BIR Ruling

December 13, 1972 Mr. William Garcia Manager Goodwill Food Products Corporation 28 Capitan Tiago Street Malabon, Rizal S i r : This refers to your letters dated September 6 and December 11, 1972 requesting confirmation that your importation of food processing machine consisting of one (1) 20 tons capacity compressor "York" "usado" (second hand) refrigerator 7 x 7 and accessories for installation in your plant be subjected to the 7% compensating tax. cdt To illustrate that the aforesaid imported article is a food processing machine you described the process of manufacturing your Rose Brand Gulaman Bars as follows: That seaweed is your raw material; that this raw material goes to the washing machine for washing, after which it goes to the extraction kettles to extract the colloids or sticky substances that are within the seaweeds. Then it undergoes filtration process to effect separation of the seaweeds residue from the clear solution; that from the filtration process, it goes to the moulds; and that the moulded agar-gel now goes to the freeze-dehydration process. It is in this process that the imported ammonia compressor is going to be used. By freeze-dehydration you mean the separation of the water from the gulaman; that unless the moulded gulaman gel is frozen first into gulaman ice, its water content cannot be removed; that because of the size of this ammonia compressor, the moulded agar-gel passes through it in seconds, so much so that no portion of the raw materials stays in it longer than one minute; that from this process, the agar-ice goes to the thawing process in which the water runs off leaving the pure gulaman behind. Then it is dried, after which it goes to the packing section for packaging. You also stated that as could be gleaned from the foregoing, the imported article is designed merely for the purpose of changing the temperature of the agar-gel; that it is not a storage refrigerator; that it is not a facility for keeping any article for conservation or preservation, and that it is in fact a machinery for manufacturing your gulaman product. In reply, I have the honor to inform you that under the foregoing description of the use and nature of the imported machine and our appreciation of the pictures submitted, the imported ammonia compressor is an integrated part of a food processing machinery. Such being the case, the same is subject to the 7% compensating tax pursuant to Section 190 in relation to Section 186, both of the Tax Code. aisadc Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue