BIR Ruling

September 15, 1977 3rd Indorsement Returned to the Chief, Manufactured Tobacco Tax Division, thru the Revenue Service Chief (Specific Tax) the within papers relative to the request of Fortune Tobacco Corporation for a permit to pack its HOPE non-menthol cigarettes (P20/MClass) in ten (10) sticks to a pack, instead of in 20's. In the preceding indorsement of the OIC Accountable Forms Division, dated September 9, 1977, it is stated therein that while there are no available cigarette strip stamps packed in 10's, nevertheless, there is a stock of slow moving item of the P18/M20's class which may be surcharged; and this stock will be good for a period of 11 months taking into consideration the projected monthly consumption of said item as contained in the letter of Fortune Tobacco Corporation dated September 7, 1977. Section 149(b) (7) of the National Internal Revenue Code of 1977 which governs the cigarettes in question, provides: "(7) On cigarettes packed in twenties, the retail price of which per pack exceeds on peso and seventy centavos, but does not exceed two pesos, on each thousand, twenty pesos." The above-quoted provision as well as the entire Section 149 does not prohibit the packing of the cigarettes in 10'. It appears also that the packing of the cigarettes in 10's will no result in the loss of government revenue. In fact, since it has been reported by our internal revenue officers that a lower retail price per pack of 10's increases the demand of the cigarettes in the market, it would seem that the result will be an increase in the collection of the specific tax. Accordingly, herein request may be granted. However, it should be noted that the specific tax due on the cigarettes is based on the retail price thereof. Accordingly, in order to maintain the classification of the cigarettes in question at P20/M, said cigarettes packed in 10' should be retailed at a price which exceeds P0.85 but does not exceed P1.00 per pack. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8