BOC probes charges of undervaluation vs cement importers

The Bureau of Customs (BOC) has moved to investigate a number of cement importers who may have defrauded the government of millions in pesos in customs duties by undeclaring the value of the cement that they are bringing into the country.

This, as Customs Deputy Commissioner George Jeroes ordered the recall of several import entries submitted by at least three cement importers to the BOC for a close "re-assessment" by the bureau. According to him, the cement import prices declared by these importers in certain points of entry appear to be undervalued, raising speculations that they may be trying to avoid paying the right amount of taxes to the government.

In their official commercial invoices, Iloilo City Hardware, Inc., V&C Rising, and Stanphil Philippines, Inc. declared the price of the cement they brought in from Indonesia this year at a range of $21-24 per metric ton (MT) C&F (cost & freight). C&F refers to the price or cost of the commodity being brought in plus shipping costs.

The $21-24 price range declared by the free importers is considerably lower than the average $42 per MT C&F declared by other importers of Indonesian cement. Moreover, official figures from the Commercial Trade Attache of Indonesia show that the prevailing export price of Indonesian cement this year was $26 per MT FOB (freight on board) or within the range of $39-43 per MT C&F, if shipping costs are included.

It was the Confederation of Homeowners Association of Reforms in Governance and Environment (CHARGE) and the Consumers Union of the Philippines who discovered the discrepancy. In a press statement issued last Nov. 7, CHARGE president Jesus Arranza urged the government "to change these unscrupulous importers who undervalued their importations in order to reduce their tax payment. This way the government can collect the rightful taxes and duties."

Arranza also recalled that several imports had testified under oath before the House committee on trade and industry that the landed cost of the cement they have been importing was P110 per bag. Actual import entries filed with the BOC however show that some importers have been declaring a landed cost of as low as P52 per bag, or less than half the P110-level they cited in their testimony at the Lower House.

For his part, Customs commissioner Titus Villanueva vowed to intensify the BOC’s ongoing efforts to crack down on smugglers. He said the bureau will continue taking the necessary steps to minimize incidents of technical and outright smuggling, not only of cement, but also of other imported products as well.

Earlier, Villanueva was commended by no less than President Arroyo herself for exceeding the BOC‘s collection target for January to May this year despite the lower volume of imports during the period.