BIR Ruling [DA-104-05]

March 31, 2005 BIR RULING [DA-104-05] 107 (A) 264-86 Meister Transport, Inc. HHC BLDG., 636 Victoria cor. Basco Streets Intramuros; Manila Attention: Mr. George S. Delos Reyes Gentlemen : This refers to your letter dated September 15, 2004 requesting for VAT exemption on the return shipment of 1950 ctns. of crayons. It is represented that the shipment consisting of: "1,950 cartons (14,426.730 kgs.) STC: 193,537 packs crayons (Car) Item # 42-9012-V903; & 40,410 packs crayons (Spider) Item # 42-9012-V904 covered by Fastlane Industries Invoice No. FV400042 dated 10 August 2004 under Bill of Lading No. AS-S-2985 on board "Tian Rong V.923S" dated 22 August 2004 valued at USD28,494.97;" which was previously exported to Kowloon, Hongkong, as evidenced by Export Declaration Nos. 57038, 64505 & 72866; Export Invoice Nos. 0000107129, 000108332 & 000109464 and Export Bill of Lading Nos. MSHKG3502, 3/406/004854 & 3/407/004881 was returned to the Philippines; that said shipment has been found to be not in conformity with the requirement; and that in compliance with the Bureau of Customs requirement for VAT exemption, you now request for VAT exemption in as much as said shipment is exempt from payment of customs duties pursuant to the provisions of Section 105(t) of the Tariff and Customs Code of the Philippines. In reply, please be informed that there shall be levied, assessed and collected on every importation of goods a value-added tax equivalent to ten percent (10%) based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise taxes, if any pursuant to Section 107(A) of the Tax Code of 1997. TcSAaH However, due to non-conformity with the requirements, the said crayons were rejected abroad and therefore, shipped back to the Philippines. Accordingly, the return shipment of the said goods/articles is not an importation, hence not subject to the value-added tax imposed under Section 107(A) of the Tax Code of 1997 (BIR Ruling No. 264-86 dated December 2, 1986). 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group