BIR Ruling [DA-137-05]

April 11, 2005 BIR RULING [DA-137-05] Section 148; DA-194-87 Legaspi Import & Export Corporation Bloomingdale Bldg., Salcedo St., Legaspi Village Makati City Attention: Ms. Bernardina M. Sanchez Licensed Customs Broker Gentlemen : This refers to your letter dated February 28, 2005 requesting exemption from Excise taxes, for your importation of Acetone. It is represented that Legaspi Import and Export Corporation is a supplier of Acetone to BOI and PEZA Registered companies; that according to the Materials Data Sheet, acetone is a clear, colorless liquid with pungent odor, and is extremely flammable; that acetone, also known as dimethyl ketone is the simplest representative of the ketones; that it is soluble in water, ethanol, etc.; that acetone is also used to make plastic, fibers, drugs, and other chemicals; that acetone occurs naturally in plants, trees, volcanic gases, and landfill sites; and that it is found among the products formed in destructive distillation of wood, sugar, cellulose, etc. and for this reason it is always present in crude wood spirit, from which a greater portion of it may be recovered by fractional distillation. In reply, please be informed that acetone is a solvent not subject to any specific tax imposed under the Tax Code of 1997. It is not classified as distilled spirits nor as manufactured oil or motor fuel under Section 141 and 148 respectively of the Tax Code of 1997. Although it is found in destructive distillation of wood, sugar, cellulose, etc., and for this reason it is always present in crude wood spirit, from which a greater portion of it may be recovered by fractional distillation, and reduction by sodium amalgam converts it into isopropyl alcohol, it is not classified as distilled spirits. In fine, acetone is a volatile flammable fragrant liquid compound used in making other chemical compounds and as a solvent. 1 Individual solvents are used to dissolve the resin portion of paints or inks and that the resulting mixture is also used for the same purpose. Hence, they are not subject to any excise taxes. Accordingly, this ruling shall serve as authority of the Bureau of Customs to release the above importation which shall be in lieu of the issuance of the Application to Release Imported Goods (ATRIG). This ruling is being issued on the basis of foregoing facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void. cHaICD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group Footnotes 1. Page 24, The Merriam-Webster Dictionary, New Edition.