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Shell Statement on BOC Charge of Alleged Technical Smuggling

In various media reports today, Pilipinas Shell Petroleum Corporation (Shell) was reported to have defrauded the government by not paying excise and value added taxes (VAT) for import shipments of catalytic cracked gasoline (CCG) or light catalytic cracked gasoline (LCCG), which Shell allegedly “misclassified” as tetra-propylene for the period 2005 -2009.

Catalytic cracked gasoline (CCG) or light catalytic cracked gasoline (LCCG) are blending components used to produce Clean Air Act compliant unleaded gasoline. As there is no customs classification (AHTN) code for CCG/LCCG under the Tariff and Customs Code of the Philippines, Shell used a comparable product tariff heading - 2710.11.30 (tetra-propylene) but the tariff description clearly states that the product is CCG/LCCG. More importantly, this classification passed through the process of assessment, review and approval by the Bureau of Customs (Customs).

As above, Shell maintains that it has paid all the right taxes and strongly denies having engaged in any fraudulent activity, especially smuggling, as this is very much against its business principles. Shell has consistently been in the Top 10 Taxpayers list of the government and over the last 5 years, its annual tax payments has averaged about P 26 billion per year. The issue surrounding the alleged non-payment of excise taxes on its 2005-2009 shipments is already the subject of a pending case between Shell and Customs at the Court of Tax Appeals.

Shell will continue to exhaust all available legal remedies for the immediate resolution of this important issue.