BIR Ruling [DA-015-00]

January 7, 2000 BIR RULING [DA-015-00] Sytengco Enterprises Corp . No. 10 Resthaven St., SFDM Quezon City Attention: Atty . Jaime Dizon Gentlemen : This refers to your letter dated June 18, 1999 requesting, in effect, for a ruling exempting your importation of Sulphur Flakes, Sulphur Powder and Colloidal Sulphur from the 2% excise tax imposed under Section 151 (B)(2) of the Tax Code of 1997. Records show that you imported 40 MT (800 bags) of Sulphur flakes from Singapore under Invoice No. 60133 dated June 2, 1999; and that an excise tax of 2% was imposed by the Bureau of Customs on your aforesaid importation. In your subsequent letter dated October 8, 1999, you contended that the mineral products referred in Section 151 of the Tax Code of 1997 which are subject to the 2% excise tax are the unprocessed, raw non-metallic (in its original state-block) products whereas sulphur flakes, sulphur powder and colloidal sulphur are already processed materials which have undergone mechanical processing as follows: 1. Sulphur flakes obtained by rapidly distilling crude sulphur and condensing it in the liquid state, solidified and then molded or crushed into flake and then added with some whitening agent. 2. Sulphur powder produced by the process of sublimation according to desired fitness/mesh of the particles and then added with some whitening agent. LibLex 3. Colloidal Sulphur powderized, which forms an emulsion with water, preserving in this state by adding a protective colloid such as albumin or gelatin. In reply, please be informed that pursuant to Revenue Regulations No. 13-94 dated July 20, 1994, sulfur is one of the mineral products falling under "Other Non-Metals" subject to excise tax. Obviously, the sulfur being referred to therein is crude mineral sulfur occurring in the free state including those which have undergone simple treatment of preparation such as washing or drying. However, as aforedescribed, the processes involved in transforming crude sulfur into sulfur flakes, sulfur powder and colloidal sulfur cannot be considered simple processes as the same involve chemical changes which partake the nature of manufacturing. Such being the case, sulfur flakes, sulfur powder and colloidal sulfur are no longer mineral products in their original state and, hence, exempt from the 2% excise tax imposed under Section 151 (B)(2) of the Tax Code of 1997. However, your aforesaid importation is subject to the 10% VAT imposed under Section 107(A) of the same Code. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue