BIR Ruling

June 14, 1967 Columbia Tobacco Company, Inc. P.O. Box 2727 Manila Gentlemen : This refers to your letter dated May 25, 1967 stating the following: "We understand that pursuant to the Administration's determination to combat the illegal entry of smuggled "blue seal" cigarettes, both houses of our Congress passed a bill now pending signature of the President reducing the rate of specific tax on imported cigarettes. LLpr "Being one of those regularly importing cigarettes, our importations would be affected by the reduced rate of specific tax. We are, therefore, in a quandary as to the possible effects the reduced rate would create on our shipments in transit and those at the customs bonded warehouses when the new tax rate takes effect. "In view of the above, we will appreciate very much your ruling on this matter." In reply, I have the honor to inform you that Section 125 of the Tax Code provides as follows: "Specific taxes on imported articles shall be paid by the owner or importer to the customs officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customhouse, or by the person who is found in possession of articles which are exempt from specific tax other than those to whom the same is lawfully issued." prcd The Supreme Court in interpreting Sec. 1480 of the Revised Administrative Code of 1917, which is similar to the foregoing provision of the Tax Code, said: "As it is in the will of the importer or the owner of imported goods to choose the moment for making payment of internal revenue tax, from its arrival at the port until immediately before its withdrawal from the customhouse, the law in force when the payment is made is the one that should prevail; for human voluntary acts are governed by the law in force at the time of their performance, unless there is a legal provision to the contrary." (Luzon Brokerage vs. Pasadas, 51 Phil. 305). Similarly, Section 1202 of the Tariff and Customs Code provides as follows: "Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation is deemed terminated upon the payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs." llcd In view of the foregoing, this Office believes as it hereby holds that the rate of specific tax due on importations of cigarettes whether in transit or already landed but still in customs bonded warehouses is that provided by law at the time immediately preceding the removal from customs when the tax accrued and has to be paid. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue