6 Customs officers relieved on oil smuggling raps

Bureau of Customs Commissioner Napoleon Morales has ordered the temporary relief of six BOC personnel supposedly involved in the technical smuggling of oil imports by two importers by undervaluing the shipments.

In an interview, Morales said the six Customs officers who handled the release of shipments of Andan Enterprises Inc. and Mawab Resources Inc. last month at the Port of Manila will be preventively suspended, though he withheld their names pending further investigation.

"Our investigation showed there is probable cause to pursue charges against the two oil firms," Morales said. "We will also go after our personnel who were responsible for the release of the shipments."

Morales warned: "The companies will possibly charged separately, and the brokers suspended. Everyone who had anything to do with facilitating the transaction – all those who signed will suffer the consequences of their action."

He said the BOC will file charges of violation of Tariff and Customs Code of the Philippines against Andan and Mawab after the BOC intelligence and investigation service found that the two importers did not pay some P37 million in duties and taxes.

The BOC uncovered the technical smuggling in gas oil importation involving the two firms, which supposedly engaged in the undervaluation of import shipments.

An investigation conducted by BOC intelligence officer Eric Albano showed that Andan had wrongfully declared at $286.05 per metric ton the value of its three entries of imported gas oil from the Taiwan-based Formosa Petrochemical Corp. The average value of imported gas oil amounts to over $500 per metric ton.

In his report, Albano said the value used by Andan was substantially lower than the values 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.

"The importation of Total Corp. used a much higher value of $536 per metric ton for the commodity gas oil coming from the same country of origin," he added.

Albano said Andan had gotten away with over P11 million in unpaid Customs duties and taxes by undervaluing its shipments, adding that a similar case was discovered in the gas oil imports of Mawab from Korea.

Customs records showed Mawab had declared the value of its gas oil imports earlier this year at $344 and $286.05 per metric ton for five entries that came in two shipments.

"(Mawab’s) shipments were found to be grossly undervalued in contrast to the previous importation of gas oil from Korea by Petroleum Inc., which used the value $653 per metric ton last year," Albano said.

He added that Mawab’s undervaluation cost the government some P25 million in unpaid taxes and duties.

Albano said he recommended that the Customs district collector demand additional payment of duties and taxes, including penalties and surcharges, from Andan and Mawab, the importers of Gasoil and both operating in Mariveles, Bataan.

Citing the Tariff and Customs Code and other pertinent laws, Albano said Andan and Mawab can be held liable for technical smuggling. Both companies have denied the charges.

According to a press statement, both firms said they were able to settle their correct, assessed dues in full, belying allegations that they undervalued their shipments.

"All of our import transactions are above-board – as evidenced by the approval of Customs and BIR before and after the cargo shipments arrive," Mawab and Andan said in the statement.

Andan said the prices of petroleum products varies from country to country, depending on the terms given to each importer by suppliers or exporting countries.

Andan also said prices may differ greatly and that comparing the value of its shipments with other values used by other oil companies is misleading, since different factors determine these values – even if the oil imports came from the same country during the same time frame.

Mawab said oil prices are directly affected by the price index of oil on the world market, foreign currency exchange, suppliers’ rates, terms of sale, oil quality, quantity or volume, the source of the oil and the cost of insurance and freight.

These cases prompted the BOC to intensify its monitoring of oil imports in port districts nationwide.

Morales ordered tighter examination of documents of oil shipments, especially those coming from the Ports of Manila, Subic Freeport, Clark and Batangas, which handle most of the country’s oil imports.

He also admitted in a statement that these four ports were identified as possible sources of oil imports that were not charged the proper taxes and duties.

He said it is necessary to "tighten cargo processing controls on imported petroleum products such as accreditation of depots, third party surveyors or appraisers."

However, Morales said the BOC will also focus on oil exportation, saying it could also lead to revenue loss through drawback: "There must be real time accounting and inventory of petroleum products entered without payment of duties and taxes, such as those destined to Subic Freeport and the Special Economic Zones."