CTA affirms excise tax on raw gasoline

MANILA, Philippines – The Court of Tax Appeals (CTA) has affirmed a 2009 ruling of the Bureau of Internal Revenue that imposed excise tax on two types of raw products used to produce gasoline in compliance with the Clean Air Act.

The ruling was part of the 42-page decision of the CTA full bench, in which it found Pilipinas Shell Petroleum Corp. (PSPC) liable to pay more than P3.5 billion in excise tax for the importation of raw gasoline materials for the years 2006 to 2009.

The tax court magistrates ruled against a petition to invalidate a ruling issued by then BIR commissioner Joel Tan-Torres that set the amount of excise tax on imported Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG).

CCG and LCCG are intermediate or raw gasoline products used as blending components to produce gasoline compliant with the Clean Air Act.

In its petition, PSPC alleged that the ruling, issued on Dec. 15, 2009 by Torres, is contrary to applicable laws and jurisprudence and has no factual or legal bases.

PSPC also claimed that they would be subjected to double taxation as the BIR would also collect excise taxes on the manufactured gasoline that contained the two raw products.

The petroleum company likewise alleged that it “constitutes an unlawful usurpation of the exclusive power and jurisdiction of the court since the issue of proper imposition of excise taxes was then already pending with the CTA.”

But in its decision, the CTA said the power to interpret provisions of the tax code belongs to the BIR commissioner or, in this case, Torres.

It noted that the issuance of Torres “merely reiterated and, in fact, strengthened the BIR’s position with regard to the application of excise tax.”

The court also denied the allegation of double taxation, noting that the first imposition is on the imported raw products while the second is on the finished product, which also contained other chemicals.

“The first imposition is concerned on the importation of articles while the subsequent imposition is on the manufacturing or production of goods in the Philippines for domestic sale or consumption or for any other disposition,” added the ruling.

During the administration of President Gloria Macapagal-Arroyo, then presidential adviser on revenue enhancement Narciso Santiago Jr. led an inter-agency effort to collect unpaid excise taxes from PSPC for its importations.

Santiago, also a former undersecretary of the Department of the Interior and Local Government, is the husband of Sen. Miriam Defensor-Santiago.