CTA Case No. 2645 (Decision)

iHi.PlJRV.H~ OJ? TllH. PHlUi"P!~"O COURT Of TAX fo.FP�..~~ 0 ~r.1-�N (!1Tl' /THE GOODYEAR TIRE AND RUBBER COMPANY OF THE PHILIPPINEs, L'l'D. ' Peti t.ioner , - versus - C.T.A. CASE NO. 2645 COi'vlM ISS IONER OF INTERNAL REVENUE, Re::.ipondent. x--�-- --�----x DEC I S I 0 N From the decision of the Commissioner of Customs dated Septeruber 30, 19 76 affirming that of the Collector of Customs for the Port of Manila dated January 5 , 1976 dismissing Protest Cases Nos. 8627, 8627-A, 8628 and 8628-A against alleged over -assessment and payment of customs duties and internal revenue taxes on four (4} _separate ship- ments of synthetic rub Jers and/or rubbe~ substitutes, petitioner The Goodyear Tire and Rubbe r Company of the Philippines, Ltd., fil e d with this Court two interrelated petitions for review. CTA Case No. 2841, entitled "The Goodyear Tire & Rubber Company of the Philippines, Ltd., vs. Commissioner of Customs" , \�Jhich is an appea l from the assessment and collection of the additional customs duties on the f8ur (4) _rubher shipments of petitioner;

- -- DECISION - CTA CASE NO. 2645 - "...', �- and CTA Case No. 264 5 1 entitled "'I'he Goodyear Tire and Rub ber Cornp ~n y of the Ph ilippines, Ltd. vs. Commissioner of Inte r nal Revenue", which was filed pursuant to the then Section 306 (now Secti on 292) of the National Inter11al Revenue Code for the recovery of alleged overpaid national internal revenue t axes on the sa id importations of synthetic rubbers and/or rubbe r s ubstitutes collected by the Commissioner o f Customs as deputy and agent of responden t Commissioner of In ternal Revenue for the collection of internal revenue taxes on imported articles. The i nstant appeal is there- fore a companion case of CTA Case No. 2841, which was decided by this Court in favor of petitioner Th e Goodyear Tire and Rubber Company of the Philip- pines, Ltd., on May 22 , 1978, and which decision ordering the Commissioner of Customs to refu nd the additional customs duties involved therein had already become final and executory on July 25 , 1978. There is no controversy as to the facts of this ca se . As gathered from the reco rds of CTA Case No. 2841 , particularly the records of the Bureau of Customs pertain ing to these proceedings, together with the pleading?, on which the instant appeal was submitted for decision by the parties,

- DECISION -� CTA CASE NO. 26 4 5 -� 3 �- and narrated i n the dec).sion in said CTA Case No. 2841, pet i tioner The Goodyear Ti r e and Rubbe r Company of the Philippines , Ltd., during the period from November. 10, 1 972 t.o December 1 972, i mpor te d from Japan synthetic rubbers and rubber subs t itut es which we r e purchased f~om the Japan Synthetic Rubber Co., Ltd., of Japan through the latter 1 s l ocal agent Mitsui Co., Ltd. Upon arrival of the shipments in t he Philippines , petitioner filed with the Bureau of Customs the following i mport entries: a) Import En try No . 89077-72 --179 pallets of synthetic rubber and/or r ubber sub- stitutes - - Spryic-A 176,400 kgs. at �11.50/1b Stevie 11 , 550 kgs. at �14 . 00 / 1b b) Import Entry No . 94204-72 -- 96 pallets of synthetic rubber and/or rubber sub- stitutes -- Spqric-A 148,149 lbs. at. �11.50 Lunar i.e-�.\ 30,093 lbSe at rHl. 5o 16,204 lbs. at �14.00 Stevie 27,778 1.bs. at �11. 50 Chill i.e c) Import Entry No. 94216-72 -- 205 pallets of synthetic rubber an~/or rubber sub- stitutes ~-- Lunar i.e 354 .� 169 lbs. at �11..50 Chi 11 j_c � , ''\5 71,760 J"...o.c ~. at � l.. "� S i:ov ic Madonic 25 , 4G3 1bs. at �.145 53 , 148 ll1s e a.t �15.00 d) I mpo r t En try No. 942 1 8-72 -- 45 pallets synthetic rubber and/or rubber substitutes-- Chi1lic 104,167 lbs. at �11.50

