Customs
administrative fines and the Court of Tax Appeals
(February 23, 2004)
Can the Court of Tax Appeals reduce the adminis-trative
fine imposed by the Commissioner of Customs?
NO. And this is the story.
The vessel SS "BATES" arrived at the
port of Manila and discharged 72 bales of textile
remnants consigned to Balin Trading Co. The gross
weight of the said cargo as declared in the bill
of lading was 13,272 lbs. but is was reported
after examination and appraisal that the actual
weight was 66,579 lbs. or a discrepancy of 53,307
lbs. Hence, the actual gross weight exceeded by
more than 400% the declared weight.
Consequently, the agent of the vessel was required
by the Bureau of Customs to show cause why an
administrative fine of PHP26,575 on the vessel
should not be imposed which is the maximum fine
that can be imposed under the Tariff and Customs
Code (TCC).
After hearing, the Collector of Customs rendered
a decision finding the vessel SS "BATES"
and ordering the ship agent to pay the said administrative
fine. On appeal, the Commissioner of Customs affirmed
the decision of the Collector of Customs.
The ship agent appealed the decision of the
Collector of Customs to the Court of Tax Appeals
(CTA). But the CTA modified the decision of the
Collector of Customs. It reduced the fine imposed
against the ship agent to PHP6,000.00.
Thus, the Collector of Customs elevated the
case to the Supreme Court. And the Supreme Court
ruled in the following tenor:
"The Court finds that respondent court
(CTA) did act with grave abuse of discretion when
it reduced the administrative fine notwithstanding
the gross misdeclaration of the weight of the
manifested merchandise and therefore grants the
petition.
1. Section 2523 of the TCC authorizes the imposition
of the administrative fine in the sum of PHP26,575.00
imposed by the petitioner (Commissioner of Customs).
The two requisites therein provided, namely, (1)
that the actual gross weight exceeded by more
than twenty per centum the declared gross weight
and (2) that the discrepancy is due to carelessness
or incompetency of the master, owner or employee
of the vessel, were duly found by petitioner commissioner,
as well as by respondent court, to be present
in the instant case. x x x
2. Here, the Collector of Customs as affirmed
by petitioner Commissioner of Customs, in accordance
with authority given them by the cited codal provision,
duly exercised the discretion and authority vested
in them by imposing the maximum fine due to gross
underdeclaration. x x x Applying by analogy the
principles of penal law, the gross underdeclaration
(by more than 400%) aggravated respondent’s
(ship agent) offense and no mitigating circumstance
having been shown by respondent, petitioner correctly
imposed the maximum fine and there is no valid
justification for respondent court's arbitrary
reduction of the fine to a mere PHP6,000.00. x
x x"
Thus, let us always remember that the CTA has
no discretion to reduce the administrative fine
imposed by the Commissioner of Customs if there
was gross misdeclaration of the weight of the
cargo by the vessel.
For comments or inquiries, email the author at
jtb@pac-atlantic.com.ph.
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Can
the trial court enjoin forfeiture proceedings
in the BOC?
NO.
Sometime in December of 1998, the District Collector
of Customs of Cebu issued a Warrant of Seizure
and Detention (WSD) on 25,000 bags of rice bearing
the name "SMOOTH, milled in Palawan"
on board the MV BERTO, then docked at Pier 6 in
Cebu City.
The warrant was issued on the basis of the report
of the Economic Intelligence and Investigation
Bureau (EIIB), Region VII that the rice shipment
was illegally imported from Vietnam.
Forfeiture proceedings subsequently started in
the Cebu customs office.
But the consignee and the buyer of the bags
of rice filed a complaint for injunction with
the Regional Trial Court (RTC) of Cebu.
The Bureau of Customs (BOC) Port of Cebu and
the EIIB sought the dismissal of the complaint
on the ground that the RTC had no jurisdiction.
But the RTC denied their motion to dismiss on
the ground that the issuance of the WSD was "anchored
merely on suspicion that the rice shipment was
smuggled".
Thus, the 25,000 bags of rice were released
to the plaintiffs but they were ordered to post
an PHP8,000,000.00 bond.
The BOC and EIIB moved for reconsideration but
their motion was denied by the RTC. However, the
court ordered the increase of the bond of the
plaintiffs to PHP22,500,000.00.
On certiorari to the Court of Appeals, the resolution
and order of the RTC were sustained.
