PILIPINAS Shell Petroleum Corp. (PSPC) is now holding dialogues with Malacañang officials and the Department of Finance (DOF) for its possible intervention on its tax row with the Bureau of Customs (BOC).
Mylene Santos, Shell’s downstream communications manager, said they are in talks with Malacanang and DOF to prevent BOC from seizing their future shipments of the imported Catalytic Cracked Gasoline (CCG), which is being used to process gasoline and other products.
“We are holding discussions with Malacanang and DOF,” Santos told reporters in an interview.
But she said there is no official decision yet since the dialogue is still ongoing.
The BOC vowed to seize under section 1508 of the Tariff and Customs Code all and future shipments of Shell amounting to US$923 million or P43 billion arriving from February 2010 to May 2010.
Customs made the declaration (of confiscating Shell’s future shipment) to force Shell to settle its tax deficiency due to the importations of CCG and Light Catalytic Cracked Gasoline (LCGG) covering 2004 up to 2009.
Shell has unpaid assessed tax amounting to P7.3 billion.
The oil firm is disputing the tax assessment before the Court of Tax Appeals (CTA), saying that the CCG and LCCG imports are merely raw materials for the production of unleaded gasoline.
The CTA issued a temporary restraining order to stop BOC from seizing Shell’s shipment which will lapse on February 9.
Arnel Santos, Shell’s vice president for manufacturing, said if BOC will confiscate the incoming shipments of Shell, it would directly affect their operations and will definitely lead to the closure of their refinery in Batangas.
“What I just want to emphasize is that the refinery is running normally. We have not shut the plant down, but when seizure takes effect that when the consequence will take effect,” Santos said during the stakeholders meeting Tuesday here at their Tabangao refinery.
Santos further doubts that their competitor Petron Corporation and other independent oil firms can absorb the vacuum that Shell will leave if they cease to operate and opted to close the refinery.
He claimed that this will also result in massive fuel shortage and supply disruptions in the country.
Shell has 34 percent market share and about 50 percent of their customers are large industries, airline companies as well as vessel operators and power plant firms.
Santos also warned that the closure will result in huge job losses.
Shell has more than 800 employees and another 17,000 workers in its retail stations or a total of 17,800 employees.
“There will also be a significant impact on employment, particularly on direct employment and consequential employment. We employ 800 plus people, and the retail stations employ about 17,000 people,” Santos added.
He said the Department of Energy (DOE) through Secretary Angelo Reyes already declared that CCG are not subjected to excise tax since these are raw materials.
The Shell official stressed that paying P7.3 billion disputed tax will put them at a disadvantageous side. “It puts the manufacturing business at a disadvantageous in the Philippines.”
For his part, BOC Commissioner Napoleon downplayed the supply shortage and threats of closure of its refinery noting that Petron and other independent oil companies can fill in the vacuum of Shell as a result of the closure.
Morales also scored the opinion of DOE on the CCG importation saying, “It’s wrong and it’s based on erroneous decision.”
He added that they are willing to enter into an agreement with Shell to pay in tranches the disputed tax assessment.
But Shell said it will exhaust all legal means including elevating their case to the Supreme Court. (MSN/Sunnex)