BIR Ruling

August 29, 1966 The San Miguel Corporation P.O. Box 271 Manila Attention: Mr . D . T . Reyes Asst . Vice-President Gentlemen : This refers to your letter dated August 25, 1966 requesting the payment of only 7% compensating tax on your importation of Freezer Parts for use as replacement or spare parts of your Ice Cream Manufacturing Plant. LexLib It is represented that in the process of manufacturing ice cream, after the ingredients have been mixed, they are mechanically transferred to freezer compartments for the purpose of completing the manufacturing process. These compartments with freezing temperatures (hence, ice cream freezer) are neither refrigerators nor storage cabinets as generally understood and mentioned in the Internal Revenue Code. Whereas a refrigerator merely keeps food or articles at low temperatures, a freezer is a room or compartment of sub-freezing temperature. A freezer is, like the one used in ice cream manufacturing, an industrial equipment. The Internal Revenue Code could not have contemplated an industrial equipment as a semi-luxury item. In reply, I have the honor to inform you that as correctly represented, the ice cream freezer used in your Ice Cream Manufacturing Plant is considered an industrial equipment, hence, the imported parts for use as replacement of said equipment are subject to the 7% compensating tax pursuant to Section 190, in relation to Section 186, both of the Tax Code. cdtech Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue