BIR Ruling [DA-075-A-05]

March 10, 2005 BIR RULING [DA-075-A-05] 148; DA-445-04 Unioil Petroleum Phils., Inc. 2701 West Tower Philippine Stock Exchange Centre Exchange Road, Ortigas Centre Pasig City Attention: Ms. Esther P. Magleo President Gentlemen : This refers to your letter dated February 11, 2005 requesting for a ruling as to whether or not Aromatic Hydrocarbon, which your company imports and sells, should be classified and taxed as aromatic extract under Section 148 (a) of the Tax Code of 1997. It is represented that Unioil Petroleum Phils., Inc. (UPPI), is the importer of aromatic hydrocarbon. This imported article is thereafter sold to the customers of UPPI to be used as raw materials either in the manufacture of rubber, tires or dyes, paints, thinners, adhesives, etc. Since Aromatic Hydrocarbon is not being used as gasoline blends nor an additive for other petroleum refined products but as solvent in the manufacture of the aforementioned products, you believe that its importation is not subject to excise tax under Section 131 (B) in relation to Section 148 (a), both of the Tax Code of 1997. In reply, please be informed that Section 148 (a) of the Tax Code of 1997 provides: "Sec. 148. Manufactured Oils and Other fuels . There shall be collected on refined and manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the goods hereunder enumerated as soon as they are in existence as such: SITCcE (a) Lubricating oils and greases, including but not limited to basestock for lube oils and greases, high vacuum distillates, aromatic extracts and other similar preparations, and additives for lubricating oils and greases, whether such additives are petroleum based or not per liter and kilogram, respectively, of volume capacity or weight, Four pesos and fifty centavos (P4.50): Provided, however , That the excise taxes paid on the purchased feedstock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax due therefrom: Provided, further , That lubricating oils and greases produced from basestocks and additives on which the excise tax has already been paid shall no longer be subject to excise tax: Provided, finally , That locally produced or imported oils previously taxed as such but are subsequently reprocessed, rerefined or recycled shall likewise be subject to the tax imposed under this Section. . . . In a similar request for a ruling, the Bureau ruled in BIR Ruling No. DA-445-2004 dated August 23, 2004 as follows: "In view of the foregoing and considering that the use of Aromatic Hydrocarbon as solvent in the manufacture of tires and rubber which are non-excisable products and not as a catalytic or motive power enhancer, in effect is not within the contemplation of Section 148 of the Tax Code, this Office holds that your importation and sale of Aromatic Hydrocarbon are not subject to excise tax." Since the facts presented is very much identical to the facts that caused the issuance of the aforesaid ruling, this Office believes that the importation of Unioil Petroleum Phils., Inc. of Aromatic Hydrocarbon is also not subject to excise tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. SHaIDE Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group