Sister agencies Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) recently seized over P2 billion worth of cigarettes bearing fake tax stamps in separate raids conducted in Pampanga, General Santos City, and Zamboanga.
Five warehouses in San Simon Industrial Park in San Simon, Pampanga, sub-leased by local tobacco manufacturer Mighty Corporation, were raided by joint BIR and BOC elements and the provincial police on March 1. The crackdown yielded 62,200 master cases of assorted cigarettes worth over P1.957 billion. Each master case contained 50 rims, with each rim containing 10 packs of cigarettes.
The cigarettes are manufactured locally but they contain some imported ingredients.
The security team conducted random sampling and checking of each master case at least eight times for every warehouse, and results confirmed that fake tax stamps were used.
BOC deputy chief of staff Mandy Therese Anderson in a press conference on March 2 noted that under BIR Revenue Regulation 07-2014, smuggling is presumed when fake tax stamps are used.
While Mighty has been identified as the sub-lessee of the warehouses, BOC has yet to know the exact identities of the personalities involved. Anderson said a criminal case for tax evasion may be filed against the perpetrators, who will also be liable for unpaid excise taxes with surcharges and penalties.
A separate raid on March 1 was also staged by BIR with BOC Special Studies and Project Development Committee (SSPDC) and BOC-Port of Dadiangas in General Santos City to conduct anti-illicit trade operations against Sunshine Corn Mill Corp.’s warehouse on Amadaza Street, Lagao, General Santos City.
The operation resulted in the seizure of 11,044 master cases of assorted cigarettes with fake tax stamps, with an approximate street value of P215 million. Operating teams confirmed that the tax stamps were counterfeit after results of official scanning and tagging of the cigarette packs and master cases.
On February 22, BOC likewise raided a warehouse in Zamboanga City that led to the seizure of 400 master cases of counterfeit smuggled cigarettes with an estimated street value of P13.5 million.
Mighty ready to cooperate
Mighty executive vice president and spokesperson Oscar Barrientos, in a statement, said the company is “willing to open all its warehouses to cooperate with the BOC for seizure of fake cigarettes should any be found within its premises.”
He reiterated Mighty’s position that it is “not in the business of producing fake cigarette products as its own local brands are well-accepted by its customers.”
He bewailed “the use by other government agencies of mission orders of the BOC to pursue schemes of competitors to seize products using a false pretext that fake cigarettes are stored in warehouses because of (the company) being in the forefront of efforts to alleviate the plight of local tobacco farmers through amendatory legislation.”
Barrientos said, “It was (plain) from the result of raids conducted by the BOC in warehouses of Mighty in Pampanga and General Santos that no fake products… were found. That should have aborted the activity. But other government regulators without appropriate mission orders or directives from its head offices had used the raid to assert offenses by Mighty not covered by the BOC orders,” Barrientos claimed.
He called on the BOC to be “vigilant at its function to avert smuggling and ensure collection of duties and taxes as Mighty does not produce fake products and had done nothing to violate any of (BOC) regulations or of the Tariff and Customs Code.”
During the March 1 press conference, Neil Anthony Estrella, Customs Intelligence and Investigation Service director and BOC spokesperson, said the bureau will have to “dig deeper and find out possible perpetrators,” and probe if the raw materials used in the seized cigarettes were smuggled.
He added that the BOC will validate names identified in the initial investigations, and that the agency will follow due process and wait 15 days before issuing a warrant of seizure and detention.
According to James Layug, Port Operations Service director and SSPDC head, each cigarette pack should have been imposed a P30 excise tax. The three separate raids thus involved foregone excise tax payments amounting to P1.1 billion.
In a separate statement, BOC said recent operations against illicit tobacco trade will help implement Finance Secretary Carlos Dominguez’s order to further tighten enforcement following the proliferation of fake cigarette tax stamps, which he described as “a matter of serious concern”.
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