BIR Ruling

December 11, 1967 Eng Suy Liong Steel Manufacturing (Ang Bing Proprietress) 319 J. Teodoro Street, Grace Park Caloocan City Attention: Mr . Lincoln T. Yabut Accountant Gentlemen : This refers to your letter dated December 1, 1967 stating the following: "I have the honor to hereby respectfully request some informations whether the sale of waste materials derived from the raw materials used in the manufacture of our steel products, is subject to any business tax and/or any internal revenue taxes. "This request is in view of the fact that in the process of the manufacture of our steel products such as steel post straps and washers, some steel cuttings and scrap iron are derived which are considered waste materials. In the past we usually throw these away as waste, but recently some scrap iron vendors offered to purchase them, hence we are constrained to seek your kind opinion as to the kind of tax or taxes that may be charged for the sale of said articles. We wish to further inform your goodselves, that the nature of our business being a manufacturer, our purchases are exclusively raw materials and that we never purchase any finished goods for resale purposes. The sale covering said articles is very insignificant, considering that small amount involved, plus the fact that such articles are never intentionally manufactured, but are only incidentally derived from the raw materials used in the manufactured of our products. It should be noted also that the sales tax due to the raw materials used by our factory has been already paid by their manufacturers, having been purchased from reliable companies, such as the Central Steel Manufacturing Co., Inc. and the Philippine Blooming Mills Co. and other well known companies." In reply thereto, I have the honor to inform you that under the foregoing representations the sale of waste materials derived from the raw materials used in the manufacture of your steel products is not subject to any internal revenue tax. However, the receipts derived therefrom shall be declared for purposes of the income and additional residence taxes. LLpr Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue