Dominguez orders BOC, BIR to run after cigarette counterfeiters

Large cache of various cigarette brands affixed with fake strip stamps have been seized. (CNC image)

MANILA — Finance Secretary Carlos Dominguez III has directed the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) to track down manufacturers of counterfeit tobacco products and their possible cohorts in government, who had a role in allowing the entry of unlicensed cigarette-making machines into the country.

According to a news release issued Wednesday, Dominguez also ordered BOC Commissioner Isidro Lapeña and BIR Commissioner Caesar Dulay to disable the confiscated machines so they could no longer be used.

Lapeña and Dulay were also told to find out how the machines used to manufacture the fake cigarettes, which were uncovered in recent operations in Luzon and Mindanao, were able to enter the country undetected by authorities.

“I want to hit them with everything you’ve got, the Customs and the BIR, and get to the bottom of this,” Dominguez told officials of the two bureaus during a recent Executive Committee (ExeCom) meeting of the Department of Finance (DOF).

Dominguez issued the directive after the BIR reported that its strike team had raided several warehouses storing smuggled and counterfeit cigarettes in Malabon and Manila.

The raids yielded a total of 531 master cases of fake and smuggled cigarettes bearing various brands.

BOC operatives, meanwhile, had seized counterfeit cigarettes and bogus tax stamps worth PHP500 million in three warehouses in Bulacan.

The BIR strike team likewise seized four unlicensed cigarette-making machines, six cigarette-packing machines and a filter-making machine, along with fake cigarette tax stamps inside the San Simon Industrial Park in Pampanga.

The bureau reported to the finance chief that the machines were smuggled into the country.

Two factories in Cagayan de Oro, meanwhile, yielded unregistered cigarette-making machines, packaging machines and a filter-making machine during recent operations conducted by the BIR strike team. Filter rods, tipping paper, cigarette paper, cut filters, inner liners pack and wrap film, plug wraps, acetate tow and other materials used to manufacture cigarettes were also seized during the raids.

The BIR informed Dominguez that “as instructed, the machines will be properly disabled to prevent their further usage.”

“You better trace where these machines came from,” Dominguez said. “Who are the people behind this? How did these machines get in?”

In response to Dominguez’s order, BOC Deputy Commissioner Edward James Dy Buco, who was present at the ExeCom meeting, said the customs bureau “will have the entry of these machines investigated.”

Dominguez likewise directed the BOC to find out from which country the machines originated, and how the units were allowed by the said country for export when these were most probably classified as “controlled items.”

The BIR and BOC have earlier created a joint task force to crack down against smuggled and counterfeit cigarettes.

On the part of the BIR, the agency also created its strike team to act as lead and point coordinator of all BIR enforcement activities on smuggled articles and locally manufactured counterfeit excisable products.

Dulay had appointed Revenue Officer Remedios Advincula Jr. to lead the team.

The BIR’s intensified campaign against counterfeit cigarettes led to the closure of local manufacturer Mighty Corp.’s operations last year.

The firm eventually sold its assets to be able to settle its tax obligations after the government slapped a string of criminal complaints against it for the use of counterfeit tax stamps on its products.

Mighty’s tax settlement generated PHP30.4 billion in total revenues comprising the payment of the firm’s deficiency taxes and transaction taxes arising from the sale of its assets.

The tax payments marked the largest amount ever collected by the government from a single corporate entity.