By a vote of five to three, the 3rd Panel of the Superior Chamber of the Administrative Council for Tax Appeals (Carf) denied the taking of Cofins credits on costs with port services. The understanding prevailed that the expense does not generate the right to credit because it occurs after the production process. By a casting vote, the panel also denied the credit on freight of finished products, including the transportation of goods between the mining area and the port and transportation by sea.
The case reached Carf after the tax authorities denied the taxpayer's request for reimbursement. The ordinary panel dismissed Vale's appeal by a casting vote and the company appealed.
In the Superior Court, the company's lawyer stated that the lower court's ruling contradicted the binding understanding established by the Superior Court of Justice (STJ) in the judgment of REsp 1,221,170. At the time, the Court defined that the concept of input for the purposes of PIS/Cofins crediting must be assessed in light of the criteria of essentiality and relevance to the taxpayer's economic activity.
According to the defender, the STJ's position does not only cover the relevance and essentiality of the expense in relation to the production cycle or manufacturing cycle, but in relation to the taxpayer's activity as a whole.
According to the lawyer, port services include unloading, stacking, handling and shipping of ore at the port. According to her, in light of the concept of input defined by the STJ, these steps are inseparable from the production cycle. Regarding the freight of finished products, the defender stated that mining is only economically viable with a logistical structure for outflow.
“The mines are located in the interior of the country. It is common for the ore to be priced based on its availability at the port of shipment. It has no economic value if it cannot be transported. There is no domestic market that can accommodate Vale’s production. Vale’s customers are mainly abroad,” he said.
The rapporteur, counselor Vanessa Marini Cecconello, granted the taxpayer's appeal. In the judge's assessment, based on economic, operational and even accounting criteria, port services are linked to production. Cecconello also understood that port services could be included in item IX of article 3 of Law 10.833/2003. The provision provides for the possibility of crediting costs related to “storage of goods and freight in the sales operation”.
The costs of freight for finished products, for the rapporteur, could be included in the same provision, or in section II of article 3 of Law 10.833, which treats as eligible for credit “goods and services, used as input in the provision of services and in the production or manufacture of goods or products intended for sale”.
Councilor Rosaldo Trevisan, however, disagreed. According to him, both port services and freight of finished products are expenses incurred after the production process, for which there is no provision for credit in the legislation. The position was supported by the majority of councilors.