Shell fires back at Customs over tax evasion raps

Fop misleading the government in filing a P24 billion tax evasion case against Pilipinas Shell Petroleum Corp., the local unit of Netherlands-based Royal Dutch Shell Plc will file cases of negligence, incompetence, and defamation against Bureau of Customs officials, an official of the Manila-based oil firm said Tuesday. "Shell has always acted according to its business principles and has built and protected its reputation for many years. Accordingly, we will be filing cases for gross negligence, gross incompetence and defamation against those who had misled this government," Shell said in a published statement Tuesday in the Philippine Daily Inquirer and Philippine Star. The statement did not say that Pilipinas Shell will file cases against Customs officials, but the company’s vice president for corporate communications, Robert Kanapi, told reporters that that was the case. The Customs Bureau filed a complaint against officers and employees of Pilipinas Shell last week alleging that the country's second largest oil company intentionally misdeclared its 2005-2009 shipments of catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) by using the tariff heading tetrapropylene to evade payment of proper taxes and duties. The oil firm said that Customs officials publicly accused Pilipinas Shell of technical smuggling and made it appear that Shell evaded the payment of excise taxes and the value added tax. "We view this development as reinforcement of President Aquino's assessment that the biggest challenge facing his administration is trying to replace a system that has been in the country in its worst form for practically the last 10 years," the company said in the statement. Pilipinas Shell — which owns an 110,000 barrel per day refinery in Batangas — said it is committed to helping the present administration in the fight to change the system "and to expose corrupt and incompetent government officials." Misled by holdovers The company said that Customs Commissioner Angelito Alvares was misled by "holdovers from the previous administration" to believe that the company committed fraud by misdeclaring its CCG and LCCG importations, that there was tax evasion and revenue loss against government, and that the facts of the criminal complaint were different from the case pending before the Court of Tax Appeals. "As a responsible corporate citizen, Shell has paid all appropriate taxes and duties on all its imports. Even if the tariff heading number of tetrapropylene (2710.11.30) was used for CCG/LCCG importations, Shell consistently declared that the product imported was CCG/LCCG in the documents it submitted to the Customs," the company said. The bureau reviews and assesses the proper tariffs and taxes Pilipinas Shell must pay based on the product declaration of CCG and LCCG, the company said. "Therefore Shell accordingly paid the tariff duty assessed by Customs and as such there was never any revenue loss to the government since it collected either the higher duty of three percent or the relevant tariff rate for CCG and LCCG based on the applicable executive orders," that company added. Pilipinas Shell stressed that no excise taxes were due against the 2005-2209 CCG and LCCG importations since each shipment was covered by an Internal Revenue directive to Customs not to assess Shell's excise taxes on those imports. "CCG and LCCG are not subject to excise taxes since these are not final products but raw materials used by Shell's refinery to produce Clean Air Act-complaint petroleum products," Pilipinas Shell said. “From 2004 until December 2009, the BIR did not assess excise taxes on these imported raw materials upon importation but collected the excise taxes from Shell upon the withdrawal of the finished products from Shell's refinery," the company added. Pending before CTA is the issue of double taxation — whether the CCG and LCCG shipments were excisable by Customs upon importation in addition to the Internal Revenue assessment upon withdrawal of the finished products, Pilipinas Shell said. — VS, GMANews.TV