BIR Ruling [DA-291-99]

May 13, 1999 BIR RULING [DA-291-99] TWA, Inc. Km. 58 Cagayan Valley Road San Rafael Bulacan Attention: Mr. Flaviano V. De Leon Gentlemen : This refers to your letter dated April 20, 1999 requesting for a confirmatory ruling that the excise tax exemption accorded by law to TWA, a CBBE Registered Enterprises for its manufactured petroleum products is considered as to have been deemed fully paid upon transfer/sale to its distributing arms, LUBWELL and FILPRIDE. It is represented that in BIR Ruling DA-232 dated April 14, 1999, this Office has ruled that the excise tax on Petroleum Products imposed under Section 148 of the Tax Code of 1997 is levied against the manufacturer, producer or refinery of the products, and which shall attach to the product/s as soon as they are in existence and the payment of which is done before their removal from the place where they are manufactured, produced or refined pursuant to Section 130(A)(2) of the same Tax Code (or fifteen (15) days from the date of removal thereof from the place of production under Section 127 of the Tax Code, as amended), so that if passed on to you by the manufacturer, producer or refinery, a tax credit is not availing in your purchase of kerosene being used as raw materials; that, ordinarily, the finished product, i.e., the jet fuel produced from kerosene in your case, is subject to excise tax under Section 148(g) of the 1997 Tax Code; that, however, since you are a duly CBBE-registered enterprise enjoying certain benefits and incentives under R.A. No. 6810, this Office has ruled that you are exempt from the excise tax for which you are directly liable to pay pursuant to paragraph III(A)(2)(c) of Revenue Memorandum Order No. 39-90, implementing R.A. No. 6810, otherwise known as the "Kalakalan 20"; and that such exemption shall be valid only for five (5) years from the grant of your CBBE Certificate Authority, i.e., on November 25, 1994 or until November 24, 1999. In reply, please be informed that pursuant to Section 130(A)(2) of the 1997 Tax Code, as manufacturer/producer of the petroleum products, you are directly liable to pay the excise tax imposed on petroleum products under Section 148 of the same Tax Code. However, as previously determined, being a CBBE-registered enterprise you are exempt from payment of the excise tax for which you are directly liable to pay, which exemption is availing from November 25, 1995 until November 24, 1999. Such being the case, excise taxes on your manufactured petroleum products are deemed to have been paid at the time the same come into existence. Henceforth, upon your transfer/sale of the finished products to your marketing arm, Lubwell and Filpride, the corresponding excise tax are considered fully paid. (BIR Ruling No. 152-88 dated April 19, 1988) Likewise, as mere distributing/marketing arms, both Lubwell and Filpride, there being no excise taxes passed on to them as a result of the tax exemption privilege of the manufacturer-producer TWA, Inc., they cannot pass on any excise tax as component cost of the product to the end user. STIEHc This ruling is being issued on the basis of the 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. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal & Enforcement Group