BIR Ruling

August 27, 1970 Fortune Tobacco Corporation Parang, Marikina, Rizal Gentlemen : This refers to your letter dated August 20, 1970 requesting opinion on the rate of specific tax to be paid by you under the following circumstances: "In connection with our intention to use machines in wrapping the original containers/labels of our manufactured cigarettes (hand packed), with cellophane, we hereby request for a ruling/or legal opinion as to whether or not the specific tax rate on the cigarettes will be affected or considered to be as mechanically wrapped. "By wrapping the original containers/labels of our manufactured cigarettes with cellophane by using machines, we can minimize manual labor resulting to less cost of production, more production of finished cigarettes and ultimately more specific tax revenue to the government." In reply, I have the honor to inform you that in view of the amendment of Section 137(b) of the Tax Code by Republic Act No. 6110 wherein the kind of wrapping or packing materials have been deleted from the old law as a criterion for determining the rate of specific tax on cigarettes, the use of cellophane as a wrapping material of the original containers of your manufactured cigarettes will not affect the rate of specific tax on cigarettes, the use of cellophane as a wrapping material of the original containers of your manufactured cigarettes will not affect the rate of specific tax due on said cigarettes. And if, as represented, the cigarettes which you manufacture are handpacked, that is, manually wrapped or packed in the container or cigarettes package and the cellophane is a mere cover of the handpacked and stamped cigarettes, you are not liable to the increased rate of tax prescribed in Section 137(b)(4) of the Tax Code, even if you use a machine in covering the said handpacked or wrapped cigarettes with cellophane. cdta Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue