THE Department of Finance (DOF) has reiterated its order to the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) to stop the illicit entry of cigarette-making machines in the country, to deter the making of counterfeit tobacco products.
Finance Secretary Carlos G. Dominguez III issued the order after confirming with BIR Commissioner Caesar R. Dulay that the illegal tobacco trade has shifted from smuggling cigarettes to producing counterfeit brands here, using undocumented cigarette-making machines acquired from China.
“What we have to stop is the import of the equipment, which is coming from China,” Dominguez said during a recent DOF Executive Committee (Execom) meeting.
The finance chief instructed Dulay and BOC Commissioner Rey Leonardo B. Guerrero to coordinate with Chinese officials to inform them about this new illicit scheme and to ask them to stop the export of cigarette-making machines to the Philippines without the proper documentation.
Previous BIR raids showed that counterfeiters can manufacture fake versions of popular brands using smaller, more portable versions of the machines and devices for making cigarettes.
“They have graduated from fake stamps to fake cigarettes,” Dulay said during the meeting.
Erring traders have apparently switched to manufacturing their own counterfeit cigarettes in lieu of smuggling legitimate products following the heightened joint BIR-BOC drive against suppliers of tobacco products with fake tax stamps, which was in compliance with Dominguez’s earlier orders.
In response to Dominguez’s earlier directive, the BIR and BOC created a joint task force to crack down hard on sellers of smuggled and counterfeit cigarettes.
In August Dominguez also directed both bureaus to dig deeper into the apparent smuggling into the country of machines used to manufacture counterfeit cigarettes.
He instructed officials from both agencies to trace the manufacturer of the machines and travel to the probable country or countries of origin, to seek the cooperation of customs authorities in those countries of origin in finding the people behind the illegal entry of the cigarette-making units via
Philippine ports.
He also thumbed down a proposal to negotiate with those behind the illegal importation, and ordered the BIR not to give up the machines. The finance chief said the BIR should determine instead the penalties that should be
imposed on those responsible for such illegal importation.
The order was issued following the BIR’s report that cigarette-making machines were confiscated in Cagayan de Oro City. According to BIR Deputy Commissioner Arnel SD. Guballa, the machines were being used to make cigarettes for export.
The two factories in Cagayan de Oro yielded four unregistered cigarette-making machines, six packaging machines and a filter-making machine.
Dominguez said the machines had no import permits and the manufacturer who used them did not have a permit to operate, making the entire process illegal.
During the same month, the BOC, under the leadership of former Customs Commissioner Isidro S. Lapena, arrested 17 Chinese nationals caught making fake cigarettes inside a warehouse in Nueva Ecija, with the estimated market value of the seized cigarettes at P200 million.
According to the BOC, the foreigners were rounded up during an inspection by agents of its Enforcement and Security Services (ESS) on Valmonte Street in Barangay Pambuan, Gapan City.
Also intercepted were fake cigarettes of assorted brands, six cigarette-making machines,
cigarette raw materials and fake BIR tax stamps stacked inside three boxes.
The suspects—16 males and one female—were from Hu Bei, Fu Jian, An Hui and Xi An, China. They were put in the custody of the Philippine National Police for violating Republic Act 8293, or “An Act Prescribing The Intellectual Property Code And Establishing The Intellectual Property Office, Providing For Its Powers And Functions, And For Other Purposes.”