DECISION - CTA CASE NO. 2645 - 4- On th e basis of the commercial and consular invoices , petitioner declared the importation values of said shipments and paid the corresponding customs duties, taxes and charges due thereon. However, upon examination of the goods in question by the customs appraiser, a h igher valuation was applied based on the Customs Valuation Circular No. 38-72 dated November 20 , 1972 and the Customs records , as follows: a) Import Entry No. 94204-72 Spryic-A at �13.00 per lb. Lunar ic�-l\ at �12. 00 per lb. Stovic at. �16.00 per lb. Chil.lic at �13.25 per lb. b) Import Entry No. 94216-72 Lunar ic �-A at �.12 per lb. � <it ...]...'.:L!.~:>~ per 1 ) . Chillic Stevie at �.15 per� lb. Madonic a~ �15.00 per lb. c) Impor t Entry No . 94218-72 Chillic at �.1325 per lb. d) Import Entry No. 89077-72 Spryic-A at �13.00 per lb. Stevie at �16.00 per lb. As a consequence thereto , add i tional customs duties and taxes in the total amount of P9,735.00 and ~6,53 7.00, respectively, were assessed against petitioner, details of which are as follows: - ,. ...... [ j .' �')

DECISION - CTA CASE NO. 264 5 -5- Du..t_~ Advance Sale Taxes a) Import Entry No. 89077-72 P6,65l.OO P4,332.00 b) Import Entry No. 94 204-72 1,373.00 922.00 c) Import Entry No. 94216 -72 1,033.00 694.00 d) Import Entry No. 94218-72 878 . 00 589.00 ~~b~~~=Q2 ~t1l:~~�::QQ Aside from the above additional customs duties and taxes, a fine of P2,746.00 on the importation covered by Import Entry No. 94204-72 was slapped on petitioner. Upon receipt of the above-mentioned assessment, payment was immediately made by peti- tioner to the Bureau of Customs. Subsequently, petitioner filed Protest Cases Nos. 8627, 8627-A, 8628, 8628-A with the Collector of Customs on the following grounds: (1) That the importation in question should have been assessed on the values stated in the commercial and consular invoices and other per- tinent documents as provided for under Section 201 of the Tariff and Customs Code of the Philippines, as amended; (2) That subject importation of synthetic rubbe r materials manufactured by Japan Synthetic Rubber Co. while code-named "Spryic A" or "I unaric A",� "Stevie" and "Chillic" by petitioner, are, in fact, the ver y same synthetic rubber materials code-named

J.� ) DEC IS ION �- CTA.CASE NO. 2645 ,.. - 0- "J'SR l'712H , " "JSR P>02" and ",}SR 1778N" on page 32 of the Customs Valuation Circular having the fol l ow- ing home consumption values: JSR 1712H $.125/lb JEH 1502 $.145/lb ,JSR 1778N $ . 0125/lb (3) Insofar as the 96 pallets covered by Import Entry No. 94204-72, under Protest No. 8627, is concerned, there is no basis for the imposition oF the two-time fine inasmuch as there has been no misdeclaraticn as contemplated under Section 2503 of the Tari[f and Customs Code. On January 5, 1976 1 after a series of administrative hearings, the Collector of Customs of the Port of Manila rendered a decision dis- missing the protests as without merit. Within the reglementary period, petitioner appealed said decision to respondent Commissioner of Customs , who, on September 30 , 1976 , affirmed the aforesaid decision of the Collector of Customs. Hence, the appeal in C'I'A Case No. 2841. Likewise, within the reglementary period, petitioner filed on Dece~b2r 13 , 1974 a claim for refund with respon- C:12nt Commissioner of Int.efnal Revenue of the additional internal revenue taxr or ~dvnnce sales ., J \) lj

'. DECISION - ' CTA CASE NO. 2645 - 7 �- tax, in the total amount of ~6,537 . 00 , paid by it on its shipments of rubber rna ter ials throug.h a letter dated December 10, 1974. ("Annex "C", petition for review, pp. 15-18, CTA records .) Under paragraph 4 of his answer dated March 20, 1975, respondent admits the filing of this claim for .�: �2 fund. {pp. 27-28, CTA records.} The parties are not in controversy on the computation of the additional internal revenue tax payable by, or amount refundable to, petitioner as the case may be. Petitioner assails the Government's right in assessing and collecting the additional internal revenue tax or advance sales tax afore said. The argument advanced is that the act ion of the Bureau of Customs in imposing higher valuation is arbit- rary, erroneous, and without basis in fact and in law. And the reasons are: (l) In accordance with and on the basis of the import doc uments filed with the Bureau of Customs, such as the commercial invoices and the consular invoices , petitioner declared the true and correct export values of its shipments of synthetic rubbers and rubber substi- tu tes. ( 2 ) T heJ.: e is ab~,olu tely no ev idcnce that the invoice values of the importations are not their actual import values so as to justify a dis-

DECISION - CTA CASE NO. 2645 - 8- regard thereof and a resort to the published valuation of the Bureau of Custcms , more spcci- fical ly Customs Valuation Circular No. 38-72 dated November 20, 1972 , as the basis for the import values . Is petitioner The Goodyear Tire and Rubber Company of the Philippines , Ltd., entitled to the refund or tax credi t of the additional advance sales tax in the sum of P6 , 537.00 assessed and collec t ed by the Bu reau of Customs on its import- ations of synthetic rubbers and rubber substitutes involved in this case? The controlling statute is Section l83(b) o f the then 1939 National Internal Revenue Code, the pertinent provisions of which read: Sec. 183. Paymel'!_.t of pe;:~t~� taxes. - XXX XXX (b) Sales tax on imported articles.- ~'i'hen the articles are imported, the ~rcen~ age ta.x~-~ established in Sections 184, 184-A, 185, 185-A, 185-B, 186 and 186-B of this Code sha~l,l. be pai~i in advance. �y the import~~ , in accord ance with the regulations promulgated by the Secretary of Finance and pr io_! to the rel ease of such ~�ticle~ f ~_�~�_t?m s ' ..2 u s t<?..9.Y__~_e d on the i np.2_!_i; invoice value thereof, certified to as correct und~~ penalties of perjury by the Philippine Consul at the port of origin if there is any, including freijl.t, postage, insurance, commission, �customs

DECISION - CTA CASE NO. 2645 -� 9 - dLty and all similar chQrges , plus 100% of such total value in the case of articles enumerated in Sections 184 and 184-A, 50% of such total value in the case of articles enumerated in Sections 185, 185 -A and 185-B; and 25% in th e case o f crtic les enu - merated in Sections 186 and 186-8. (emphasis supplied.) }{}(X XXX It is quite apparent, during the time material to this case, that the advance sales tax on im- ported a~ticles is based on th0 landed ccst thereof plus the corresponding mark-up. The landed cost thereof, certified to as correct by the Philippine Consul at the port of origin, if thLre is any , including freight 1 postage, insurance, commlSSlOn, customs duty, and all simi lax: cha.rges . (Gena to Comme~cial Co rp oration vs. Court of Tax Appeals, 104 Phil . 615; Philippine Amer i can Drug vs. Collector of Internal Revenue, 106 Phil . 161; Caltex (Phil.) '� Inc. vs. Actin<:] Commissioner of Customs , L-24619, February 26, 1968, 22 SCRA 779; Commissioner of Cuatoms vs. Ccldran, L-23425, February 26, 1968, 22 SCRA 742.) In CTA Case No. 2841, The Goodyear Tire & Rubber Company of the Philippi ne s, LtcL vs. Commis- sioner o f Customs, wherein the question involved L1 J 3

DECISION - CTA CASE NO. 2645 -- 10 - was whether or not the Commissioner of Customg erred in disregarding t he commercial and consular invoice values as the bases of tle home consumption values of t he same i mported synthetic r ubbers and rubber substitutes involved i n the instant case - - -�-- for duty purp. oses of imcosing the -a-d� valorem under ..... Section 201 of the Tariff and Cus~oms Code, this Court ruled that since there was no iota of proof presented by the Bureau of Customs to overcome the �rima .facie correctness of the values stab2d in the commercial or consular invoices submitted by the same petitioner herein The Goodyear Tire and Rubber Company of the Philippines, Ltd., the said invoice values should prevail . By reason of the identical or close similarity of the laws involved and the issues litigated: CTA Case No. 2841 being the customs aspect of this case , and as a matter of fact , as sta ted earlier, this suit was submitted for decision by the parties on the basis of the pleading s and records of CTA Case No. 2841; hence , has controlling effects on the instant proceeding, we will quote at length from the decision. Petitioner has religiously complie d with said requirementsd law by submitting the fol l owing evidence: the commercial

DECISION - CTA CASE NO. 2645 - 11 - and consular invoices (Exhs. A-A to A-C, pp. 307, 309, Customs record) i. the Central Banl Release Certi ficates confirming the unit price per pound as stated in the said commercial and c on- sular invoices (Exh. A-5); the draft drawn against petition~r tor subject shipment (Exh. A-M) under the approp- riate letter of credit in the total amount of U.S. $25,995.86 (Exh. A-Li; and the debit made by Rizal Commerci~l Bankjng Corporation for the peso equ iva lent of the US $25,995.8 6 (Exh. A-N)~ Aside from thes e documents, to further c orroborate the truthfulness and cor r ect- ness of the declared values in said documents, petitioner submitted addi- tional documents like: (1) the firm offer dated November 9, 1972 issued by Mitsui & Co., Ltd., local agent for JSRC, showing that the values of subject importation are t hose as declar e d (Exh. A-1), and (2) tne certification issue d by JSRC to t h e �s a me effect, properly authenticate d by Mr. Fortunato D. Oblena , Vice- Consul, Embas sy of the Philippines, Tokyo, Japan (Exh. A-,T) � As against all these overwhelmingly convincing proof, no shred of evidence whatsoever was introduc ed by respondent . to rebut petitioner's stand. While i t is true, as alleged by respondent, that the probative value of the questioned importation is �fima f acie only, and therefore not binding upon r espondent, yet in the absence of a ny concrete evidence to overturn said value, the Court cannot do otherwise but rely upo n i t . Even responde nt himself believes that the va lue s stated in the commercial and consular in- voices can be the primar y basis of the home consumption value and can be set aside only in case of reasonable doubt, in favor of other home consumption values, bas ed on more reliable information, when he stated in his decision, to wit: x x x While the value given to said documents may be the pri- ma ry basis of the home cons u mption value, yet on r e asonable doubt, the same may be set aside i n favo r of I ... 'l l . '

