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Shell disputes Customs’ P7.3-B excise tax claim

12/07/2009

Oil giant Dutch Royal Shell unit Pilipinas Shell Pretroleum Corp. (PSPC) has filed a petition with the Court of Tax Appeals (CTA) to bar the Bureau of Customs (BoC) from enforcing a disputed deficiency excise tax assessment amounting to P7.3 billion.

The assessment covers the importation of catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) for the last five years used for the production of unleaded premium gasoline.

In its petition, PSPC through its legal counsel, former Ombudsman Simeon Marcelo, said the BoC has no jurisdiction to issue the questioned tax assessment since “the Bureau of Internal Revenue (BIR), the government agency tasked by law to collect all national internal revenue taxes and to interpret provisions of the National Internal Revenue Code (NIRC), has previously ruled that such importations are not subject to said taxes.”

PSPC said to date, the BIR has not issued any tax assessment under the NIRC covering the subject importations.

On the contrary, “the BIR has ruled that PSPC’s importations of CCG and LCCG, being intermediate products or raw materials, are not subject to excuse taxes,” PSPC added.

Based on its own rulings, the BIR has issued Authorities to Release Imported Goods to the BoC since 2004 directing that the importations of CCG and LCCG by PSPC should not be subjected to excise tax. PSPC contends that the BoC has not jurisdiction to overturn these previous BIR rulings.

PSPC explained that in compliance with the Clean Air Act and Philippine National Standards, both CCG and LCCG, as intermediate products or raw materials, still have to go through a refinement process before they can be sold locally as unleaded premium gasoline.

PSPC asserted that while the shipments were not subject to excise taxes at the time of importation, all taxes due on the CCG and LCCG were actually paid “upon the withdrawal of the finished product from its refinery” for sale as unleaded premium gasoline. PSPC protests that the attempt of BoC to collect taxes on the same goods constitutes double taxation.

Marcelo added that “in its zeal to meet its collection quota, the BoC should not be allowed to act contrary to law and act beyond its lawful jurisdiction.”

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