BIR Ruling

July 18, 1973 2nd Indorsement Returned to the Chief, Tobacco Tax Division, thru the Revenue Operations head (Specific Tax ) the within papers bearing on the effects of Presidential Decrees Nos. 69, 88 and 149 prescribing new rates of specific tax on cigarettes, particularly on the question as to whether a cigarette manufacturer may be granted a refund or tax credit on account of the decrease in tax rates applicable to its packed cigarettes remaining on hand at the cigarette factory as of July 1, 1973, the effective date of the new rates. cd Section 124 of the Tax Code provides that "specific taxes on domestic products shall be paid by the manufacturer, producer, owner, or person having possession of the same; and, except as otherwise especially allowed, such taxes shall be paid before removal from the place of production." Paragraph 3(d) of Revenue Memorandum Order No. 22-73, dated June 14, 1973 states as follows: "(d) Strip stamps affixed to packed cigarettes on hand which will be subject to new and lower tax rates under Presidential Decree No . 149 . "Cigarette manufacturers in possession of packed cigarettes affixed with strip stamps under the old and higher tax rates may file a claim for tax refund or tax credit corresponding to the decrease in specific tax rates pursuant to Presidential Decree No. 149. Said claim shall be filed in accordance with existing revenue rules and regulations and the provisions of Section 306 of the National Internal Revenue Code, as amended." It is clear from the foregoing that a cigarette manufacturer who has in his possession packed cigarettes affixed with strip stamps under the old and higher rates, and which cigarettes were removed from the factory after July 1, 1973, is entitled to the refund or tax credit or the difference between the old and higher rates and the actual rates due upon removal of said cigarettes from the place of production. aisadc (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5