BIR Ruling

March 26, 1973 Allied Brokerage Corporation 422 Sta. Lucia St., Intramuros Manila Attention: Mr . D . C . Africa Sr . Vice-President Customs Affairs Gentlemen : This refers to your letter dated February 28, 1973 stating as follows: "We have for some time now been required by the Bureau of Customs to pay Sales Tax on importations based on their appraisals. "Although we have pointed out that such payments should be based not on their appraised value but on the Invoice price as per Section 183(b) of the National Internal Revenue Code, they still continue to collect sales tax based on their appraisals. "In view of the above, we would respectfully request for a ruling on this point." In reply, I have the honor to inform you as follows: In carrying out the provisions of the law, the appraisers are not limited to the values stated in import invoice. They may use their own knowledge of values, make all reasonable investigations for the purpose of determining the value. The rule is well established that the value of merchandise fixed by the appraiser and affirmed by the Collector of Customs is conclusive in the absence of affirmative showing that the appraiser in assessing the value, proceeded upon a wrong principle and contrary to law. (Muser vs. Magone, 155 U.S. 240, cited in Lim Quin vs. Insular Collector of Customs, 37 Phil. 10, 12; Lambert and Co. vs. Collector of Customs 25 Phil. 159; Behn, Meyer and Co. vs. Collector, 26 Phil. Rep. 647; Kuenzle and Streiff vs. Collector of Customs, 31 Phil. Rep. 465; Robertson vs. Frank Brothers Co., 132 U.S. 17; Auffmordt vs. Hedden, 137 U.S. 310; Passavant vs. U.S. 148 U.S., 214). In this connection, it may be stated that the Government and the collection of revenue would be at the mercy of importers if the value in the consular or import invoice filed by the importer is considered conclusively as the import value of the imported articles for purposes of computing the advance sales tax under Section 183(b) of the Tax Code. And obviously, it is for this reason that Sections 201, 1404-1407 of the Tariff and Customs Code, authorize the Collector of Customs to determine the market value of imported articles and in the exercise of his duties as official head of the customs service of his port, to assess and collect the lawful revenues from imported articles, to prevent and suppress smuggling and other frauds upon the customs, and to enforce the tariff and customs administration. (Section 1152 Revised Administrative Code in relation to paragraphs (a), (b) and (j) of Section 602 of the Tariff and Customs Code). In other words, the Collector of Customs is not bound by the value appearing in the commercial or import invoice and consular invoice and he may disregard it if the value stated in the shipping documents is not the true and correct value of the articles imported. The invoice value as used in the aforesaid provisions of Section 183(b) of the Tax Code does not mean any value appearing in the invoice or bill of lading covering imported articles. This proposition is upheld by the Court of Tax Appeals in its appealed decision which we adopt as our own, thus: "We do not think that the term 'invoice value' as used in Section 183(b) of The Revenue Code, means any value appearing in the invoice or bill of lading covering an imported article. Such value is not conclusive upon the Government so as to preclude it from determining the advance sales tax on the basis of a different valuation if the invoice valuation of the invoice value does not reflect the correct value. The 'import invoice value' referred to in the law simply means the true and correct value of an article as agreed upon between the foreign shipper and the local buyer in an arm's length transaction. . . ." (The Coca-Cola Export Corporation vs. Commissioner of Internal Revenue and the Collector of Customs, Manila, as Deputy of the Commissioner of Internal Revenue, CTA Case No. 759, June 27, 1964) In view thereof, the customs appraised value shall be the basis of the advance sales tax due on imported articles. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue