- 80 -
the distinction it drew between a net loan and a gross loan in
order to distinguish the previous holding reached in the Parana I--
1st Panel decision.37 Although the Parana II decision cited and
discussed the provision in Decree-law 401 that deems the
borrower/remitter to be the contribuente where imported goods are
purchased on an installment basis, that discussion was in rebuttal
of the losing party's argument that the actual beneficiary of the
interest was the foreign lender, not the State of Parana.
Moreover, if the 1975 Parana II decision was incorrectly decided,
as petitioner's experts claim, we then find it puzzling that, over
the years, no successful challenge to its holding has been made,
and that the Brazilian Supreme Court has continued to utilize and
36(...continued)
A. Except for the * * * [Parana I--1st Panel
and Parana I--Full Bench decisions], I do disagree.
Q. You disagree with all the ones that held the
borrower was immune?
A. These are the ones. They are not different
ones.
37 Da Silva indicated in his testimony that he believed
the Parana I--1st Panel decision involved a gross loan, whereas
the Parana II decision involved a net loan. Pedreira testified
that the Parana II decision definitely involved a net loan.
Guerra maintained that the Parana I--1st Panel decision possibly
did not involve a gross loan. He claimed that if the case
involved a gross loan, there then would be no reason for the
State Highway Department to litigate and dispute payment of the
withholding tax, as a victory would not benefit the Highway
Department but only the foreign lender. However, Guerra did
agree that the Parana II and Santo Andre I decisions involved net
loans. We note that both the Parana II and Santo Andre I
decisions utilized a net-loan-versus-gross-loan rationale to
distinguish the Parana I--1st Panel holding.
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