BIR Ruling

May 20, 1970 General Garments Corporation 458 E. Rodriguez Sr., Q.C. 40109 P. O. Box 33 Quezon City Attention: N . T . Samtani General Manager Gentlemen : This refers to your letters dated April 21, and April 24, 1970 requesting that only 7% advance sales tax plus 25% mark-up be imposed on your importation of 42 ctns. Powernet (Knitted Elastic Fabrics) Ex: "SPAARNEKERK" B/L No. 8 Reg. No. 93 and Entry No. 9145-70 (Invoice No. 0933). cd It is represented that the above shipment of fabric consists of 77% nylon 70 denier, and 23 % spandex 420 denier, with costs of quotations broken down as follows: .77 lb Nylon yarn 70 denier at $0.80 lb. $0.616 .23 lb Spandex (Rubber) 420 denier at $5.90 lb $1.357 That based on the foregoing quotations, the value of the Spandex rubber (23lb) is much more than the nylon yarn notwithstanding that the nylon yarn component is 77%. In reply, I have the honor to inform you that it appearing that nylon is not the chief component (chief value) of the imported fabric, but the spandex rubber, said shipment is subject to the 7% advance sales tax based on the landed cost thereof plus 25% mark-up pursuant to Section 183(b) in relation to Section 186, both of the Tax Code, as amended by Republic Act No. 6110. casia Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue