BIR Ruling

February 8, 1974 The General Manager Fortune Tobacco Corporation Parang, Marikina, Rizal S i r : This refers to your letter dated February 5, 1974 requesting that leaf tobacco and partially manufactured tobacco purchased from L-3 dealers in the provinces which will be used exclusively in the manufacture of your cigarette products, be exempted from inspection and the payment of inspection fees. cdt Your request is based on the following reasons: "1. That Fortune Tobacco Corporation is a duly registered cigarette manufacturer with principal business and office address at Parang, Marikina, Rizal; "2. Fortune Tobacco Corporation operates a redrying plant (L-3R) at Marikina, Rizal; "3. Fortune Tobacco Corporation is the owner and operator of a threshing and stripping plant (L-6) at Marikina, Rizal, Vigan Currimao, Ilocos Norte; and that "4. Fortune Tobacco Corporation is the owner of several L-3 establishments in various places, among others at Marikina, Rizal, Baesa, Quezon City; Pangasinan; Ilocos Sur; Ilocos Norte; Isabela; and in the provinces of Mindoro. "The magnitude of the operation activities of the businesses of Fortune Tobacco Corporation are so widely spread that the transfers of raw materials from the provinces to their L-7 factory at Parang, Marikina, Rizal, is inevitable. To subject these transfers of leaf tobaccos and partially manufactured tobacco from one establishment to another to payment of inspection fees would be incurring too much additional operating expenses on their part. "That the redrying, threshing and stripping of these tobaccos in the provinces and the subsequent transfers of the same to their manufacturing complex constitute only but one single operation of the manufacturing processes and does not change ownership or inure any pecuniary gain or benefit to the corporation. "The redrying and threshing operation which is being done in the provinces is in consonance with the government's policy of diverting economic development of the rural areas. "The request for exemption in the premise, applies only to leaf tobaccos and partially manufactured tobacco which will be shipped from their own establishments in the provinces which are for exclusive use in the manufacture of their own cigarette products on which it pays specific tax and does not cover shipments and/or transfers intended for resale to other cigarette factories or wholesale tobacco dealers. "That the leaf tobacco and partially manufactured tobacco have already been inspected and the corresponding inspection fee thereon have been paid when they purchased them from various L-3 dealers in the provinces. In reply, I have the honor to inform you that under the foregoing circumstances and it being represented that the leaf tobacco and partially manufactured tobacco which will be shipped from your own establishments in the provinces for the exclusive use in the manufacture of your own cigarette products which are subject to specific tax, the same are not subject to inspection and the payment of the corresponding inspection fee. acd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-3