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Revenue push fueled lobby versus Sevilla

By Riza Lozada

The resignation of former Bureau of Customs (BOC) Commissioner John Phillip Sevilla was both controversial and an eye-opener for the business sector, as his departure was considered the result of industry groups resenting the aggressive BOC thrust to hike revenues lobbying against him.

A source said Sevilla was pushed to resign as a direct result of the injury the BOC caused the steel industry making the cost of steel products costlier with new tariff rules.

“The main issue here is how the agency made the cost of steel more expensive,” a source said requesting for anonymity.

Recently, smuggling cases on steel angle bars increased due to importers aversion to pay the mandated fees under “Safeguard Duty for imported steel angle bars” amounting to P3,706.03 per metric yon (MT), as mandated under Republic Act (RA) 8800 (Safeguard Measures Act of 2000).

Just last week, the BOC reported filing cases with the Department of Justice (DOJ) against the owners and customs brokers of two firms that attempted to illegally import steel products worth close to P31 million.

“The first case against Thunder Birds pertains to the firm’s importation of eight 20-foot container vans of what was declared as “steel angle frames” but was found to contain “steel angle bars” upon 100% examination.

Further investigation indicated that Thunder Birds misdescribed the product and misdeclared the weight and value to cheat on duties and taxes as well as avoid the payment of the additional.

According to the BOC, the importer misdeclared the products “to avoid paying the imposable Safeguard Duty of P3,706.03/MT on importations of angle bars.”

A recent administrative order of the BOC, nonetheless, gave the Customs commissioner “the power under the Tariff and Customs Code of the Philippine (TCCP) and with the approval of the finance secretary, to compromise the imposition of the fine when the importer makes a voluntary and full disclosure of the deficiency before the audit,” this according to a well-informed source.

The Philippine Iron and Steel Institute revealed that 450,000 metric tons out of two million metric tons of imported steel were substandard, and were brought into the country either through technical smuggling or misdeclaration or direct smuggling.

President Aquino appointed former Customs Commissioner Alberto Lina to replace Sevilla, Malacanang announced on Thursday on the same day that Sevilla tendered his resignation.

Lina held the BOC chief for five months under the presidency of Gloria Arroyo, but resigned during the “Hello Garci” controversy.  He is the chairman of the Board of the Lina Group of Companies and the Airfreight 2100 Inc. or Air 21.

Presidential Communications Secretary Herminio Coloma, Jr. said that Aquino thanked Sevilla for his “exemplary leadership” in reforming the BOC.

Finance Secretary Cesar Purisima also thanked the former BOC chief for helping the Bureau’s collections increase by 21 percent year-on-year in 2014 versus 5 percent in the pre-reform period.

Sevilla got appointed as Customs chief in December 2013 after serving as office-in-charge after the resignation of former BOC Commissioner Ruffy Biazon.

Media reports quoting Sevilla said that his reason for leaving his post due to “political compromises” in the BOC as he also cited the nearing 2016 elections.

He was pressured to resign due to unmet collection target but Sevilla denied this observation from various influential sectors.

The Market Monitor tried to reach the Philippine Chamber Of Commerce and Industry (PCCI) for a comment. However, it limited its assessment to the impact of smuggling to the local manufacturing which sector consistently affected by hurting its industries due to various smuggling of raw materials, semi-processed materials, finished products and by-products, this according to PCCI spokesperson Butch Pajarillo.

The local manufacturing industries recently got inclusion in the Investments Priorities Program (IPP) for 2014 until 2016.  The Board Of Investments (BOI), which issued the guidelines on the preferred industries qualified under the IPPs, designed the program to lure more investors to the country by giving tax incentives.

The rampant smuggling in the Philippines, which Sevilla reportedly pinpointed the BOC as one of the most corrupt agencies of the government, would put dampener to efforts on attracting investments.

“As of March 4, 2015, The BOC Run After the Smugglers (RATS) group has filed a total of 198 smuggling-related cases before the DOJ, of which 136 are pending preliminary investigation at the DOJ, and 47 have been elevated or filed as cases before the courts. Established by the Bureau in July 2005 and formally launched in 2006, the RATS program is mandated to detect and prosecute smugglers and other customs and tariff law violators,” data gathered revealed.

In 2014 merchandise imports grew by 2.4 percent from US$62.4 billion in 2013 to US$63.9 billion according to the National Economic and Development Authority (Neda) noting also that domestic consumption and investment would sustain imports. “Given these, the manufacturing sector will likely continue its growth momentum, thus, keeping imports of raw materials and intermediate goods brisk,” the agency said.

It also reported that The People’s Republic of China remained as the main supplier of imported goods accounting for 13.7 percent share to the total value of inward shipments in December 2014 followed by United States of America (9.8%), Germany (8.4%), Singapore (8.3%), Japan (7.9%), Taiwan (7.1%), South Korea (6.9%), Saudi Arabia (5.7%), Malaysia (5.5%), and Thailand (4.7%).

During Sevilla’s term, the agency amended rules on imposing penalties on importers and customs brokers after post-entry audit with the issuance of Customs Administrative Order No. 03-2015 declaring that failure to pay correct duties and taxes for imported foods merits penalties with three degrees of culpability-negligence, gross negligence, and fraud.

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