The Filipino Galvanizers Institute Inc. (FGI) also accused TRM-NEDA of abuse of authority when it granted zero tariff incentive to Steel Corp. for the importation of hot rolled coils (HRC) to the detriment of the other industry players like them.
They urged TRM-NEDA to immediately cancel the duty incentive given to Steel Corp. or they will be constrained to "seek judicial relief in a court of law."
FGI, through lawyer Harry Roque, wrote TRM-NEDA seeking the immediate cancellation of the duty incentive awarded to Steel Corp. for violation of the equal protection clause of the Constitution. Furthermore, the incentive granted to Steel Corp. for HRC importation is not among those allowed under RA 7103 or the Iron and Steel Industry Act, FGI said.
FGI is composed of eight steel companies, namely Union Galvasteel Corp., Chuayuco Steel and Manufacturing Corp., Group Steel Corp., Malayan Steel Industries Inc., Puyat Steel Corp., Sonic Steel Industries Inc., Sugar Steel Industries Inc., and Tower Steel Corp.
The conflict dates dates back to former President Joseph Estrada’s time when the TRM-NEDA granted a zero tariff duty on Steel Corp. on the ground that its HRC imports met the qualifications of RA 7103 entitled to that incentive.
According to FGI, the agency went beyond its mandate since the law states that tariff incentives may only be given on imported raw materials "not indigenously sourced or are not available in sufficient amounts . . . such as iron, ore, cooking coal and manganese ore."
Using that provision of the law, the manufacturers argued that HRC is not among the raw materials qualified for exemption although one of the materials used for the production of HRC is iron.
"Not being raw materials in the category specified by law, the NEDA has no power whatsoever under Section 6 (f) to grant incentives on the importation of HRC," the manufacturers said.
HRC, which is used to produce finished products such as beams, base plates, pipes, tubes, pressure vessels like LPG and cylinders, is made from iron ore, limestone and coal. The mixture is charged in a blast furnace to produce refined iron ore.
The refined iron ore is then smelted in an electric furnace and cast in slab casters to produce slab ingots, which when rolled in a hot strip mill, produce the HRC.
HRC, when processed in a reduction mill, produces cold rolled coils (CRCs) and sheets which are used to produce a variety of products like GI sheets, tin plates, automotive parts, bus bodies etc.
Based on the process, FGI maintains that HRC is not a raw materials, and thus, not qualified for the exemption.
"Not being a raw material, HRC importation cannot be given a tariff incentive . . . and the grant of such incentive by the NEDA is tantamount to lack of authority and constitute an ultra vires act," FGI said.
FGI argues that the zero duty incentive to the importation of HRC inputs of Steel Corp. violates the policy of the law of enhancing the viability of the entire iron and steel industry since the rest of the members of the industry, particularly the CRC manufacturers, are made subject to a three-percent tariff duty.
"The zero duty privilege given to Steel Corp. and the three-percent duty burden imposed on the others will kill the rest of the industry members and transform Steel Corp. into a virtual monopoly," FGI says.
"The zero duty on HRC and three-percent duty on CRC does not create a level playing field and the same violates the constitutional proscription against unequal protection of the law," they added.