Case Digest (G.R. No. 222480)
Facts:
Avon Products Manufacturing, Inc. v. Commissioner of Internal Revenue, G.R. No. 222480, November 07, 2018, the Supreme Court First Division, Tijam, J., writing for the Court. Petition for Review on Certiorari under Rule 45 was filed by Avon Products Manufacturing, Inc. (Avon) assailing the Court of Tax Appeals (CTA) En Banc Decision dated March 16, 2015 and Resolution dated January 15, 2016 affirming a deficiency excise-tax assessment.Avon is a manufacturer of perfumes and related products that buys denatured alcohol for use as a raw material. On January 7, 2008 the Bureau of Internal Revenue (BIR) issued Avon a Permit to Buy/Use Denatured Alcohol conditioned (Condition No. 3) that discrepancies between volumes purchased and volumes actually received would be subject to excise tax on the difference. From January to December 2008 Avon purchased 1,309,000 liters of denatured alcohol which the BIR considered exempt from excise tax under Section 134 of the NIRC so long as the alcohol met the proof requirement and was not reprocessed.
During transit marginal quantities evaporated, which the BIR quantified as shortages of 21,163.48 liters. The BIR issued a Formal Letter of Demand assessing excise tax on those shortages; Avon protested and the BIR issued Final Decision on Disputed Assessment (FDDA) dated September 1, 2010 denying the protest. Avon filed a Petition for Review with the CTA challenging assessment only on the 21,163.48 liters.
The CTA Second Division, in a Decision dated May 16, 2013, denied Avon's petition and upheld the deficiency excise tax (modified amount) and ordered payment of interest and surcharges; Avon's motion for reconsideration before that Division was denied. Avon e...(Subscriber-Only)
Issues:
- Did Avon establish that the denatured alcohol that evaporated during transit was the subject of the assessment and exempt from excise tax under Section 134 of the NIRC?
- Does Revenue Regulations No. 3-2006, Section 22 (losses on distilled spirits) apply to losses of denatured alcohol that evaporated during transit?
- Is the Court's decision in La Tondena, Inc. v. Collector of Internal Revenue applicable so that unintentional losses prior to conversion to finished distilled spirits are not subject to specific/excise tax?
- Is Condition No. 3 of Avon's BIR permit (assessing excise on discrepancies between purchased and received volumes) contrary to the NIRC such that the BIR may not assess excise on evaporated denatured alcohol?
- Whether excise tax under Section 141 of the NIRC is limited to specified taxable articles and thus cannot be imposed on denatured alcohol that remains exempt?
- Was the simulta...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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