The destruction of seized Mighty cigarettes bearing counterfeit tax stamps that began in December 2017 is still ongoing and is expected to be completed in the first week of March 2018 owing to the extremely large volume of the illegal stocks confiscated by the Bureaus of Internal Revenue (BIR) and of Customs (BOC) last year, according to the Department of Finance (DOF).
A spot check conducted by a DOF team at the Holcim Philippines Geocycle facility in Bulacan, where the seized cigarettes bearing the brands produced by Mighty Corporation were being “co-processed” destroyed, show a total 98,078 mastercases still set for destruction as of Feb. 2.
Finance Secretary Carlos Dominguez III announced in December last year that a total of 229,428 mastercases or 114,714,000 cigarette packs were set for destruction at the Holcim Philippines Geocycle plant in Norzagaray, Bulacan where they are destroyed through a method called “co-processing.”
The “co-processing” method pioneered by Holcim Geocycle ensures the total thermal destruction of waste materials, while reducing toxic gas emissions and land and groundwater pollution. The resulting by-product is used as raw material for cement.
A separate batch of 9,347 mastercases or 4,673,500 cigarette packs also bearing the Mighty brands were also set for destruction at the Holcim plant in Davao City. The destruction of this batch, which were seized by BIR and BOC operatives in General Santos City in March last year, was completed lastDec. 29.
At the Holcim plant in Bulacan, six to eight trucks arrive daily from the warehouses in San Ildefonso, Bulacan and San Simon in Pampanga where the cigarettes were seized by teams from the BIR and BOC in separate raids in March last year.
With each truck able to hold 504 cases, the BIR expects that as of Feb. 2, the destruction of the remaining cases would take 33 days or around March 7.
A BIR representative is always present during the transfer of the seized stocks from the warehouses to the Holcim facility to conduct an inventory check during the unloading of the cases, the DOF team said.
Dominguez earlier said that the destruction of the cigarettes bearing fake tax stamps and a separate batch of smuggled cars destroyed by the BOC were done to “send a strong message that tax evasion in our country does not pay.”
Addressing tax cheats, Dominguez said: “You might as well stop because you will never succeed.”
BOC Commissioner Isidro Lapeña said the Bureau is intensifying its campaign against smuggling as ordered by the finance chief. “In fact we have strengthened our anti-smuggling task forces that will cover the whole country,” Lapeña said.
According to the BIR, the cigarettes now being destroyed at the Holcim plant in Bulacan are worth about P3.316 billion. These comprise the 66,245 mastercases valued at P869 million that were confiscated in San Simon, Pampanga last March 1 and another 163,183 mastercases estimated to cost P2.44 billion that were seized in San Ildefonso, Bulacan last March 24.
BIR estimates showed that excise tax liabilities, including penalties, arising from the use of counterfeit tax stamps on these cigarettes amount to P9.564 billion from the Pampanga raid and another P26.29 billion from the operation in Bulacan.
The confiscated cigarettes bore the brands Mighty Menthol 100s, Marvels Menthol and Marvels FK.
The cigarettes destroyed in Davao City and in Bulacan constituted the evidence in the complaints filed by the BIR last May against Mighty Corp. before the Department of Justice (DOJ) for the use of fake tax stamps.
The complaints against Mighty had since been withdrawn at the DOJ after the company, with main headquarters in Bulacan, offered last July to settle its tax liabilities with the government for P25 billion and shut down its operations.
Mighty Corp. subsequently sold its assets to Japan Tobacco Inc. (JTI) to help pay off its tax arrears.
The government has so far collected P30 billion or around $600 million in additional revenues from Mighty’s tax settlement, the largest sum ever that was paid by a single corporate entity in the country’s history.
Since JTI took over Mighty’s operations last September, cigarettes bearing the Mighty brands have yielded roughly P4 billion more in monthly excise taxes.
BIR Commissioner Caesar Dulay said the increase in excise tax payments on Mighty brands totaling P20.22 billion from September to December 2017 represent a 262 percent improvement or P14.65 billion more from the collection of P5.57 billion for the same period in 2016, when Mighty was still controlled by its previous owners.
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