BIR Ruling

July 15, 1976 Ricsan Development Corporation Km. 11, Sasa, Davao City Attention: Mr . Francisco P . Tesorero Gentlemen : This refers to your letter dated July 12, 1976 requesting reconsideration of the ruling of Revenue Region No. 11-B, Davao City dated June 22, 1976 which was reiterated in its letter to you dated July 7, 1976, holding that your importation of ammonia compressor parts are subject to the 40% compensating tax on the ground that ammonia compressor is an ice-making machine taxable under Section 185-A (b) of the Tax Code. cdt In your letter requesting reconsideration of the aforesaid ruling, you stated that Ricsan Development Corporation is licensed as a deep-sea fishing operator and registered with the BOI as such under Certificate of Registration No. 73-270; that the MV RICSAN I was imported tax-free in 1973 under proper certificate of authority issued by the BOI on August 3, 1973 with the following description: "One (1) unit Motor Ship, tuna long liner, MV RICSAN I (ex Isuzu Maru No. 12),239.72 Gross Reg. Ton, 126.18 net reg. ton, overall length 42.45 M, L pp 37.00 M, Breadth (MLD) 7.20 M, Depth 3.40 M, with 3 Fish Holds and 1 Freezing Chamber with 2 compressors of 34.1 R.T. and 45.4 R.T.;Main engine 650 PS 'Akasaka' Auxiliary engines: 96 PS 'Yanmar' and 160 PS 'Niigata'". that Ricsan Development Corporation imported needed replacement parts and the supplier shipped the same summarized as follows: Diesel Engine Spare Parts US$2,045.73 Ammonia Compressor Parts US$5,207.82 Total US$7,253.55 that the imported ammonia compressor parts will be used to replace the worn out parts of the built-in quick freezer equipment of the vessel wherein fish catch are immediately placed for quick freezing; and that after the fish is frozen (hard as stone),it is deposited in the refrigerated chamber and remains in frozen condition until it is delivered to the foreign port of destination. In reply, I have the honor to inform you that under the foregoing representations and our evaluation of the documents submitted, the imported ammonia compressor parts are not parts of ice-making machines but parts of the refrigerating system of the fishing vessel, MV RICSAN I. The imported articles are therefore parts of an industrial refrigerating equipment. Such being the case, the imported ammonia compressor parts are subject only to the 7% compensating tax pursuant to Section 190 in relation to Section 186, both of the Tax Code. This supersedes the ruling of the Regional Director, Revenue Region No. 11*B, Davao City dated June 25, 1976 and reiterated on July 7, 1976. Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3