Coffee manufacturer loses special duties case before tax court

By Benjamin Pulta

December 28, 2022, 1:57 pm


MANILA – The Court of Tax Appeals (CTA) has turned down a suit by an instant coffee manufacturer questioning the collection of its tax liability in connection with a 2018 order issued by the Department of Agriculture (DA) imposing special safeguard (SSG) duties.

The decision promulgated on Dec. 1 dismissed a petition filed by Mandaue-based private corporation, Ecossential Foods Corp. seeking the suspension of the collection of its tax liability in connection with the order issued in 2018 by the DA which covered the company's Kopiko 3-in-1 coffee products.

In March 2018, the DA issued Department Order No. 06 imposing SSG duties on certain imported commodities, including coffee products, pursuant to Republic Act 8800 (Safeguard Measures Act).

In April 2018, a memorandum circular was issued, implementing the DA order and imposed assessment notice for payment to companies covered, including Ecossential, for payment of SSG duty on its Kopiko products.

The company said it cannot be covered by the SSG, which comes into effect when "triggered" by price changes in the price on reference years, saying the reference prices refer to instant coffee products in granules or powder form.

A witness for the company said its Kopiko line, which includes Kopiko Blanca, Kopiko Black and Kopiko Brown, is a mixture of instant coffee, refined sugar, non-dairy creamer, salt and other ingredients.

The instant coffee used in Kopiko products constitutes less than 10 percent of the final product and are not made from top-grade coffee beans which are generally used for a different market. In the case of instant coffee, the trigger price was PHP203.74 per kilogram.

The court, in dismissing the company's challenge, noted that the coffee maker failed to prove that the official findings were wrong insofar as the trigger prices were reached.

"As per the DA's memorandum, petitioner (Kopiko)s products and the like have all breached their respective trigger prices. The records show that the petitioner presented countervailing evidence to prove that the findings therein are incorrect. Therefore, absent any evidence to the contrary, the presumption that such official duty has been regularly performed will stand," the court said. (PNA)