Fujisu Feedmill Industries, Inc.

April 4, 2007 BIR RULING [DA-206-07] VAT Ruling Nos. 59-00, 020-00 Sec. 109 (B), NIRC Fujisu Feedmill Industries, Inc. FBIC Malolos, Bulacan Attention: Dolores O. Aure President Gentlemen : This refers to your letter dated March 16, 2007, requesting this Office for VAT exemption on your importation of broken rice residue as raw material for the production of quality animal feeds. It is represented that Fujisu Feedmill Industries Inc. ( "Fujisu" for brevity) is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) with SEC Registration No. CS200617909 on November 16, 2006; that the primary purpose for which the corporation was organized, under its Articles of Incorporation, is to "engage in conduct and carry on the business of buying, selling, distributing, marketing at wholesale, and retail insofar as may be permitted by law, all kinds of goods, commodities, wares and merchandise of every kind and description such as agricultural-by-products"; and that the former name by which you used to operate and conduct your business is Fujisu Feedmill Industries (FFI). It is further represented that as FFI, it was able to secure a ruling (BIR VAT Ruling No. 059-2000, dated December 18, 2000) to the effect that its importation of broken rice or rice residue is exempt from VAT. In this regard, Fujisu now seeks to reiterate that exemption from VAT for the same activity under its new corporate name. In reply, please be informed that Section 109 (B) of the Tax Code of 1997, as amended by Republic Act No. 9337, provides that: "SEC. 109. Exempt Transactions. (1) Subject to the provisions of subsection (2) hereof, the following transactions shall be exempt from the value-added tax: xxx xxx xxx B) Sale or importation of fertilizers; seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients , whether locally produced or imported, used in the manufacture of finished feeds (except specialty feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered, as pets);" (emphasis supplied) xxx xxx xxx It is significant to note, under BIR Ruling No. 028-98 dated September 15, 1998, that the manufacture, importation, sale or distribution of feeds or feeding stuff require prior registration and permit from the Bureau of Animal Industry (BAI) under Republic Act No. 1556, as amended by Presidential Decree No. 7, and that the certification of the nature and composition of the commodities/items as stated in the registration and import permit issued by BAI shall govern the classification of the said items for purposes of VAT exemption under Section 109(b) of the Tax Code of 1997, as amended by RA 9337. It is likewise worthy to state that this Office has previously ruled that the importation of "broken rice" or rice residue is exempt from the VAT (VAT Review Committee Ruling No. 020-00 dated May 11, 2000). Accordingly, Fujisu's instant importation of broken rice or rice residue which is certified as feed ingredient by the BAI, shall be exempt from the imposition of the VAT. However, it is required that in all cases of importation of VAT-exempt items, the same shall not be released from customs custody unless a duly approved Authority to Release Imported Goods (ATRIG) is secured from the Revenue District Officer where the port of entry is located. SHIcDT 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service