Closure of Mighty bonded warehouse hailed by groups

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Civil society coalition and health advocates hailed the Bureau of Customs (BOC) for the temporary suspension of Mighty Corp.’s license to operate its customs-bonded warehouse following alleged violation of the Tariff and Customs Code.

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In a statement, the coalition said that government actions clearly bear out the government’s commitment to generating a climate of regulatory compliance, within which the social objectives of the Sin Tax Law can best be met.

“We are gratified by the BOC’s action to temporarily close Mighty Corp.’s warehouse to prevent revenue leaks, as well as by the DOF’s [Department of Finance] wider effort of probing the allegations against the company,” the umbrella group said.

The coalition is composed of the Action for Economic Reforms (AER), FCTC Alliance of the Philippines (FCAP), Philippine College of Physicians (PCP) and Woman Health Philippines.

To recall, the BOC issued a memorandum last month approving a DOF Task Force’s recommendation to close down Mighty’s importation warehouse.

The BOC shutdown of Mighty’s warehouse comes amid a maelstrom of controversy.

Throughout 2013, Mighty has been accused of engaging in technical smuggling, resulting in artificially low prices of its cigarettes, which, in turn encouraged the shifting of consumption from higher-priced cigarettes to Mighty’s brands.

The coalition stressed that the downshifting of consumption does not align with the Sin Tax Reform Law’s objective of discouraging smoking.

“It should also be noted that some of the charges leveled against Mighty have been affirmed in the initial report of the DOF Task Force, which attested to substantial unaccounted raw materials that should have been exported, as well as potentially huge revenue leakage,” the coalition said.

“These findings square well with the commonly noted observation that in 2013, Mighty’s cigarettes were sold at a price below the break-even rate,” it added.

During the course of evidence gathering and documentation at the Port of Manila, it was noted that the subject Mighty has made a series of requests for large payments of duties and taxes of Mighty’s warehousing importations.

“It is highly irregular, bordering on the anomalous, for Mighty to make duty payments for unusually large volume of bonded raw materials that are supposed to be devoted to manufacturing and exportation of its finished products,” the group added.

The coalition is now looking forward to the eventual release of the DOF Task Force’s final report.

It added that it is highly reassuring that the BOC and the DOF’s decisive response to the Mighty controversy will serve to prevent a similar incident from being repeated this year.

“As last year’s experience with Mighty Corp. proved, the practice of artificially depressing the price of cigarettes sets a worrisome precedent that goads other tobacco manufacturers to follow suit,” it said.

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11 Comments

  1. Carter Gumabay on

    Now if only other government agencies would follow the BOC’s lead and take the appropriate action against Mighty Corp. The BIR seems to be dragging their feet on this issue. Does Mighty have mighty connections in that department?

  2. It’s good that these civil society groups are vocal about their support on Mighty’s warehouse getting closed. It might put some pressure on the BOC and whatever else agency is investigating Mighty to make sure they walk the straight and narrow path on this issue and really conduct a fair and just investigation.

  3. Dina Del Cuesta on

    More groups should back up this suspension of Mighty’s warehouse. Mighty has been trying to brush this issue aside, offering nothing but fluffy explanations with no substance whatsoever. If more groups support the BOC in this investigation, perhaps it’ll be harder for Mighty to just keep dodging the issue.

  4. oliver vicente on

    Mighty should just open their books if indeed they are innocent. For months now they have been denying allegations of technical smuggling and tax evasion with no zero evidence to prove it. Are we supposed to just take Mighty’s words without proof?

  5. “As last year’s experience with Mighty Corp. proved, the practice of artificially depressing the price of cigarettes sets a worrisome precedent that goads other tobacco manufacturers to follow suit-” other tobacco manufacturers won’t follow Mighty’s practice. It is illegal. Only Mighty can pull off that kind of scheme,

  6. Mighty seemed to have played the government big time. They supposedly supported the sin tax law but didn’t abide by its regulations. Instead, they cheated their way around it and used it to unfairly get ahead. Now they’re facing these investigations and has had their warehouse suspended… serves them right!

  7. The support of the civil society groups should be translated into more efforts on the part of the government in making sure that the company pays what is due the government. Mighty can continue denying the allegation of fraud, but if it continues to fail to substantiate it, the allegation will also continue to hound it. It seems the company is just buying for time because it is nonsense to make an unsubstantiated denial as this will court controversy.

    In the court, this is plainly nothing.

  8. Carlos Quidlat on

    Why can’t Mighty Corp. debunk the technical smuggling issue? Is this true? It is high time for the company to explain its side, and if it cannot, government should squeeze the truth out of it. If there is nothing that could come out, the regulatory agencies should throw the book at it. A corporation that cheats does not have a minute to stay in operations.

  9. Crispin Basilio on

    Mighty defeated the purpose of the Sin Tax Law which is to curb smoking and earn the government more revenues. They sold cigarettes cheaply by playing with the BoC and did not pay the correct Sin Tax. Time for them to answer for their transgressions.

  10. The closure of Mighty’s bonded warehouse is definitely great news. Although a bit delayed, at least the government is starting to take action.

  11. This must serve as warning to Mighty Corp. and that government should sustain its campaign against the company. The DOF must continue digging for evidence and file charges if pieces of evidence warrant. No one must be above the law.