Customs chief: Problem real but not rampant

Customs Commissioner Ruffy Biazon.. INQUIRER.net FILE PHOTO

Customs Commissioner Ruffy Biazon on Tuesday acknowledged as “real” the problem of oil smuggling in the country but he disputed an INQUIRER report which quoted him as having said that it had become rampant during the first two-and-half years of the Aquino administration.

“It’s a real problem, but I wouldn’t say there’s enough physical evidence to say it’s rampant other than claims based on computations of various data from various sources,” Biazon said.

In a text message to the INQUIRER, he said the Bureau of Customs (BOC) was “embarking on measures to address the problem of oil smuggling.”

“One is the implementation of the policy to collect taxes on petroleum imports whether they’re bound for economic zones or not. Those which are qualified for exemptions will have to apply for a refund,” he said.

Biazon said “this will eliminate a loophole that some smugglers take advantage of.”

“We are also considering a proposal to allow petroleum importations only through specified ports nationwide, and we are setting up an information gathering system for data coming from the ports in order to clearly analyze the movement of petroleum products,” he said.

Large ports watched

Because of the smuggling, the government is heightening the monitoring of economic zones and large ports in Limay (Bataan), Batangas City, Manila International Container Port and the Ninoy Aquino International Airport (Naia), Malacañang said.

These entry points for imported crude and refined oil have been under scrutiny by the Bureau of Internal Revenue (BIR), Department of Finance (DOF) and the Bureau of Customs, President Aquino’s spokesperson, Edwin Lacierda, said.

At a briefing in Malacañang, Lacierda said these agencies “have aggressively stepped up the campaign to curb oil smuggling and to make sure that we bring smugglers to justice.”

“Proactively, we’ve identified some smugglers and, in fact, we’ve already filed a certain number of cases. The DOF will be issuing (shortly) the number of cases that we have filed against the smugglers,” he said.

Nine cases filed

Since July 2010, the BOC has filed in the Department of Justice nine cases against alleged oil smugglers through its Run After The Smugglers (RATS) campaign. These cases were related to dutiable values totaling P38 billion.

In a statement, Finance Secretary Cesar V. Purisima said the DOF and its attached agencies, including the Bureau of Internal Revenue and the Bureau of Customs, recently visited seven major district ports to gather data.

Among the ports visited within the six weeks until mid-March were major destinations of inbound petroleum cargo like the Port of Limay in Bataan.

Purisima said a second wave of visits would begin this month and would cover the Manila International Container Port, Port of Manila, Port of Naia and Port of Batangas.

Port accreditation

The DOF will also soon implement a system of port accreditation for commodities at high risk of smuggling such as oil and steel, he said.

Accredited ports will be required to submit to the DOF monthly reports that will be cross-checked with data from the Department of Energy (DOE) and the Philippine Ports Authority, based on volume and vessel, the finance chief said.

“The port accreditation system will prevent ‘port shopping’ and hinder unethical importers from literally evading tax collection,” Purisima said.

Rolling import plans

He added that all importers of sensitive commodities would also be asked to submit yearly rolling import plans indicating quantity, type, source and location of intended port arrival.

The BIR has issued Revenue Regulation No. 2-2012, which would have changed tax administration on petroleum products to require upfront payment of tax and duties on imported oil.

RR 2-2012 allows tax-exempt parties to file for refunds, such as if the oil cargo was intended for use within special economic zones and thus qualifies for tax exemptions.

According to the DOF, implementation of RR 2-2012 was delayed for nearly a year because the Regional Trial Court in Pampanga issued a temporary restraining order upon the petition of Rep. Carmelo Lazatin (1st district).

Subsequently, the Pampanga RTC’s Branch No. 58 issued in April 2012 a writ of preliminary injunction against the implementation of the BIR regulation. The Court of Appeals reversed the lower court’s order last February.

Fuel testing

According to the DOF, the BOC has been instructed to implement RR 2-2012 and to hold inbound oil cargos until payment of VAT and excise tax.

Energy Secretary Carlos Jericho Petilla told reporters that his department planned to use newly acquired equipment to test the quality of fuel products, which may partly identify whether these have been smuggled into the country.

“We will go around with the machines we have bought to test the quality of fuels…. We may start the inspection of gasoline after elections to avoid political [linkages] to these efforts,” Petilla said.

The energy chief, however, noted that the Department of Energy (DOE) had no police powers to arrest suspected smugglers.

He said he could not validate the claims of Ramon S. Ang, chair of Petron Corp., who said anew that smuggled oil products “now account for at least a third of the total volume sold in the market.”

Petilla said it did not follow that the volume of smuggled oil was steadily increasing just because Petron’s own sales did not match the increase in fuel consumption.

This, he said, could be due to a growing number of independent players following the deregulation of the downstream oil industry.

“But I do understand Mr. Ang’s concern that the government is losing to smuggling and we have to arrest that,” Petilla said.

Ang slammed

A party-list group, meanwhile, slammed Ang for claiming that smuggled oil products accounted for at least a third of the total volume sold in the market.

“Obviously, Ang is pointing to oil smuggling as the so-called cause of government losses to cover up their enormous profiteering spree over the self-imposed and unrestrained oil price hikes dictated by the Big 3,” Anakpawis party-list chair Randall Echanis said when asked for comment.

Echanis noted the temerity of Ang to accuse the other oil importers, mostly the small fry in the downstream oil industry, of smuggling when Petron, Pilipinas Shell and Caltex (now Chevron) have refused to open up its books for public scrutiny.

Echanis noted that Ang complained only after the bottom line or profit margins went down. With a report from Ronnel W. Domingo