BIR Ruling

April 10, 1973 Mr. Yu Sui Kiat North Bay Boulevard Navotas, Rizal S i r : This refers to your letter dated February 22, 1973 stating that you are engaged in the fish meal and dried fish business. In the operation of the fish meal business, you stated that you buy raw fish from the fish market in Navotas, Rizal, have the fish dried under the sun and afterwards grind it to become the fish meal; and that in so doing no other ingredients are added nor deducted in the process of manufacturing the product. You also represented verbally that said fish becoming the fish meal consists of the "rejected fish" which is unfit for drying. It is also represented that in your dried fish business, raw fish are bought from the fish market; and that to preserve the fish, a little salt is added and then have it dried under the sun. Under the foregoing facts, you would like to be informed whether your fish meal and dried fish are exempt from the sales tax under Section 188(b) of the Tax Code, as amended by Presidential Decree No. 69. In reply, I have the honor to inform you that under the foregoing facts, the fishmeal is animal and poultry feeds; hence, the same is subject to the 5% sales tax imposed by Section 185-B of the Tax Code, as amended by Presidential Decree No. 69. However, the cost of fish used in the manufacture of the fish meal is deductible from the gross selling price of the fish meal for purposes of the sales tax due thereon. With regard to the dried fish, the same is exempt from the sales tax, pursuant to Section 188(b) of the Tax Code, as amended by Presidential Decree No. 69, which provides as follows: cdi "(b) Agricultural food products, ordinary salt and all kinds of fish and its by-products, whether in their original state or not, except those enumerated under Section 186-B. Agricultural non-food products, whether in their original state or not when sold, bartered or exchanged by the producer or owner of the land where produced. The phrase 'whether in their original state or not' means the transformation of said products by the application of simple processes to preserve or otherwise to prepare said products for the market such as freezing, drying, salting, smoking, or stripping." Very truly yours , (SGD.) MISAEL P. VERA Commissioner of Internal Revenue