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Shell threatens to shut down oil refinery

BusinessWorldONLINE

Saturday, January 16, 2010 | MANILA, PHILIPPINES

Pilipinas Shell Petroleum Corp. threatened Friday to shut down its oil refinery in Batangas and cause a fuel supply shortage if the Bureau of Customs (BoC) seizes P43 billion worth of the oil company’s imports to pay for supposed backtaxes.

Customs wants to seize Pilipinas Shell’s shipments worth $923 million arriving on February to May 2010 to cover tax deficiencies from 2004 to 2009 involving shipments of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG).

Pilipinas Shell claims these are raw materials for the production of unleaded premium gasoline for which duties have been paid for, but Customs accuses the oil firm of misdeclaring the goods, demanding the payment of excise taxes levied on finished products intended for domestic consumption.

“The threatened seizure is unjust, premature and oppressive,” Pilipinas Shell counsel Simeon V. Marcelo said in a press statement.

“What makes this worse is that the BoC threatens to seize all of Shell’s shipments, even those that are not CCG or LCGG,” Mr. Marcelo added.

Pilipinas Shell, the second largest oil company in the country with over a quarter in market share, said the seizure would affect 823 workers in the refinery and a loss of P11 billion a month. This would also affect 959 retail stations, Pilipinas Shell said.

The Court of Tax Appeals granted last Dec. 9 Pilipinas Shell’s request for a 60-day temporary restraining order blocking the intended seizure.

The company’s application for an extension of the order is still being heard by the court. — J. B. F. Santos

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