Meanwhile, in the forfeiture proceedings before
the Collector of Customs of Cebu, a decision was
rendered "forfeiting the rice shipment and
the vessel in favor of the government".
The plaintiffs did not take part in the forfeiture
proceedings before the District Collector of Customs
despite due notice to their counsel because they
refused to recognize the validity of the proceedings.
The BOC and EIIB elevated the decision of the
Court of Appeals upholding the resolution of the
RTC to the Supreme Court.
In the Supreme Court, the consignee/buyer of
the rice shipment (respondents) cited the statement
of the Court of Appeals that regular courts still
retain jurisdiction "where, as in this case,
for lack of probable cause, there is serious doubt
as to the propriety of placing the articles under
Customs jurisdiction through seizure/forfeiture
proceedings".
But the Supreme Court ruled in the following
manner:
"x x x They (respondents) overlooked the
fact, however, that under the law, the question
of whether probable cause exists for the seizure
of the subject sacks of rice is not for the Regional
Trial Court to determine. The customs authorities
do not have to prove to the satisfaction of the
court that the articles on board a vessel were
imported from abroad or are intended to be shipped
abroad before they may exercise the power to effect
customs' searches, seizures, or arrests provide
by law and continue with the administrative hearings.
The proceedings before the Collector of Customs
is not final. An appeal lies to the Commissioner
of Customs and thereafter to the Court of Tax
Appeals. It may even reach this Court through
the appropriate petition for review. The proper
ventilation of the legal issues raised is thus
indicated. Certainly a Regional Trial Court is
not therein included. It is devoid of jurisdiction."
Let us bear in mind that the Collector of Customs
has the exclusive jurisdiction over seizure and
forfeiture proceedings and regular courts cannot
interfere or stifle with this exercise.
For comments or questions, email the author
at jtb@pac-atlantic.com.ph.
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Is
the re-appraisal by the BOC based on 'alert notice'
valid?
NO. And this is the story.
Sometime in March 1974, Candy Corporation imported
sealed beams from the United States. The invoice
price was USD0.908 per piece but the Collector
of Customs of Manila re-appraised it to USD1.35
apiece based on an "Alert Notice" received
from a Finance AttachŽ abroad.
Candy Corporation paid the increased duties and
taxes but filed a Protest.
The Collector of Customs denied the Protest.
Candy Corporation appealed to the Commissioner
of Customs but the latter affirmed the decision
of the Collector of Customs.
Candy Corporation elevated the case to the Court
of Tax Appeals (CTA). And the CTA reversed the
decision of the Commissioner of Customs by ordering
the refund of the overpaid customs duties to Candy
Corporation.
But the Commissioner of Customs elevated the
case to the Supreme Court. And the Supreme Court
ruled in the following tenor:
"In the corresponding Import Entry, respondent
company (Candy Corporation), quoted the prices
of the imported merchandise as declared in the
consular invoice and as required by Section 201.
Reasonable doubt regarding the declaration was
not shown to have existed such that recourse to
reports from commercial attaches or other information
became necessary. Neither was there compliance
with the requirement in Section 201 regarding
publication of the lists of dutiable values of
imported articles from time to time. The re-appraisal
made by the Bureau of Customs was based on 'Alert
Notices' received from Finance Attaches abroad,
which, however, were not disclosed, neither to
Respondent Company nor to Respondent Court (CTA).
x x x
While it is true that the appraisers of the
Bureau of Customs are given ample leeway in determining
the correct customs duties under Section 1405
of the Tariff and Customs Code, Section 201 of
the same Code, which prescribes the criteria for
the determination of the dutiable values of imported
articles, has not been complied with. What is
more, administrative proceedings are not exempt
from the operation of due process requirements
one of which is that a finding by an administrative
tribunal should be supported by substantial evidence
presented at the hearing or at least contained
in the records or disclosed to the parties affected.
In this case, the 'Alert Notices' on which petitioner
(BOC) based its re-appraisal were not disclosed
during the proceedings before the Bureau of Customs
nor presented in evidence before respondent Court.
The re-appraisal made by the petitioner, therefore,
can be faulted with arbitrariness in disregard
of the standard of due process to which all governmental
action should conform to impress upon it the stamp
of validity".
Let us remember that any re-appraisal by the
Bureau of Customs as to the dutiable values of
imported cargoes should not be arbitrary and must
always be supported by substantial evidence in
order to be valid.
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For comments or inquiries, email the author
at jtb@pac-atlantic.com.ph.
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