Shell refuses to pay P7.3-billion excise taxes

MANILA, Philippines - Pilipinas Shell Petroleum Corp. has refused to pay the excise taxes being collected by the Bureau of Customs even as the Bureau of Internal Revenue had reversed its previous position and now insists on taxing Shell.

Shell continues to contest the position of the two agencies, insisting that the catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) it imported are raw materials and not end-products and are therefore not subject to excise taxes.

The BOC is collecting P7.3 billion in excise taxes from Shell for its past shipments of the two products.

Shell refused to pay the amount, saying that the two products are raw materials for gasoline and are therefore not subject to excise tax.

The oil firm cited a previous legal opinion issued in 2004 by then BIR Commissioner Jose Mario Bunag which said that the importation of the two products are exempt from excise tax.

BIR Commissioner Joel Tan-Torres, however, reversed this position, saying that after looking further into the issue, the agency has found out that Shell should pay excise taxes for the importation of the two products.

“We are now following the position of the BOC. The import declaration filed with the BOC says that the products are finished products which are subject to excise taxes,” Tan-Torres said yesterday.

Shell, through its legal counsel Simeon Marcelo, expressed concern over Tan-Torres’ decision.

The BIR’s decision came soon after Shell filed a case with the Court of Tax Appeals questioning the jurisdiction of the BOC to slap Shell with a P7.3-billion deficiency tax assessment on its CCG and LCCG importations.

Shell argued that since excise taxes are not internal revenue taxes, it is the BIR and not the BOC that has jurisdiction over it.

“The timing of the reversal clearly points to an attempt to cure the patent defect in BOC’s legal position,” said Marcelo.