Shell decries accusations of not paying excise tax

Pilipinas Shell Petroleum Corp. (Shell) denied reports Wednesday that it owes government billions of pesos in excise tax for import shipments of alkylate, a blending component for petroleum. In a statement, Shell explained that alkylate is an intermediate product, and is therefore not subject to excise tax. "However, when the alkylate is further processed into finished unleaded gasoline product that is fit and ready for consumption, the finished product is subject to the payment of excise taxes before [it] is released from Shell’s refinery," it added. Alkylate, the company pointed out, is a blending component it uses to meet the Philippine National Standards (PNS) criteria set by the Philippine Clean Air Act for unleaded gasoline. The substance is often used as a blending ingredient to enhance the octane in gasoline, and also tends to reduce ground-level smog that causes pollution in most urban cities. Shell pointed out that the Bureau of Internal Revenue has issued an individual Authority to Release Imported Goods for the shipments in question, and ruled that they are "raw materials and/or blending components." The firm admitted that in a sampling conducted by SGS Philippines in April and witnessed by both Shell and the Bureau of Customs, an alklate shipment has been found not to meet the PNS specifications. "Shell has paid all the right taxes and strongly denies having engaged in any fraudulent activity, especially smuggling, as this is very much against its business principles," it stressed. Shell has been dragged in the news by a resolution filed by Zambales Rep. Mitos Magsaysay, asking the House of Representatives to probe the failure of the Bureau of Customs to collect P1.6 billion in excise taxes from Shell’s alkylate imports. Magsaysay said that instead of following the recommendations of Customs officers to file a case against the oil firm, Commissioner Angelito Alvarez had them removed from their posts. "Why were the district collectors of Batangas and three other people who signed the report to charge Shell with 1.6 billion [in] non-payment of taxes and duties relieved by Comm. Alvarez?" Magsaysay asked via her Twitter account. Alvarez has been contacted by GMA News Online but his office has yet to issue a statement as of this posting. — JM/VS, GMA News