DIGESTS
Customs and Duties
An Import Entry and Internal Revenue Declaration (IEIRD) is akin to a preliminary assessment.
While the IEIRD does constitute a formal declaration by the taxpayer, it also contains corrections and the recomputed amounts of the taxes and customs duties due on the imported articles as determined by agents or representatives of the BOC. In fact, it is the filing and acceptance of the IEIRD, accompanied by the payment of the amounts indicated therein, which constitute the official entry of imported articles in the country. Thus, the corrections and re-computations, if any, by the Collector, or his agents, on the IEIRD, at least in the context of this case, would be akin to a preliminary assessment which does not yet contain a formal demand to pay from the government.
In general, a preliminary assessment constitutes only an initial finding of the taxing authority of the liabilities of a taxpayer. If the taxpayer contests the same and initiates a formal protest in the form of a request for reconsideration or reinvestigation, then the assessment becomes disputed. If the IEIRD is considered as the preliminary assessment, any protest thereto should be filed with the Collector. As pointed out by public petitioners, the Collector’s ruling on the protest may then be reviewed by the COC, and then it is the latter’s decision which may be elevated to the CTA. It is also error to assume that the IEIRD can constitute the final assessment for the sole reason that the non-filing thereof and non-payment of the taxes and duties contained therein would result in the abandonment or forfeiture of the imported article. In fact, in one case, the Court had already clarified that an IEIRD cannot be considered as the Collector’s final assessment that could be the proper subject of review, and that in any case, such assessment must still be reviewed by the COC before it is brought to the CTA.
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Liquidation; Finality thereof
Assessments inform taxpayers of their tax liabilities. Under the TCCP, the assessment is in the form of a liquidation made on the face of the import entry return and approved by the Collector of Customs. Liquidation is the final computation and ascertainment by the Collector of Customs of the duties due on imported merchandise based on official reports as to the quantity, character and value thereof, and the Collector of Customs’ own finding as to the applicable rate of duty. A liquidation is considered to have been made when the entry is officially stamped “liquidated.”
Petitioner claims that it paid the duties due on its importations. Section 1603 of the old TCCP stated:
Section 1603. Finality of Liquidation. When articles have been entered and passed free of duty or final adjustments of duties made, with subsequent delivery, such entry and passage free of duty or settlement of duties will, after the expiration of one year from the date of the final payment of duties, in the absence of fraud or protest, be final and conclusive upon all parties, unless the liquidation of the import entry was merely tentative.
An assessment or liquidation by the BOC attains finality and conclusiveness one year from the date of the final payment of duties except when:
(a) there was fraud;
(b) there is a pending request or
(c) the liquidation of import entry was merely tentative.
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Lien on the articles imported.
Section 1204 of the TCCP provides:
Section 1204. Liability of Importer for Duties. – Unless relieved by laws or regulations, the liability for duties, taxes, fees and other charges attaching on importation constitutes a personal debt due from the importer to the government which can be discharged only by payment in full of all duties, taxes, fees and other charges legally accruing. It also constitutes a lien upon the articles imported which may be enforced while such articles are in the custody or subject to the control of the government. (emphasis supplied)
Under this provision, import duties constitute a personal debt of the importer that must be paid in full. The importer’s liability therefore constitutes a lien on the article which the government may choose to enforce while the imported articles are either in its custody or under its control.
When respondent released petitioner’s goods, its (respondent’s) lien over the imported goods was extinguished. Consequently, respondent could only enforce the payment of petitioner’s import duties in full by filing a case for collection against petitioner.
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Conclusiveness of the value of the merchandise.
The Court has long held consistently that “(T)he rule is well established that the value of merchandise fixed by the appraiser and affirmed by the Collector of Customs is conclusive in the absence of an affirmative showing that the appraiser, in assessing the value, proceeded upon a wrong, principle and contrary to law,” and that “(I)f the customs authorities were bound by the invoice value, it is evident that they would be, to a considerable extent, at the mercy of foreign merchants and importers. The purpose of Congress in providing for appraisers was to prevent fraud upon the customs, and thus protect the revenues of the Government.”
The Court has likewise consistently held as a necessary corollary that the value of imported articles as fixed by the customs authorities in the discharge of their function of assessing and collecting the lawful revenues justly due on imported articles and confirmed by the customs commissioner and/or respondent internal revenue commissioner (who in this case directly confirmed the customs collector’s determination since the matter involved advance sales taxes on imported articles imposed by the NIRC and collected by the customs collector as his agent) that such valuation is presumed to be correct and therefore conclusive in the absence of fraud or illegality or of an affirmative showing by the protesting importer that the customs authorities in fixing or assessing the value of the importation proceeded upon a wrong principle and contrary to law.
The burden thus rests upon the importer disputing the customs valuation not only to prove the contrary and overcome the presumption of correctness of the valuation but also to show that the figures declared by him are in fact true and correct. As restated by the Court in a 1960 case [Collector of Internal Revenue vs. Bohol Land Trans. Co., 107 Phil. 965 (1960)] “the determination of the tax deficiency by the Government has prima facie validity and the burden rests upon the taxpayer to overcome this presumption and to show to the satisfaction of the Tax Court that the determination was not correct.”
~~~The Coca-Cola Export Corporation vs. The Commissioner of Internal Revenue, et al. (G.R. No. L-23604, 15 March 1974, 1st Div., J. Teehankee)
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The jurisdiction of the RTC over an action for collection of custom duties (before RA No. 9282); There must be no needless delay in the collection of customs duties.
The governing law at that time was RA 1125 or the old CTA Law. Section 7 thereof stated:
Section 7. Jurisdiction. The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided:
(1) Decision of the Commissioner of Internal Revenue in cases involving disputed assessment, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Code or other laws or part of law administered by the Bureau of Internal Revenue;
(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other money charges; seizure, detention or release of property affected; fines and forfeitures or other penalties imposed in relation thereto; or other matters arising under Customs Law or other laws or part of law administered by the Bureau of Customs; and
(3) Decisions of the provincial or city Boards of Assessment Appeals in cases involving the assessment and taxation of real property or other matters arising under the Assessment Law, including rules and regulations relative thereto. (emphasis supplied)
Inasmuch as the present case did not involve a decision of the COC in any of the instances enumerated in Section 7(2) of RA No. 1125, the CTA had no jurisdiction over the subject matter. It was the RTC that had jurisdiction under Section 19(6) of the Judiciary Reorganization Act of 1980, as amended:
Section 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall exercise exclusive original jurisdiction:
xxx xxx xxx
(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body exercising judicial or quasi-judicial functions, xxx.
In view of the foregoing, the RTC should forthwith proceed with Civil Case No. 02-103191 and determine the extent of petitioner’s liability.
We are not unmindful of petitioner’s pending petition for review in the CTA where it is questioning the validity of the cancellation of the TCCs. However, respondent cannot and should not await the resolution of that case before it collects petitioner’s outstanding customs duties and taxes for such delay will unduly restrain the performance of its functions. Moreover, if the ultimate outcome of the CTA case turns out to be favorable to petitioner, the law affords it the adequate remedy of seeking a refund.
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