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. Back
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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. Back
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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.
For comments or inquiries, email the author at jtb@pac-atlantic.com.ph.
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