BIR Ruling [DA-289-98]

July 1, 1998 BIR RULING [DA-289-98] TWA, Inc. Unit 96 Columbia Tower Ortigas Avenue Mandaluyong City Attention: Mr. Flaviano V. De Leon (CEO) Gentlemen : This refers to your letter dated May 27, 1998 requesting for a ruling that your importations of lube base stock, additives, petroleum distillate, solvent reformates and the like are not subject to excise taxes pursuant to Republic Act No. 6810 or the Kalakalan 20 Law as implemented by Revenue Memorandum Order No. 39-90. aIETCA It is represented that TWA, Inc. is a duly registered Countryside and Barangay Business Enterprise (CBBE), with CBBE Reg. No. 008 in San Rafael, Bulacan dated November 25, 1994; that its CBBE Certificate of Authority, which is valid for five (5) years , entitles it to all the benefits and incentives, subject to the terms and conditions of R.A. No. 6810; and that it is engaged in the manufacture of petroleum products whereby it uses reformate as one of its raw materials. In reply, please be informed that paragraph III (A) (2) (a) of Revenue Memorandum Order No. 39-90 implementing Republic Act No. 6810, otherwise known "Kalakalan 20", provides in part thus "III Guidelines and Instruction: "A. CBBE Exempted from All Taxes and Fees "1. . . . "2. Exemption from taxes and fees. The exemptions cover taxes and fees for which they are directly liable including the following internal revenue taxes: "a) Excise taxes; "xxx xxx xxx. However, CBBE are still liable to pay the following internal revenue taxes: "a) . . .; "b) Value-Added Tax (VAT) on imported articles; "xxx xxx xxx." Since TWA, Inc. is duly registered as Countryside and Barangay Business Enterprise (CBBE), it enjoys all the benefits and incentives subject to the terms and conditions of R.A. No. 6810 (Kalakalan 20 Law). [BIR Ruling No. 172-94 dated December 9, 1994; BIR Ruling UN 083-95 dated March 1, 1995] IaAEHD Although under the provision of Section 107 (A) of the Tax Code of 1997, excise taxes, if any, may be imposed, in addition to VAT, on importations of goods in general, however, based on the above-quoted paragraph III (A) (2) (a) of Revenue Memorandum Order No. 39-90, CBBEs are exempt from the payment of said excise taxes. Moreover, Section 148 of the Tax Code of 1997 contemplates the imposition of excise taxes on petroleum products only as soon as the goods subject thereto become in existence as such. They are imposed rather on their being manufactured and/or processed and not on their being imported. However, the importations of the above-named products by TWA, Inc. shall be subject to value-added tax under the above-quoted RMO. 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, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)