redson textile manufacturing corp., cta case no. 4399 commissioner

Republ i c of the Philippines
COURT OF T~X ~PPE~LS
Qw?zon City
REDSON TEXTILE MANUFACTURING CORP.,
Petit i OlHH',
·-
Vet'SUS
C.T.A. CASE NO. 4399
·-
COMMISSIONER OF CUSTOMS,
He s pond£~nt.
X
- -- ---------- - - -----------
D
This
E
C
X
I
I
Cl
N
is an appeal from the decision
Commissioner
of
Customs d ated Se ptember
of
6,
the
1989
affirming the decis io n of the District Collector of
Customs of the Port
dec reei ng
the
consisting
of Manil a dated August 3,
forfeiture of
of
thread a nd
petitioner's
knitted
1988
goods,
sweaters,
for
alleged violation of Secti on 2530 (e ) of the Tariff
and
Cu stoms
Code
of the
Philippi n es
rela ·tio n to Customs IY! e mo ra ndum Ot•der No.
<TCCP)
11--80 <CMO
11-80)
and the Gar ments and Texti le Expor t
<GTEB>
rules and regulations.
Petitionet'
Corporation
<RTMC>
Investments
<BOI>
Reds on
Textile
in
Bo ar d' s
Mam.t fact uri n g
is registe red with the Board
of
,.
as exp o rt
prod ucer
of
knitted
"
68 7
/
C.T.A. Case No.
4399
- D E C I S I 0 N -
as
a nd
Manu facturi n g
ma n 1.1fac t
IJ t~
such
<BMW No .
Ware h ouse
i ng
In
6(1 3 ) •
it s
s upplie d
is
it
b u si ne ss ,
semi-finished
Bon de d
a
wi th
<thread,
or fi n is h ed product
and accessories) as it s material in p u ts of product s
export
mi::muf act ured
of
consistit,g
swe ate r s
These
a nd
products are sup plied by Co nt inental
a s ister co mp any o f
<CMC> ,
BOI
a
likewis ~
Manufacturi n g
re g istered
e xpor t
RTMC
and
producer~
a nd
operator of a bond ed manu f acturing warehouse.
No v e mbe r~ 1 L~,
0n
Int el lig ence
and
apprehended
two
1 '3 8 E.,
t h~
C us t om s
Division
<CIID>
a g e nt s
In v es t igation
of
thread
and
knitt e d sweate r s wh ile th ey are a b out to le ave
t he
of
vehicles lo a de d with
p~t
it i
at
on et~
lnvegtigati on
Ma n daluyong,
the
good s
Pagawa,
were
lnc.
embroid ery
b o u nd
for
its
and knitting.
washi ng
fen~
Said c ont ractors do
appear to be accredited with the Bureau o f
and tho GTEB when
was
neither
u nd erg u arde d
CIID
in
a
verifi~d.
co ver~d
by
Furt her,
by an y boatnote
customs guards .
me morandum
showed
sub-c on tractors,
Needle c raft ,
t';\ nd E. S .
St. , .
Bri x t o n
d a ted
688
not
Custo ms
t tH~
nor
was
it
Acc ordingly,
t he
December
3,
1 '386
• >\''
.,
C.T.A. Case No.
4 399
- D E C I S I 0 N -
3
Port
of
that a war r ant of seizure and detention
be
recommend e d
Manila
to the Colle c tor of Cu s tom s,
a gainst
issued
v iol a tion
of
the
goods
aforementi on ed
Section
2530 Ce>
of
th e
fat~
TCCP,
as
a mended i n rel ation to CMO 11 - 80 and GTEB r ules and
regule.'\tions.
( p. 2 0,
Petitioner
s eizure
of
1.1
n de~~
11
("Motion
of
or the immediat e
sei z
p r ohibit•~d
of
F~eccn~ds.)
prayed for the dismissal
pro c eeding s and
the goods
not
Ct..1stoms
tn- e 11 ,
to Di $ !Tiism ",
p.
release
th ey being
or
impo t~t atio n
2 9 - 32,
the
c:n~t
i c 1e s
export~lt
Cu s tom s
Records>.
This was denied by the Collector of Customs in
d c:d ; ed
May
7,
allegation s and grounds
stand
on.
After
hearing
Customs
case
fi ndi ng
l.987
cit~d
ha ve no legal
the merits,
the
forfei t ed
<"Decis i Cin",
Petitioner
P·
in
favor
99- 101'
of
leg
the
of
Customs
affirmed
on
this
government
revie w
to l r-.l w an d jurisprud ence.
the
107,
Cus toms
the d e cision of the Colle c tor of
Cus toms
S eptember 6,
1989,
Commissioner
<p.
•
by
of
Recot~ds.)
The
of
Customs
subm it ted said decisio n for
co ntt~c.,t~y
to
Co ll ector
the Commissi on er of Customs on the gr ound th at
sam e is
the
Recor ds>
decreed that the ar ti cles subject
be
his
that
Cus tom s
on
io n
finding no reason to reverse
68 ~1
·:
C.T.A. Case No.
4399
- D E C I S I 0 N -
···-
p.
<"De cis ion",
it.
t he
Henc e ,
with
instant
Br·' ief",
p.
Oct c1 bet~
the
Tariff
of
suppo s edly
viol a ted -
( "Fippeal
cleat' as
to
Customs
&
Section 2 5 3 0
but the s ame wa s ,
the record s
t ' 0 Ill
f i led
was
27,
was not
it
provi s ion
f
Customs
109 -- ll.O,
CTn t'ecot·d s . >
1 ·- 10,
Initi a lly,
(f)
·-·
p e tition for review
on
Co twt
this
.{~
however,
<e>
which
Code
was
~3 e c t
or
thresh e d
and determined to be the
ion
out
fot·mer,
quoted b e lo\1-J:
Section 2530.
Property Subject
to
T •.=u · i F f .
and Custom s
r ·ot·fl".i tw··e
Und er·
1... a '"'. ·f:ln '/... y~~U;J_g_!_ v e s s e 1 !!!:. ?-' i r·c;.r a f.:t . ,_
~-~r.:_q_Q.L
9.X:.t..Lc;;J ..~:.. s"'-!1.9..
Q_P.•i~_gj;_~.. ~!.!:!.9.1.J...'I..
c on d i "t!.J. o n s_
gg_
.9..:tt:~
u TJ..~.t ~-!:.":.
H1.g_
.f...Q.l.l..9...w i_!)__q
s 1-:!!::_!j_f?.~:t !;_q_ L9...t.:f e_i t u.t.~-~:
><X X
XXX
e•
X>< X
~b_Lc;..tJ
i ?_
fraudulently conce a led
in or
[LU.Y...
9. !::::U_~J_g_
!:..!~.. IJI.QS..J:!_Q_ ~:Q_T).!i..!2..c:"!!.~..'t'-
!;_q_
P.·=~t.l..Li£.
Q_t_:
~E:.cg.b..9..~-:!..?....f?..'l_ c o n t a i n
!'l!.1_y_
f t' 0.!!!.
Q!: i v_a t_~
y at' d o t'
1~.~
e t'
cont a iner
freight
station
!-:!.!:!.9 ..f:!.:t.:
t;_1!2.i.fl.•II!S:t
~-!".IP..f?..!.:..v_i_~_i o n ;
<Und ers coring supplied.)
><X><
XXX
)( )( )(
Interrelated to the above and claimed as
havin~;t
been complied with were CMO 11-80 and
I
F~u
1e s
and
requirement s
Regul a tions.
Cited
below
aY' O
not
GTEB
the
under CMD 11-80:
.'1"
XXX
XXX
,I
6~0
'
C.T.A.
Case No.
4399
- D E C I S I 0 N -
B.
WITHDRAWAL OF RAW
BONDED WAHEHOUSE
)(XX
X>< X
2.
MATERIALS
FROM
THE
X)(X
Subcontracting
a.
Ihl?.. QJl_et~atot~
shall
seek
the_
e.Qpro_y_E.J:_
fit·st
of
th~
!:29...TIJ_m i s .21-'-<?..!J.lU:. f Q!.: s u b c o n t t~ acti.!J...g_
:tg_ anothet~ Q.onQ_ed !!Jc.mufactut~ i_!!Y_
~~~~.!:!..Q~~
.Q.!.:.
:t2-
§!.!}.Y.
9 u s t.Q m' s
it eg_
?._•:~bcontt'a_~;'t Ot'
hY.. ~d. tin_g. e. t~ e g u e s t
s t at t.!lY.
:tbe na!!J.JU!.. 9f :\';h_g_ subcontractot~
!2-.!lQ.
th_g_ wot~k/pt~ocess
:t.Q.
be
g_one.
g~.L!_y - acct•gd
b.
Before
the transfer
is
made,
inventory and identification of
the
materials
to
be
subcontt'act ed
~ shall
be
conducted
by the CBW officer.
A
ftn' m
<Annex
B>
as
in
requisition
shall be
prepared
containing the description
of
materials
to
be
transferred,
quantity
and
the
requisition
ship number( s ) that cover them.
The
Document Processor
<BMWD>
handling the
logbook
of the
warehouse
s hall
be
duly
furnished
with
a
copy
for
recording purposes.
c • l!J..g_
s f e t' s h a 1 1 b e
co v e t~ e d
note
and
sha 11
.12..~­
ll!l.det:.g~-~n~q_ed unt i 1 !~ece i vee!
Q.y_
thg_ ~~W Qfficet'/S!_:~pc ontr ~c;tor
!.; o n .£J?.!:.!H?..Q.!...
Q.y_
d.
t
e.
t~ an
bo ~ t
Return of the finished product s
to the original warehou se shall
t
be
in
the same
mannet~,
duly
covered
by
a
boatnote,
and
shall
be
subject
to
identific a tion and re-inventory
of the CBW Officer.
68.1
C.T. A. Case No. 4399
- D E C I S I 0 N -
·-
e.
E. ·-
All
matet~ i a ls,
including
wa s tages,
if
any
shall
be
returned
to
the BMWD
of
a ll
sub - contracting jobs and
th e ir
status. ( Un de t' scot' in g sup p 1 i e d. >
XXX
XXX
XXX
The aforecited legal requirements spelled out
in
CMO 11-80 and GTEB Rules and
not
petitioner
assailed
decisions
and
Regulations
by
petitionet'.
the
factual
insisted
on
its
bases
were
of
the
exemption
ft'om
observing customs rules and regulations .
The appeal of petitioner raised t h e
argument
that no evidence allegedly support the respondent's
findings that the subcontt'actot'S
E.S.
Needlecraft)
and
the
subject
<Pagawa,
and
were not accredited wit h the GTEB
t he
Bureau of Customs and that
of
Inc.
this
being
at' t i c 1 e s
shipped
by
petitioner to the subcontractors without guard
and
boat notes.
the
Likewise challenged by
petitioner
capability of the Bureau of Custo ms to
customs
guard
wat'ehouse.
for
every
Despite
these
request
of
assign
bonded
however,
petitioner failed to show the accreditation of
subcontractors
Customs and
with
the GTEB and
also failed to
is
produce
t he
a ny
But'eau
the
of
document
.'!
G92
C. T.A.
Ca s e No.
4399
- D E C I S I 0 N -
-
indicating
boa t n ote
the
that
7 -
the
tr a n sfer was
c ov e re d
and u nd erguarded b y a Cu s tom s gu a rd.
hand,
othet~
t he
p.
"B",
14- 15,
ma nager' ,
CTA
Samuel C.
r~eco t~ d
Ge nove
Rodol fo
s >,
it s
e xpot~t-
16- 18 , CTA r ec ord s ) and driver o f the truc k ,
Vale t e
<p.
by
respondent to refu t e petiti oner ' s
is
i s
tha t
no
12 ,
C1..1st om s
evidenc e to
t~ecot~ ds)
w e r~ e
s upport
Bureau o f Custo ms h as no
fie l d
a cu s tom s gu a rd f or every
s in ce
pe t ition e r
pt~ ese nted
ch a r ge
its
th a t
f i ndi ng s .
claim
capab ility
bonded
did n ot even a tt e mp t
P·
Re g gi e
li k ewi s e n o basis for petitioner 's
the
of
Ma dl a
<A nn ex " B-1 ",
B.
a
On
s t at e me nts .
swot~ n
p e t it ioner's warehouse man - in - charge ,
<An nex
by
to
ware h o u s e
to
req u es t
th e Bureau to p rovide it a guard .
Exemption
reg u l a tio n s
t he
f rom observing cu s to ms
r ules
claim e d by p e tition er was p r em i s ed
En dorsement
of
d a t e d Ja n uary 2 8,
Fina n ce
<Cesar
1 9 7 L•
Vit~ ata>
XX X
t hen
t o
the
XXX
"
this
Depart me nt
<F inanc e>
will
i nter po se
no
o bj e c t ion
t o
~he
approval o f t h e within repr esen ta t i on
of
Cont i nental Ma nufac tu r ing C or~oration , o r
any other BOI regi stered e x po r t
p r o ducer
693
on
by
Com missioner of Cu s tom s whi c h st at es:
XXX
and
C. T.A. Case No. 4399
- D E C I S I 0 N -
-
8
·-
for
that ma tter, that its s ale o f
y arn s
Cor
any
manufactured
product)
to
its
sister companies Cor an y company )
wh ich
are likewise registered export producer s ;
s h£111 be conside t~ed as " e><po t~t sale"
and
that
the
transaction
meets
the
requirements
for the liquidation of
the
warehousing
entries and can cellation
of
the
corresponding
su rety
bonds
covering
the products subject
of
sa l e,
which
proposition
may be effected under
eith e r of the following arra ngement:
1.
Tha t the sale by the vendor
to
the
vendee
of
yarns
or any
manufactured
product
is
considtn~e d
"exp t1r t
sa le"
and
therefore
exempt
from
the
payment of sales ta x .
Howeve r ,
the bond s po ste d by the
ve n dor
on the import ed ma terials
th a t
went
into manu fac ture
of
the
products subject o f sa le
shall
re main
su b s isti ng
until
su c h
time
when the vendee can
show
proof of a ctua l ex portation
of
the registe re d exp ort
product;
ot··
2.
That th e sale by th e vendor
to
th~
vDndee
of tha
product s
l·'l?ft~ t' r~e d
to .:~bo ve is
1 il<e wi se
c on s idtlred
"t? xpo rt
sale"
and
free
fro m sales tax
and
the
bonds
posted
y the vendor
on
the imported r a w materials us ed
in
the
ma n ufacture
of
the
products s old can cel ed provided
the vendee posts a n
equivalent
bond
to
s ubsists
until
the
registered manufactured produ ct
s hall
have
been
actually
expor~t ed. "
'I
C. T . A.
Case No.
4399
- D E C I S I 0 N -
·- 9 -
Either of the foregoing alternative
that may be availed of is subject to the
prior
appro val
of
the
Board
of
Inv!?stments
und~?r
such
rules
and
regulation s
established by
sa id
Board
implementing the provisions of Section 3
(b)
of Republic Act No. 5135
and
that
the transa ctions shall be maintained
in
separate
records
of acco unts
of
both
vendor and Vl?nd~?e."
X><><
)()(}(
The
accot'd in g
F~epubl
ic
" Expot' t
><X><
statutory basis of the said
Endorseme n t
to
,:,
Act
petit i
No.
6135,
Incentive f-kt
){ )(X
OIH?t'
is
Section
otherwise
(b)
of
as
t he
1-<nown
of 1970" qu oted below:
)()()(
)( )( )(
R e g i s t e t' e d
e x p o t' t
r.:w o d u c e t' 11
shal l
me an
any
person,
corporation,
pat ' t TH! t' !'". h i p o t' o t h rn·' £! n t i t y o t' ~1 an i z e d <HI d
~~><i s t ing
1..mder
Philippinl?
la\l'ls,
(.l)
registered
with the Board in
accordance
with
this Act, (2) engaged or
proposing
to
engage
in
the
manufacture
or
processing
of
export
products
as
h e t' P i 11 b e 1 ow
def i ned,
an d
<3 )
d i t' e c t 1 y
exporting its export products , or selling
th~m
( a) to a registered
export
trader
th~t
subs equently
exports
the
said
fW'oducts,
Ot'
(b)
to
other'
expot't
producers
who utilize said
products
as
rlirrct
inputs in
products
subsequently
man u factured
or
processed by
them
and
thereafter exported.
<b )
XXX
11
)()()(
)(><X
'!
695
C.T.A.
Case No.
