Smuggling of heavy gear bared

Caloocan Rep. Edgar Erice: Accusations. congress.gov.ph

MANILA, Philippines—The government foregoes more than P100 million in revenue every year due to the smuggling of heavy equipment and dump trucks.

Caloocan Rep. Edgar Erice has accused three local importers—Good Morning International Corp., Civic Merchandising Corp. and Quishu Philippines—of undervaluing their imports of heavy equipment by as much as 70 percent.

Erice alleged that the three importers were shipping in Hyundai, Volvo and Liugong heavy equipment from a single trader, Sekyung Auto Trading Co. Ltd. of Korea. “Most of their sales are made without invoice, only deed of sale, which deprives the government of value-added taxes,” said Erice in an interview.

Erice based his charges on import data tracked by Equipment Research Group (ERG) which showed a huge discrepancy in the three importers’ declared sales and global market report.

The House ways and means committee started its probe on the smuggling of heavy equipment and dump truck on Tuesday with the three importers.

Good Morning legal officer Florida Umandap said questions on the sales report should be addressed to the firm’s owners Cho Dak Cuan, a South Korean national.

BOC concerns addressed

Umandap stressed that all their imports pass through the regular inspection procedure. She said the company had also addressed the concerns raised by the Bureau of Customs (BOC) in previous queries.

Volvo counsel Frankie Aguilar confirmed that the firm had already been subjected to a probe since 2010 but declined to make further comment.

Erice claimed that Good Morning declared only P145.991 million in sales in 2010 and P131.712 million or a fraction of what ERG claimed it sold in 2010 (P528.5 million) and in 2011 (P750.4 million).

Civic Merchandising declared sales of P297.495 million in 2010 and P591.652 million or roughly a third of what ERG claimed the company sold in 2010 (P1.005 billion) and in 2011 (P1.659 billion).

Quishu reported sales of P41.449 million in 2010 and P59.168 million in 2011, or less than a quarter of ERG’s estimate of P301.4 million in 2010 and P652 million in 2011.

In contrast, Erice noted that importers of American and Japanese brands of equipment declared much higher sales.

Monark Equipment reported that it sold P4.021 billion in 2010 and P4.9 billion in 2011 of Caterpillar heavy equipment. Maxima Machineries Inc. sold P2.908 billion in 2010 and P5.374 billion in 2011 worth of Komatsu heavy equipment.

Erice reported that while Monark and Maxima paid between P124.34 million and P248.155 million from 2010 and 2011 in income taxes, the three other importers paid only P649,295 and a high of P8.26 million during the period.

Erice filed a resolution last September seeking a probe on the alleged violations and circumvention of certain provisions of the National Internal Revenue Code and tariff and customs laws committed by certain importers in connivance with some officers and employees of the BOC and Bureau of Internal Revenue to evade payment of custom duties and taxes in the importation of heavy equipment and dump trucks to the Philippines.