DECISION - CTA CASE NO . 2645 -� 1.2 - other home c o nsumption value especial l y when the latter is based on more reliable inform- ation . A perusal of the records yields negative r esu l ts as t o 11 0 ther more reliable in- fo r mat i o n'' that might have been submitted by 1:espon dent to bolster his stand. He has not su bmitted any revenue or c om- merc i al attache r eport as prov ided fo r u n der Re p ub lic Ac t 576 6 t o support hi s valuatio n. He even asserted th at the p r ices of imported pr o d uc ts a r no t stable and subject to change and that the values applied in the instant case are the HCV 's for articles of si mi la r nature coming from the ports of origin at t he time of exportation . However, even respondent's witness, the appraiser who personally made the discrepancy report on the home consumption value, except to state that the Customs Valuation Circular No. 38-72 dated November 20, 19 72 was his sole basis (T.S.N . , pp. 336 - 337, Customs rec.). When cross-examined as to the basis of a fbr.esa i d Custom f.> Valuation Circular, above-mentioned witness could not pinpoint any specific document but justmguely and generally stated that it was based on previous records of shipments and import- ation (T.S.N. , p. 336, Customs rec.) . No single document was even presented t6 substantiate his allegation. On October 9 , 1974 , when cross-examined as to whether aforesaid Customs Valuation Circular No. 38 - 72 has been updated since November 20, 1972, aforementioned respondent's witness categorically stated that there were no other published values. He even admitted that even if prices of commodities in fact went down , the c ustoms appraisers will still naintain their values at customs. (T.S.N., p. 335, Customs rec.) With the testimony of the abcve- mentioned respo~dent's witness, this Court believes that Customs Valuation Circ ular No. 38 - 72 c a n not be take n as the sole and only reliable source of the horne consumption value. Moreover, even the very Customs Valuation Circular

DECISION - CTA CASE NO. 2645 - 13 - No. 38-72 itself was not submitted in evidence. Respondent has not indubit- ably shown that thsre was reasonable doubt as to the values declared in the commercial and consular invoices. Neither has it submitted convincing evidence that the customs valuation was based from reports of revenue and commercial attaches, nor from any other reliabl~ information. In the absence of any iota of proof to repudiate the EEJ.E!� facie::_ correctness of the values stated in the comme~cial or consular invoices submitted by peti- tioner, this Cou rt finds no compelling reason to discard said values. Moreover, this very issue as to the basis of the home consump tion value of an importation has already been squarely ruled upon by this Court in the recent decision in the ca se of Wise & Co. vs. Comm. of Customs, CTA 2717, Dec. 29, 1977. {Certio rari denied in G.R. No. L-51242, March 7, 1980.) Considering th ~ t there is absolutely no evidence that the invoice values of the sh ipments in question are not their actual and true export values so as to justify a disregard thereof, and the public and official character of the consular and commercial invoices adverted to above, the Court finds no re asonable grounds to deny to these documents the fai tb and credence normally due thereto. (See Commissioner of Customs vs. Celdran, L-23425, Februa ry 26, 1968, 22 SCRA 742.) We therefore hold that the conclusion reached by this Court in resolving a similar issue in CTA Case No. 2841, to the effect that tL8 p_Eim~ facie correctness of the values stated i11 the commercial and consular in- voices submitted by petitioner should not be

DECISION - CTA CASE NO. 2645 - 14 - disturbed, is likewise applicable to this case. Accor dingly, the amount of ~6,537.00 representing additional internal revenue tax (advance sales tax) .Paid by petitioner The Goodyear Tire and Rubbe r Company of the Philippines, Ltd., on its shipments of synthetic rubbers and rubber substi- tutes involved in this case is refundable to it. WHEREFORE, respondent Commissione r of IntLrnal Reve~ue is hereby ordered to grant a tax credit i n favor of petitioner the amount of P6 , 537 . 00. With- out pronouncement as to costs. SO ORDERED . Quezon City , Metro Manila, September 21, 1981. a;Vl/~z C.L. ~J i.\MANTE I LLEH Presiding Judge vm C00JCU:R: ) CO'~~-f~-N-'r/E ~2 ROAQU IN 1ssociate Judge ~~~ Associate Judge I r, LJ j 1