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SMC to B.O.C.: step up fight vs oil smuggling

San Miguel Corp. (SMC) Pre-sident Ramon S.Ang strongly urged the Bureau of Customs (BoC) to exert more effort to curb
the smuggling of petroleum products.

This, after SL Harbor Bulk Terminal Corp., a unit of SMC, has filed a case against the BoC, contesting the latter’s recent seizure of its bunker-fuel cargo, which it said was done without due process and despite the presentation of a complete set of import documents.

Ang denied that his company was involved in smuggling activities. SL Harbor filed before the Court of Tax Appeals (CTA) to nullify the decision of forfeiture issued by the customs collector of the Port of Limay in Bataan.

“There was no smuggling, no illegal discharge and no basis for the warrant of seizure and detention [WSD],” Ang said, adding, “perhaps, the BoC should focus its efforts on gasoline and diesel smuggling, which is becoming more and more rampant.”

Ang, in April 2013, raised the alarm that 1 out of 3 liters sold in the market was coming from smuggled sources, with government losing as much as P30 billion to P40 billion annually.

“We have always stood behind the BoC in its efforts to put a lid on fuel smuggling and improve its revenue generation, but it has to be done properly. They cannot just seize produtcts without following the due process of law at the expense of  law-abiding taxpayers. They should go after the real criminals,” Ang said.

The BoC, last December 16, seized 44,000 metric tons (MT) of bunker-fuel cargo, consigned to SL Harbor and loaded in MT Alpine Magnolia and local barge MT Malolos in Limay, Bataan.

No alert notice or proceeding was conducted prior to the issuance nor an inventory was made, Ang noted.

Last December 20, SL Harbor filed a motion to lift WSD. A month after, the Limay District Collector of Customs issued a decision forfeiting the entire bunker-fuel cargo and the vessels. The sole basis of the decision was that MT Magnolia allegedly unloaded directly to the barrage of  MT Malolos without the payment of taxes.

On February 2 this year  SL Harbor appealed the decision to Customs  Commissioner Nicanor E. Faeldon. However, he failed to act on the appeal within 30 days. Hence, the forfeiture decision was deemed affirmed.

On March 23 SL Harbor filed a petition for review with the CTA. The case is now awaiting CTA proceedings. Meantime, the entire bunker-fuel cargo of 44,000 MT remains intact in the SL Harbor terminal storage banks.

In its 28-page petition, SL Harbor said it was deprived of procedural due process of law as no notice before seizure was issued and no hearing before forfeiture took place.

SL Harbor’s tank had in it approximately 6,376,282 liters of bunker-fuel oil as previous stock inventory. This was where the 996,264 liter onboard MT Malolos was loaded from. It was not from MT Alpine Magnolia.

SL Harbor stressed that there was no smuggling, no illegal discharge and, thus, no basis for a WSD.

“The problem with the WSD is that it assumed that the volume loaded unto MT Malolos was the same that was directly discharged from MT Magnolia. But this assumption completely forgets that SL Harbor’s storage tank had existing bunker-fuel stock inventory of more than 6 million liters.”

SL Harbor also noted in its petition that industrial fuel oil (or bunker-fuel oil) is a low-value item. It can only be used by power plants, seafaring vessels and other manufacturing plants. The black market for it is so limited that it is a low-margin product. It is also a “dirty product in the sense that its transport and handling are fraught with environmental risks that it is not an activity that anyone would engage in unless it was absolutely necessary”.

“If one were to smuggle bunker fuel, the conspiracy required would be too complex. SL Harbor would have to conspire with a big trader like Glencore, which would then risk $150 billion business to accommodate a small shipment,” the company said.

“On top of this, SL Harbor would have to conspire with ship owners who would then expose their entire fleet to risks of seizure. The risks and costs of smuggling bunker fuel far outweigh the taxes to be paid, which, incidentally, was already deposited in an accredited bank, ready to be debited in favor of the BoC,” it added.

For 2015, records would show that SMC paid the government a total of P125.7 billion in various taxes, including value-added, excise taxes and specific/ad valorem taxes. In the last five years, the company has paid a total of P537.5 billion in various taxes to the government.

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