4399
- D E C I S I 0 N -
-
1 (I
said
In
·-
Act
was
intended
to
invigo rate the co untry's export trade as a means of
economic growth by
inc~~ntive~;
and
pr-oducer-s ,
export trader s and
The
exemptions to
and incentive s
bent~fits
r- educed
incomt?
tax
capital
equipment,
and
(Sect ion 7,
Section 2530
relation
ser-vice
e ><por-ter-s .
which
registered
by
are:
ta><
exemption
cr-edit,
impor-ted
on
tax credit on domestic
t?xempt ion
ca pital
from
tax.
Rl:."t E.135 .)
The issue before Us
for- feiture
certain
registered
are entitled
pr- oducer's
equipment,
granting
is whether the decree
of
of petitioner's goods for violation
of
(e)
to
CMO
of the T ariff and Customs Code
11 - 80 and
the
GTEB
rules
in
and
regulations was valid in view of petitioner's claim
of e><empt ion from complyi ng with customs rules
and
regulations.
The familiar and settled rule is that
in
all
proce e dings take n for the seizure and/or fo r feiture
of any v essel ,
vehicle,
ait'Ct'aft,
beast Ot' ar-ticles
under the provisions of the tariff and custom laws,
I
the
burden of proof shall
<Section 2535,
lie upon
the
claimant.
Tariff and Customs Code .)
Howe vet',
'I
the
Bureau of Customs mu st establish two
..
C.T. A.
Case No.
4399
- D E C I S I 0 N -
··-
namely:
<l>
t he
-
t~ea~.; onable
that a
exist s th a t
11
a charge is well
gt'' CJI..Ifld of presumption
founded ,
seizure and/or forfeiture
(2 )
that
proceedings was
made
under the c onditions and along the
and
line s
described
in the Tariff an d Customs Code.
In
the case at
se i z ut' e
the art i c l es subject
of
and/or forfeiture were f ound v iolative
of
Section 2530
(e)
of the TCCP in r elation to CMO 11 -
80 and GTEB Rules
and Regulations.
pr o vided under the
duly
bar,
The
-·
likewise
law in such cas es were
obs erved
as
Petition er/clai mant
disc u ssed
e.:n~lier .
was not h ear d to claim and
£! Viden ce that
it has
c omplied
to
ther e with,
rely ing heavily o n t he alleged exemptio n s .
no
By
of
of the
.:'\nd
it s
I nct?nt i v t?
o b s e t' v i n
[~
i ma gi nat i
ca n
011
E ndor s ement d ate d Ja n uary 28,
sta tutrH"' Y basis,
that
conclu~;ion
the
customs
Sec:ti. oll 3
Act
of
petit i
OIHit~
<b>
ambit of
point
c.' nd
pt~ ovi s iclll
whi c h
Othe r wise,
a ll fair doubts will
say
so
him .
687
in
1974
of R.n.
G135
1 '::)73 ) '
is
e><empt ed
ft~om
rule s and regu l ations.
e><clud ecl
a
the
to
law,
a
To
one
be
mu s t
s t c:\ t ut
•
ot~y
unequ ivo cal
be resolved agai nst
.
'
C.T .A. Case No . 4399
- D E C I S I 0 N -
·- u :: WHEREFORE, the instant petition for review is
hereby
dis missed
for l ac k of
of
Commissioner~
the de cree of forfeiture
Collector
of
Por··t
of
af fit•m
decision
Custo ms '
upholding
Customs,
We
merit.
issued
Manila
by
the
against
petitioner's goods.
SO ORDE RED.
G1uezon City ,
Met r~o
Manil a,
Jul y
C:~O,
.
1993 •
GRUBA
WE CONCUR;
~)l.~es iding
Judge
~J P~J.~
RA
RAMON 0. DE V
1-)ssociate Ju ge
C E R TIFIC A TI ON
I
hereby
certify
that
reached
aft e~
of
Court of Tax Appeals
t he
Section 13,
this
decision
due consultation among the
nr~ticle
VIII
in
was
members
acc o rdance
with
of the Con s titution.
~-.JA:O.. ~
ERNESTO D. ACOSTA
Pr~E~s ·. d · ng
Js_,dge
Court of Tax Appe a l s
"
698
')