adoption (Annexes J and J - 1). 129

DECISION CTA CASE NO. 4638 - 3- Respondent cancelled the Re- export bond and allowed the payment of dut ies a nd ta xes based on the invoice value~ setting aside th e contention that thi s is not a local purchase and ( 1) ~.PP1 .:i, .!'?.9.. t .h?.......!'?0..!;.0.9..1J.g.!'? ..... r:.?.l..t..!'?. .....~:t............J;.hg.....t..:i.:m�?........ ..Pf. ..P~Y.fTI�'_o_:t.......?.\.IJ..9.. ( 2 ) J:...ffi.P9..2.�?..9......t..hg_____ ....9..9..9..;!,J;.J..QD~J...-9..%..........~.9.......Y.�AJ.P .r:.!'?.ITL. .;i, fTI.P.Pr: .t.. . l._gyy � (Annex L~ Petition for Review). To avoid delay and further deterioration of the motor vehicle~ petitioner paid th e dutie s and taxes amounting to P1,601,4 2 6.00 on July 15~ 1991 (Anne x M, Petition for Review), while the liability of petitioner as determine d by the Bureau of � Customs is P1,426,062.00 (Annex D), computed as .� follo~r-1s: One (1) Unit Nissan Infinity 045 CBU (Under Re - e x port Bond) JY3~450,000.00 Value . . .............................. .... ~ ....... �.!':�.QQ_Q_~_g_�. E:-:change Rate ( JY - $ ) LJS$2 3 ,004.60 � ���-������������-��-���-�������������~-L~..Q.~ $23,464.69 ........... ����---������-������ ��~ 1. .~..4..~ F rei g h t $2 4,289.15 ........... . ........... !!l. l.~ ::2. ~. ~.:J 0/C $25,443.38 ���� ���������������-� ������������� � � - ~4 ..~.7.4. E >: change Rate ( $ - P) $578,050.87 DV ...... . .... ......................................................~.':~!.%. Duty - ���----~-~�9..!/..Q~..~- ~~..B4.".?4". DV - -�-�--�� - --~~"7s ��~--<s-5ci" -��� ������--���-----------�-----� ZQ.Q..~..Q9. Mi sce ll a neous $867,776.31 Landed Cost ....... . __.,.,,,_...... .........J-..~.J. $954,553.94 AVT Base . ........................... ........_.. . ...............J:.........-...... 100% Ta :-: Rate .............t9..;i.1. !l...~-~.:J..~..'!.4. AVT ::::~::::::::::J:'3:~:z.:~�:z.:z:f>.:::;:~I Landed Cost $1,822,33 0.25 VAT Base ,, __,. .............. ....................................... J..Q.%. VAT Rate '"'''-"�''-''-~.:~:5!:6: ~: ~:::?::~:c.~5?,.~ VAT 130

DEC I SION CTA CASE NO. 4638 - 4- .� , Summar-y Duty P289~025 AVT 954~554 'VAT 182~233 IPF ....... ......... ........ .:?..~.Q P1~426~062 The issues to be decided by the cour-t ar-e as follm�1s: 1. What is the exchange r-ate that should be applied to the imputation? 2. Is the 9/. additional ad v alor-em duty imposable on the impor-tation? The vehicle as impm- ted be,gan and ter-minated in Mar-ch 1990. The exchange r-ate which should be applied ar-e those cut-r-ent at the time of impor-tation. The exchange r-ate of the Japanese Yen a s indicated in the Invoice (Annexes A ) of JY3~450~000 should be conver-ted to U.S. dollar-s at the cur-r-ent r-ate at the time of impor-ta t ion~ or- at US$0.00668 to JY1.00~ � as v.Ja s done in the computation of duties and ta:-:es (Anne:-: D) � Similar-ly~ the US dollar- value sho~ld h av e been conver-ted to Philippine peso at the cur-r-ent r-ate of impor-tation, or- P2.72 to US$1.00 (Annex D). In this instant cas e ~ the exchange r-ates that should be applied ar-e the cur-r-ent e xchange r-ates~ at the time the impor-tation was deemed t e r-minated 1 31

