BIR Ruling

August 17, 1977 Tax on Imported Car Replacement Parts This refers to your letter dated March 30, 1977 requesting a ruling that your importation of inserts to be used in the manufacture of detachable/adjustable headrest for Delta Motor Corporation be subject to the 7% advance sales tax with a 25% mark-up. It is represented that your are a manufacturer of polyurethane foam products, and a contract manufacturer for molded seats, headrests and armrests for members of the Progressive Car Manufacturing Program; that you have been contracted by Delta Motor Corporation to manufacture detachable/adjustable headrest on an exclusive basis; that you imported from Japan a component for the manufacture of detachable molded headrests which is called "inserts"; and that these inserts are made of two steel bars and specially designed fiberglass stiffener which are placed in the filling mold. In reply, I have the honor to inform you that on July 12, 1976, the Honorable, the Secretary of Finance rules as follows: "xxx xxx xxx importations of car replacement parts with no available local substitute shall be subject to the 7% advance sales tax with 25% mark-up, in addition to the customs duties and other charges due thereon, except : "I. . . . "II. . . . "III. Accessories which are not essential but are purely for adornment, embellishment and ornamental purposes such as, but not limited to . . . detachable headrest . . . ." (Emphasis supplied) Under the above-quoted ruling, imported detachable headrest are, therefore, subject not to the 7% advance sales tax, but to the 100% advance sales tax with a 100% mark-up. Such being the case, the inserts imported by you are subject to the same rate of advance sales tax of 100% with a 100% mark-up. cta