Was the rice shipment smuggled or not?

Was it a case of smuggling or not? The Bureau of Customs (BOC) says it was. The shipper says it wasn’t. Here are the facts:

A shipment of 420,000 sacks of high-quality rice stored in two warehouses at the Subic Bay Freeport was seized by the BOC. Customs Commissioner Ruffy Biazon claimed the shipment from India was undocumented and, therefore, illegally imported into the Philippines, making it a proper subject of seizure proceedings.

However, the shipper, Amira C. Foods, says it has documents showing that the BOC authorized the ship MV Vinalines Mighty to unload the cargo at the Subic Bay Metropolitan Authority (SBMA). Biazon himself was present when the rice shipment was being unloaded and transported to two warehouses within the free port, Amira claims.

The rice was unloaded under the auspices of SBMA and BOC personnel, Amira further claims. It adds: “An E-Way Bill was filed with and was approved by the BOC upon arrival of the goods in Subic on April 4, 2012. Documents would show that the BOC boarded the vessel on the same day. Post inspection, BOC provided a general permit for MV Vinalines Mighty to discharge the important cargo.”

Amira says that contrary to the BOC claim that the rice shipment was smuggled, it is intended not for the Philippine market but for Indonesia, and this is shown by the fact that the 50-kilogram sacks of rice bear the marking of the Indonesian importer. When the Indonesian consignee rejected the cargo due to late arrival, the ship proceeded to SBMA, the most convenient port of call, to bring the cargo for safekeeping until the owner can iron out its misunderstanding with the Indonesian importer.

As proof that the rice shipment was intended for Indonesia, Amira has provided the BOC the original bill of lading and other shipping documents showing that the Indonesian port of Jakarta was the original port of destination. The owner has also given Customs authorities a copy of the communications between itself and the Indonesian importer to reinforce its assertion.

Because of the refusal of the Indonesian importer to accept the rice shipment, Amira has started a flurry of negotiations with buyers in other Asian countries, specifically in the Middle East. In fact, a firm in the United Arab Emirates has already signified its intention to buy the rice shipment. Unfortunately, the BOC seizure proceedings have stopped the transaction in its tracks.

The BOC claims the shipment was abandoned. Under the law, the government can seize abandoned shipments without any further proceedings. The BOC claims that nobody came forward to claim the rice shipment within the 30-day period for filing an entry. There was allegedly an increasing pressure to release the goods while the BOC and the SBMA waited between 60 and 90 days before they could finally seize the abandoned goods.

Says Amira in its retort: “Even assuming the applicability of the thirty-day period to this case, [we] were not given thirty days for filing the supposed entry. In fact, the BOC did not wait for the thirty-day period to lapse before it instituted seizure and detention proceedings against [us]. On May 15, 2012, less than 30 days from the discharge of the goods on April 20, 2012, the BOC already issued a warrant of seizure and detention. This lack of due process notwithstanding, on May 21, 2012, [we] posted the arrival of the goods and filed the necessary shipping documents, i.e. Commercial Invoice, Packing List, B/L Phytosanitary Certificate, Certificate of Origin, Fumigation Certificate and Inspection Certificate of Quality, Weight and Packing of Cargo, with both the SBMA and BOC.

…“We never intended to import the goods into the Philippines. Hence, the thirty-day period for any filing with the BOC does not apply in the first place. [We] relied in good faith on information given by the locator. For transshipment purposes, the only requirements were to file shipping documents with the SBMA within thirty days, and to be current on the payment of warehouse charges. Any additional filing with SBMA and BOC would only be acquired at the time of actual transshipment. We complied with all these requirements.”

Won’t the rice deteriorate in quality because of the long storage in the warehouses while the seizure proceedings are going on?

Says Amira: “The subject rice has a shelf life of two years before its quality deteriorates… We are maintaining and ensuring favorable storage conditions in the warehouses, with cleaning and monthly fumigation.”

Amira C. Foods claims it is one of the world’s biggest shippers of food items. It claims it works closely with the United Nations to rush foodstuff to countries suffering from famine because of agricultural failure.

Under the law, SBMA can and does serve as international transshipment point for all conceivable kinds of goods, and that includes industrial and agricultural products. As long as they are not diverted to the local market, the BOC cannot presume they are smuggled goods and therefore subject to seizure proceedings. To do so would be illegal. Apparently, this important consideration is lost to the BOC, Amira claims.

The National Food Authority’s Lito Banayo made an important observation: The rice shipment cannot be considered smuggled as long as it remains inside the free port. It is a fact that the shipment, all 420,000 sacks, had lain undisturbed and intact in the two SBMA warehouses until the BOC initiated what now appears as hasty seizure proceedings.