BIR Ruling

January 8, 1968 3rd Indorsement Respectfully returned to the Honorable Chairman, Anti-Smuggling Action Center, Camp General Emilio Aguinaldo, Quezon City, the within papers bearing on the question of whether or not PX goods found in possession of non-tax-exempt persons are subject to tax. Purchases made from U.S. Military or Naval Bases in this country are considered importations subject to the advance sales or compensating tax, depending upon whether the articles purchased are intended for resale or personal use. (See Go Cheng Tee vs. Meer, G.R. No. L-2825, July 17, 1950 and Saura Import and Export Co., Inc. vs. Meer, G.R. No. L-2927, Feb. 26, 1951). Accordingly, the PX goods confiscated from the residences of Mr. Lee Sui and Mrs. Andrea Calip are subject to tax. With respect to confiscated articles subject to specific taxes, like the White Horse Whisky and Seagram Whisky confiscated in the residence of Mr. Lee Sui, his attention is invited to the following pertinent provisions of Republic Act No. 4713, amending Section 174 of the Tax Code, viz: "Section 174. Unlawful possession or removal of articles subject to specific tax without payment of tax . Any person who owns and/or is found in possession of imported articles subject to specific tax, the tax on which had not been paid in accordance with law or any person who owns and/or is found in possession of imported tax exempt articles other than those to whom they are legally issued shall be punished by: "1. A fine of not less than fifty pesos nor more than two hundred pesos and imprisonment of not less than five days nor more than thirty days if the appraised value, to be determined in the manner prescribed in the Tariff and Customs Code, including duties and taxes, of the article does not exceed five hundred pesos. "2. A fine of not less than six hundred pesos nor more than five thousand pesos and imprisonment of not less than six months and one day nor more than four year, if the appraised value, to be determined in the manner prescribed in the Tariff and Customs Code, including duties and taxes, of the article exceeds five hundred pesos but does not exceed fifty thousand pesos. "3. A fine of not less than five thousand pesos nor more than eight thousand pesos and imprisonment of not less than four years and one day nor more than eight years, if the appraised value to be determined in the manner prescribed in the Tariff and Customs Code, including duties and taxes, of the article is more than fifty thousand pesos but does not exceed one hundred fifty thousand pesos. "4. A fine of not less than eight thousand pesos nor more than ten thousand pesos and imprisonment of not less than eight years and one day nor more than twelve years, if the appraised value, to be determined in the manner prescribed in the Tariff and Customs Code, including duties and taxes, of the article exceeds one hundred fifty thousand pesos. "In applying the above scale of penalties, if the offender is an alien, he shall be deported after serving the sentence without further proceedings for deportation. If the offender is a government official or employee, the penalty shall be the maximum as hereinabove prescribed and the offender shall suffer an additional penalty of perpetual disqualification for public office, to vote and to participate in any election. "xxx xxx xxx "The mere unexplained possession of articles subject to specific tax, the tax on which has not been paid in accordance with law, shall be punished under this section: Provided , however , That payment of the tax due after apprehension shall not constitute a valid defense in any prosecution for violation of this section." (SGD.) MISAEL P. VERA Commissioner of Internal Revenue