SL Harbor Bulk Terminal Corp., a unit of San Miguel Corp., has filed a case against the Bureau of Customs contesting the agency’s recent seizure of its P751-million bunker fuel cargo.
In its petition filed with the Court of Tax Appeals, the company said the seizure was done without due process and despite a complete set of import documents the company presented.
The petition seeks to nullify the decision issued by the Customs collector of the Port of Limay, Bataan, which ordered the forfeiture of industrial fuel oil imported by SL Harbor and stored in its storage facility.
“We have always stood behind the BoC in its efforts to put a lid on fuel smuggling and improve its revenue generation but it has to be done properly. They cannot just seize products without following the due process of law at the expense of law abiding taxpayers. They should go after the real criminals,” San Miguel president and chief operating officer Ramon Ang said.
Armed with a warrant of seizure and detention dated Dec. 16, 2016, Customs personnel seized 44,000 MT of bunker fuel cargo, consigned to SL Harbor and loaded in M/T Alpine Magnolia and local barge M/T Malolos in Limay, Bataan.
SL Harbor, which is engaged in the business of trading refined petroleum products and allied services, said the alleged inconsistency arises from Custom’s incorrect assumption of the volume being unloaded from M/T Magnolia into the terminal tanks and the volume being loaded from SL Harbor’s existing tax-paid inventory into M/T Malolos barge.
The company said Customs failed to take into account that SL Harbor’s storage tank had existing fuel stock inventory of 6,000 MT at the time of loading.
“There was, therefore, no smuggling, no illegal discharge and no basis for the WSD,” Ang said.
SL Harbor immediately filed a motion to lift the seizure order on Dec. 20, 2016 but on Jan. 20, 2017, Limay District Collector of Customs Julius Premediles issued a decision forfeiting the entire fuel cargo and the vessels on the basis that MT Magnolia allegedly unloaded directly to the barge of MT Malolos without the payment of taxes.
“Perhaps the BoC should focus its efforts on gasoline and diesel smuggling which is becoming more and more rampant,” Ang said.
SL Harbor also said that industrial fuel oil (or bunker fuel oil) is a low value item and can only be used by power plants, sea-faring vessels and other manufacturing plants.
It said the black market for it is so limited that it is a low-margin product.
SL Harbor said industrial fuel is also a “dirty product in the sense that its transport and handling are fraught with environmental risks that it is not an activity that anyone would engage in unless it was absolutely necessary.”
It said that if one were to smuggle bunker fuel, the conspiracy required would be too complex.
SL Harbor said it would have to conspire with a big trader like Glencore who would then risk $150-billion business to accommodate a small shipment.
“On top of this, SL Harbor would have to conspire with ship owners who would then expose their entire fleet to risks of seizure. The risks and costs of smuggling bunker fuel far outweigh the taxes to be paid which incidentally was already deposited in an accredited bank, ready to be debited in favor of the BoC,” it said.
In 2003, Ang raised the alarm that one out of three liters sold in the market was coming from smuggled sources with government losing as much as P30-P40 billion annually.
San Miguel, meanwhile, paid the government a total of P125.7 billion in various taxes in 2015 including value added, excise taxes and specific/ad valorem taxes.
In the last five years, the company has paid a total of P537.5 billion in various taxes to government.