BIR Ruling

October 23, 1967 Helene Curtis Industries Philippine Industrial Export Associates Incorporated P.O. Box 1421, Manila Attention: Mr . Leon Goldenberg President Gentlemen : This refers to your letter dated July 24, 1967 stating as follows: "We are a holder of a permit from your office dated May 15, 1956 granting us authority to procure tax paid rectified alcohol from any registered dealer, rectifier or repacker of distilled spirits for use exclusively in our manufacture of beauty parlor preparations. aisadc "The beauty parlor preparations that we manufacture using tax paid rectified alcohol is subject to sales tax under Section 184(c) of the Internal Revenue Code. A ruling is therefore requested whether we can deduct the cost of the rectified alcohol including the specific tax paid thereon, in computation of our sales tax pursuant to Section 188(a) of the Internal Revenue Code, and in line with the decision of the Supreme Court in Cases Nos. GRL-20834 promulgated on April 19, 1966 (Abad vs. Commissioner of Internal Revenue). "Heretofore, we have not been deducting the cost of the rectified alcohol in computing our sales tax, and if you will rule in the affirmative, we will be able to reduce our selling price on said items, thereby affording us to compete effectively and placed in same footing without manufacturers who were previously granted permits to procure specially denatured alcohol without the payment of the specific tax before the Supreme Court decision was promulgated." In reply, I have the honor to inform you that the cost of the rectified alcohol the specific tax of which has already been paid is deductible from the gross selling price of the beauty parlor preparations manufactured therefrom for purposes of computing the sales tax due on the latter in accordance with the decision of the Supreme Court in the case entitled Armando L. Abad vs. CTA and Commissioner of Internal Revenue G. R. No. L-20834 and 20903, October 19, 1966. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue