Tuesday, February 21, 2012

Commissioner of Customs vs. Gelmart Industries [G.R. No. 169352, February 13, 2009]

Facts: Gelmart Industries is a corporation primarily engaged in the manufacturing of embroidery and apparel products for the export market. It is, likewise, authorized to operate a Bonded Manufacturing Warehouse (BMW). It is, likewise, granted two licenses to import tax and duty-free materials and accessories for re-exportation. Under these licenses, petitioner was authorized to import “FABRICS/YARNS/LEATHERS/SUBMATERIALS” from various foreign principals, with the limitation that these licenses do not entitle the manufacturer to import finished and semi-finished goods, cut-to-panel/knit to shape materials, and cut-piece goods. 

Since the start of its operations, it manufactured embroidered handkerchiefs’ branched out to infants’ and children’s wear, knitted blouse and apparel products, shirts, ladies dresses, night gown, pajama, swim wear, nylon stockings, brassieres and intimate ladies’ underwear. Later on, petitioner stopped manufacturing some of the lines which were not viable anymore, however, maintained the manufacturing of brassieres and related intimate ladies garments, children’s and infants’ wear products, knitted gloves, socks and the like. During the year 1999, petitioner, in the course of its operations and on three (3) different occasions, received consignments of various textile materials and accessories from its supplier, to be manufactured into finished products for subsequent exportation to principals abroad. 

On August 20, 1999, then Commissioner of Customs Nelson Tan, issued a Memorandum requiring the 100% examination of all shipments consigned to petitioner. This Memorandum was prompted by the Indorsement of the Warehouse and Assessment Monitoring Unit (WAMU) which recommended the examination of the subject shipments by the examiner of the Warehouse and Assessment Division (WAD) for alleged misdeclaration. On August 31, 1999, Inspector Rodolfo Alfaro submitted a report stating that the shipments are not normally used for the manufacture of brassieres and/or lace, for the Bra and Lace Division of petitioner, which according to the BOC, is the only operational division. It was discovered that petitioner was operating the Bra and Lace Division as well as the Auxiliary Division. It was likewise found that only machineries for the two divisions exist and that there were no facilities for the other lines of products. 

On September 15, 1999, Atty. Tugday of the BOC presented the following observations and recommended the seizure of the subject shipments which actually contained cotton fabrics with 3% spandex for shirtings and 100% spun polyester polar fleece with one side anti-pilling, 2 side brush are not needed in the operation of the existing divisions of GIPI, namely: the bra and lace divisions. In short, the importations of the subject shipments were made without authority. 

In a letter dated September 14, 1999, the BOC, through Atty. Rustom L. Pacardo requested from the GTEB an interpretation of Rule VIII, Section1.d of the GTEB Rules. 

On October 1, 1999, petitioner assailed the recommendation for the issuance of the Warrant of Seizure and Detention against shipments. 

Issue: Whether there is ground in the instant case for forfeiture of shipped goods on grounds of misdeclaration 

Held: Petitioner claims that the subject shipments as described in their import entries do not correspond to those as found by the Bureau of Customs upon examination. The “100% polyester knitted fabrics” declared under Warehousing Entry Nos. 44780-99 and 46269-99, and “100% cotton knitted fabrics” declared under Warehouse Entry No. 46297-99 are allegedly not the same as the “100% polyester polar fleece” (for the shipment covered by Warehousing Entry No. 44780-99), “fleece textile materials” (for the shipment under Warehousing Entry No. 46269-99), and “cotton fabrics with 3% spandex for skirtings” (for Warehousing Entry No. 46297-99) as discovered upon examination. However, petitioner did not present any evidence to substantiate the variance between the subject shipments as declared and those as actually found. 

At any rate, the matter was settled by a letter from the Philippine Textile Research Institute presented by respondent, showing that “100% PES knitted fabric” and “polar fleece fabric” are both classified as “100% polyester.” This letter was given full faith and credence by the CTA and we have no reason, again absent any evidence presented by petitioner, to hold otherwise. 

We cannot overlook the fact that respondent had been granted two licenses to import tax and duty-free materials and accessories for re-exportation under License to Import No. 077-99 dated May 13, 1999 and Import License No. 048468 dated July 7, 1999. These import licenses authorize respondent to import “FABRICS/YARNS/LEATHERS/SUBMATERIALS” from various foreign principals with the limitation that these licenses do not entitle respondent to import finished and semi-finished goods, cut-to-panel/knit-to shape materials, and cut-piece goods. 

In a Certification dated September 6, 1999, the GTEB itself clarified that respondent is authorized to import polyester, acrylic, cotton and other natural or synthetic piece-goods; various types of yarns and threads, nylon, polyester, wool and other synthetic or natural piece-goods; all types of leather and synthetic leathers; non-woven fabrics and similar items; various types of staple fibers (synthetic and natural); various drystuffs and chemicals; and various accessories and supplies. The goods contained in the subject shipments undoubtedly fall under the category of raw materials which respondent is authorized to import under the licenses which it had indubitably obtained prior to the importation of the subject shipments. As such, there is no basis for the forfeiture of the subject shipments on the ground of misdeclaration.

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