BIR Ruling

November 13, 1969 The President Continental Manufacturing Corp. P.O. Box 992 Manila S i r : This refers to your letter dated October 24, 1968 requesting that your importations of acrylic fibers to be processed into yarns and which in turn will be used in the manufacture of gloves for export be exempted from the payment of internal revenue taxes. In reply, I have the honor to inform you that under Sections 183(b) and 190 (c) of the Tax Code, imported articles to be used by the importer himself, in the manufacture or preparation of articles for consignment abroad are exempt from the advance sales or compensating tax. And under Section 188(e) of the same Code, articles shipped or exported abroad by the manufacturer or producer irrespective of any shipping arrangement that may be agreed upon which may influence or determine the transfer of ownership of the articles so exported are exempt from the sales tax. In order to be exempt under the provisions of Sections 183(b) and 190(c) of the Tax Code, the imported acrylic fibers must be earmarked for your manufacture or preparation of gloves also earmarked for export. Imported acrylic fibers used in the manufacture of articles not so earmarked for export are subject to the advance sales tax. Accordingly, in order that the exemption of the acrylic fibers that you import under the above representation may be recognized you must notify this Office of any such importation submitting all shipping papers connected therewith. Thereafter, an authority for the release of any such importation free from tax shall be issued by this Office upon your filing of a sufficient bond to answer for all taxes that may be due on the importation should it be established later on that the products manufactured out of the imported fibers were not in fact exported. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue