Good Day Trading Corporation v Board of Tax Appeals

Facts:

Good Day Trading Corporation imported 238 cases of  Chesterfield cigarettes. Surety bond was filed to secure the payment of P52,360 – the amount of specific taxes due on cigarette importation. The shipment was stored in a bonded warehouse.

While the cigarettes were stored, Good Day sold them to Buenaventura Isleta for P32,000, EXCLUSIVE of specific taxes, on the condition that the buyer shall pay all specific taxes or file a surety bond with the BIR to guarantee its payment within 15 days from the sale agreement. A few days later, Isleta informed Good Day that he bought the cigarettes not for himself but in behalf of his companions who intended to pay the specific taxes with certificates of indebtedness.

Good day then wrote a letter to the CIR advising him of the sale. Despite several extensions, Isleta and his companions failed to show evidence that they paid the taxes or filed the surety. To avoid deterioration of the cigars, Good Day decided to rescind the sale, pay an initial tax of P8,800, and attempted to withdraw the 40 cases of cigars covered by the initial payment. Warehouseman refused, claiming that Isleta owns the shipment because they have already submitted to the BIR the certificates of indebtedness which the BIR approved. The BIR also authorized the Bureau of Customs to release to buyers the whole shipment.

Good Day asks for the refund of P8,800. CIR granted the refund. Secretary of Finance approved and no appeal was taken. But because the amount was more than P5,000, the case was brought before the Board of Tax Appeals. The Board reversed the decision of the CIR, rejected the payment through certificates of indebtedness, and ordered Good Day to pay the whole tax.

Good Day asked for reconsideration claiming that the payment of P8,800 amounted to a double payment because it was paid later through the certificates of indebtedness.  MR was denied.

Issue:

Whether or not Good Day should pay the specific taxes since it is an importer of the shipment of cigarettes.

Held:

No.Under Sec. 125 of the NIRC,

Payment of specific tax on imported articles. — Specific taxes on imported articles shall be paid by the owner or importer to the customs officers, conformably with regulations of the Department of Finance and before the release of such articles from the customhouse.

either the owner of importer shall pay the specific taxes on imported articles. If the sale of the cigarettes was valid, then purchasers (Isleta and company) become the owners of shipment and could pay specific taxes.

*BTA erred in holding Good Day to pay the specific taxes.

Notes:

Importer – primary consignee to whom the goods are sent and who himself presents the invoices, makes the entry, receives the bill of lading and gets the goods.

When importation by sea begins and ends: Importation is not completed until the duties due upon the merchandise have been paid and legal permit for withdrawal and actual withdrawing the goods becomes the importer.

*Whether one is an importer or not is NOT an issue in paying specific taxes.