Customs holds release of oil shipments by 2 importers pending smuggling probe

The Bureau of Customs (BOC) has put on hold the release of seven oil shipments made by two importers earlier implicated in alleged technical smuggling of imports through undervaluation.

Customs Commissioner Napoleon Morales said he has ordered officials of Limay subport in Bataan not to release the new oil shipments of Andan Enterprises Inc. and Mawab Resources Inc. that arrived earlier this week pending an investigation of the smuggling charges against the two firms.

In an interview with reporters, the BOC head said he likewise ordered support officials to padlock the depot of the two oil importers and immediately put on alert their incoming oil shipments.

"We will not release their shipments unless the issue on technical smuggling is resolved. The interest of the government is at stake here, so we have to do everything we can to collect the unpaid duties," Morales stressed.

The BOC earlier uncovered technical smuggling in gas and oil shipments of Andan and Mawab after the Customs Intelligence and Investigation Service found the two firms supposedly wrongfully declared the prices of their shipments and got away with some P37 million in unpaid duties and taxes.

An investigation conducted by the CIIS showed Andan had wrongfully declared at $286.05 per metric ton the value of its three entries of imported oil from Taiwan-based Formosa Petrochemical Corp. It was learned the average value of imported oil amounts to over $500 per metric ton.

Customs officials said the value used by Andan was substantially low as compared to the value used by other firms like Oilink International Corp., which imports the same commodity from the same country of origin at $516.97 per metric ton.

However, the two firms had denied such allegations, arguing that prices of petroleum products from a country vary depending on the terms given to each importer by suppliers or exporting countries.

They also claimed that prices may greatly differ and to compare the value of their shipment with other values used by other oil companies was misleading since different factors determine the value even if the oil import came from the same country during the same period of time.

Morales countered that there is a base in the valuation of oil imports despite the existing oil deregulation law.

The BOC head has already directed four departments of the bureau - Internal Investigation and Prosecution Division (IIPD), Value Classification and Review Committee (VCRC), Investigation and Prosecution Division (IPD) and Post Entry Audit Group (PEAG) - to conduct simultaneous investigations into the case.

Morales has also ordered the agency’s Post Entry Audit Group (PEAG) to check on previous import entries of the two oil firms upon recommendation of Customs Intelligence and Investigation Services (CIIS) assistant chief Eric Albano, who discovered the undervaluation of gas oil shipments of the importers.

He said the two oil importers could also face investigation by the Bureau of Internal Revenue for possible tax evasion, specifically on the possibility of discrepancy in input taxes and payment of value-added taxes.