BIR Compromise Penalties for Unlawful Possession of Untaxed Excise Articles

Unlawful possession of untaxed excise articles — cigarette paper, denatured alcohol, liquor or tobacco under a false brand, and untaxed imported or locally manufactured excise goods — carries compromise penalties up to ₱100,000, plus forfeiture of the articles themselves, under NIRC Sections 260 through 263. RMO No. 7-2015’s Annex A prices each variant separately, and every one pairs the peso figure with seizure of the goods.

This is a narrow, industry-specific corner of the compromise schedule — relevant to distillers, alcohol and tobacco businesses, and importers of excise-taxed goods, rather than general retail or service businesses. For the receipt/invoice and registration violations that apply broadly, see BIR Compromise Penalty Table for Registration, Receipts, and Invoicing Violations; for internal revenue stamp offenses specifically, see BIR Compromise Penalty for Revenue/Internal Revenue Stamp Violations.

What does the BIR charge for cigarette paper and denatured alcohol violations? #

Three closely related violations under Sections 260 and 261 each carry a flat ₱100,000 compromise, plus forfeiture of the articles, with no compromise available once a business repeats the violation.

The underlying criminal penalties for each are steep — fines of ₱20,000 to ₱100,000 and imprisonment of 6 years and 1 day up to 12 years — reflecting that these violations sit closer to smuggling and adulteration than to ordinary compliance lapses.

What about imported excise articles? #

Section 263(a) prices unlawful possession or removal of imported excise articles without payment of tax on a case-to-case basis, tied to the article’s appraised value under the Tariff and Customs Code.

Plus forfeiture of the untaxed article in every bracket.

What about locally manufactured excise goods? #

Two related violations — unlawful possession of locally manufactured excise articles without tax payment, and unlawful removal of untaxed articles from the place of production — both carry a flat ₱100,000 compromise plus forfeiture, with no compromise for repeat violations.

Frequently asked questions #

Which businesses does this excise-article compromise schedule actually apply to? #

This is narrow, industry-specific coverage — it applies to businesses dealing in articles subject to excise tax under Title VI of the NIRC, principally distilled spirits and alcohol products, tobacco and cigarette products, and imported goods subject to excise tax. It does not apply to the general run of retail, service, or professional businesses covered elsewhere on this site.

How much is the compromise for unlawful possession of cigarette paper or denatured alcohol? #

₱100,000, including forfeiture of the unlawful articles, under NIRC Sections 260 and 261 — covering unlawful possession of cigarette paper in bobbins or rolls, cigarette tipping paper or filter tips, unlawful use of denatured alcohol, and unlawful recovery or redistillation of denatured alcohol. Subsequent violations are not eligible for compromise.

What about imported excise articles possessed without payment of tax? #

Section 263(a) prices this on a case-to-case basis tied to the article’s appraised value under the Tariff and Customs Code, ranging from ₱2,000 (value up to ₱50,000) to ₱100,000 (value over ₱150,000) — plus forfeiture of the untaxed article in every bracket.

What about locally manufactured excise articles possessed or removed without paying tax? #

Both unlawful possession of locally manufactured excise articles without tax payment (Sec. 263(b)) and unlawful removal of untaxed articles from the place of production (Sec. 263(c)) carry a flat ₱100,000 compromise plus forfeiture of the untaxed article, with no compromise available for subsequent violations.

Does forfeiture apply on top of the peso compromise, or instead of it? #

On top of it. Every excise-article violation in this schedule pairs the stated peso compromise with forfeiture of the unlawful or untaxed articles themselves — paying the compromise doesn’t return the seized goods, since the forfeiture is a separate consequence from the criminal-liability compromise.

Summary #

Excise-article violations sit apart from the general BIR compliance schedule this site otherwise covers — every one of them pairs a peso compromise (₱2,000 to ₱100,000, depending on the specific violation and, for imports, the article’s value) with outright forfeiture of the goods, and every one bars compromise entirely once a business repeats the violation. This is relevant only to businesses actually dealing in excise-taxed goods; for internal revenue stamp offenses specifically, see BIR Compromise Penalty for Revenue/Internal Revenue Stamp Violations.