DECISION CTA CASE NO. 4638 - 5- or upon filing of the ent r y (Anne :{ E) a nd the acceptance of the Re- export Bond (Anne }: F) and Relea s e of the motor v ehicle on March 1 5~ 1990. The 9% additional ad valorem duty ca nnot be impos ed as it is impos able only unde r Executive Order No. 443 dated January 3~ 1991 which took effe c t on Janua r y 21~ 1991. The impo r tation of the motor vehicle began and was terminated upon the fil i ng of the entry and acceptance of the re- e xport bond and release of the motor vehicle on March 15~ 1990. Since these eve nts occurred pri or to the effectiv i ty of Executive Or der No. 44 3 on Januar y 3' 1991 ~ the additional 9% ad valorem duty impose d thereunder cannot be made to apply to this importation. (Hydro Resources Contractors Co r p. vs. C.T.A., 192 SCRA 604, 611). The dete rmination by respondent that this is a local purchase is without fac tual or l e gal basis. Respondent Commissioner of Customs ~ in his undated 1st Indorsement (Anne x "L") s et as ide as without merit petitioner counsel's contention that this i s not a local purchas e as "the Committee considered and took legal notice of the BOI approval/clearance issued 22 March 19 91, of the contemplated sale of subj e ct article to Asian Inves tme nt and Financ e Co rp . " 132

DECISION CTA CASE NO. 4638 - 6- This statement~ by itself, is a contradiction in terms. l.tJhi 1 e it states that it is a "contemplated sa le"~ i t ruled, as 1-'Jithout merit~ the contention that this is not a case of local purchase. As contended in the letter of petitioner ' s counsel dated July 3~ 1991 (Anne :-: I II II ) ~ the provisions of Section 101 of the National Internal Revenue Code (NIRC) merely creates a fiction of law for f i>:ing ta:-: 1 i abi 1i ty. What is contemplated therein is a case of ta:-: -free importation of goods "~"here such good s are subsequently sold~ transferred or exchanged in the Philippines to non- e:�:empt person s or entities >:xx. 11 In this instant case~ i t is the importer itself which had requested for the payment of the duties, ta:�:es and other charges assessed at the time of importation~ payment of which was secured by the filing and acceptance by the Bureau of Customs of a re-expot-t bond. There had been no subsequent sa 1e ~ transfer or e:-:change at the time the duties~ t.:n.:es and other charges w~re assessed and paid. Title and possess ion of the motor vehicle are with the importer at that time and the dut ies~ taxes and other charges were subsequently paid by the petitioner-importer itself. The 133

DECISION CTA CASE NO. 4638 - 7- authority secured by the Asian Investments and Finance Corporation from BOI was in contemp l ation of the sale made after the duties~ ta xes and other charges had been settled in full by the importer~ the petitioner herein. The conclusion of the respondent Commissioner of Customs that at the time the duties~ taxes and other charges were assessed~ this wa s a case of local purchase is~ therefore~ without factual nor �' legal basis. WHEREFORE, respondent Commissioner of Customs having assessed the sum of P1,426,062.00, after petitioner has paid the sum of P1,601,426.00, petitioner is legally entitled to the refund of the sum of P175,364.00. Without pronouncement as to costs. SO ORDERED. Quezo n City~ Metro Manila~ March 17~ 1992. {) 1tt/"--- co TANT� C. ROAQUIN ssociate Judge I CONCUR: Q_~Q..~ ERNESTO D. ACOSTA Presiding Judge 134

DECISION CTA CASE NO. 4638 - 8- CERTIFICATIOM I hereby certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13~ Article VIII of the Constitution. ~~ Q, (4.JJ.- ERNESTO D. ACOSTA Presiding Judge Court of Ta x Appeals 135