BIR Ruling

October 20, 1969 Corneal Lens Philippines, Inc. P.O. Box 2923, Manila Attention: Joseph H . Senn Managing Director Gentlemen : This refers to your letter dated October 6, 1969 requesting reconsideration of our ruling dated July 29, 1969 addressed to your Auditors, Carlos J. Valdez, & Company wherein it was held that you are a manufacturer of contact lenses subject to the fixed and percentage taxes prescribed by Sections 182 (A)(1) and 186 of the Tax Code. And as a consequence thereof, your importations of materials are subject to the advance sales tax. aisadc In support of your request, you stated that your making of contact lenses is not on a continuing process as you grind the imported button or rough plastic blanks only whenever a doctor submits to you a prescription for his patient; that you do not keep in stock even a single pair of finished Contact Lens because each customer has (1) a different base curve of the Cornea, (2) a different radius of the cornea, and (3) a different power of the eye; that sometimes, a patient's two eyes have even different grades or powers; and that you make Contact Lenses only when the job order for a certain individual comes in. You also alleged that contact lens making is not manufacturing within the purview of the internal revenue law because there are no finished goods already prepared for public consumption; that a Contact Lens Laboratory makes a pair or even one-half pair of Contact Lens if and when an individual gives a job order to it containing his specific eye dimensions; and that a finished Contact Lens cannot be stocked like ordinary merchandise because it still has to be soaked in chemical compositions. In reply, I have the honor to inform you that under the facts presented, you do not make contact lenses generally for sale to the public but only upon previous orders and subject to specifications furnished by customers. Accordingly, you are a contractor subject to the 3% tax prescribed by Section 191 of the Tax Code. As such contractor, your importations of materials used in the making of contact lenses are subject to the compensating tax. This supersedes our letter to your Auditors, Carlos J. Valdez and Company dated July 29, 1969. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue