Palace orders Customs to halt action vs Shell

MANILA, Philippines - Malacañang has directed the Bureau of Customs (BOC) to observe the status quo and let the Supreme Court resolve its dispute with Pilipinas Shell Petroleum Corp. over some P7.3 billion in unpaid excise taxes.

The Palace issued the order just as the BOC was to start seizing yesterday Shell’s catalytic crack gasoline imports to cover the unsettled tax dues.

The BOC prepared to carry out the seizure after the Court of Tax Appeals rejected Shell’s petition for an extension of a temporary restraining order.

“Shell brought their case to the Supreme Court to prevent BOC from wanting to implement the payment of P7.3 billion and therefore right now, out of respect for the court, BOC will, of course, with the advice of the Department of Finance, await the action of the Supreme Court on that last legal recourse of Shell,” Executive Secretary Eduardo Ermita said.

“I was informed by the Secretary of Trade and Industry (Peter Favila) that he had spoken with the heads of Shell and they are quite comfortable that the national government is not going to push through with the BOC insisting on asking them to pay P7.3-billion assessment done by the audit,” Ermita said.

“I was told by Secretary Favila that the instruction of the President was to come up immediately with a fair solution to everyone,” Ermita said.

Shell said it might have to shut down its refinery if the BOC makes good its threat to seize its imports. Such scenario will adversely affect the country’s fuel supply.

Ermita noted that President Arroyo came up with the order after meeting top officials of the BOC and their immediate boss, Finance Secretary Margarito Teves, last week.

The BOC said its audit on Shell revealed P7.3 billion in unpaid excise taxes for its importation of catalytic crack gasoline.

Shell contested the assessment, saying catalytic crack gasoline should not be subjected to excise tax because it is a raw material for the production of unleaded gasoline.

Ermita said other oil firms have committed to fill up a likely supply shortfall in the event of a shutdown of Shell’s refinery in Batangas.

He said one of the possible compromises is for Shell to settle its obligations immediately and be reimbursed if and when the SC rules in its favor.

“When it comes to business and money, you will find out that there will always be compromises that will lead to a happy solution that will be considered fair enough to the parties concerned,” Ermita said.

Grace period

BOC Commissioner Napoleon Morales said he has given Shell five more days or until Feb. 15 to think of a compromise scheme, in compliance with DOF’s instructions.

“Finance Secretary Teves told us to give them a five-day grace period. They would be given five days to settle, whether they want to pay the full amount in cash or installment or if they want to enter into a compromise,” Morales said.

“The P7.3 billion is just a drop in the bucket for them. For one shipment they spend about P700 million, even P1 billion,” Morales said.

He also downplayed Shell’s warning of fuel shortage if it shuts down its refinery. – With Evelyn Macairan and Donnabelle Gatdula