The Wines & Spirits Specialist, Inc.

July 17, 2007 BIR RULING [DA-385-07] DA-170-97 dtd 04/15/97 The Wines & Spirits Specialist, Inc. 166 Sen. Gil Puyat Avenue Pasay City Attention: Ms. Brigida P. Gonzales President/CEO Gentlemen : This refers to your letter dated December 2, 2006, requesting a ruling on the correct classification of your importation of Cavicchioli Wine Products covered by Export Invoice No. 600611900 for purposes of applying the correct excise taxes rate under the Tax Code of 1997. It is represented that your company, The Wines & Spirits Specialist, Inc. (Wine & Spirits, for short) is a registered importer of wines and liquors; that last November 2, 2006, you applied for Authority To Release Imported Goods (ATRIG) complying with all the documentary requirement of the Excise Tax Division of this Bureau; that it was approved and received by the Bureau of Customs (BOC) on November 8, 2006 and the shipment was released on November 9, 2006 after payment of all duties and taxes; that on November 13, 2006, you attempted to apply for the requisition for Revenue Strip Stamps and Labels; that however, you were advised by Revenue Officer Emily Pieg to submit actual bottles of your importation which you did comply; that you were advised by her that you have to pay additional excise tax because your importation was re-classified from being still wine to sparkling wine; that you disagree since the aforesaid wines are only FRIZZANTE Wines and not SPARKLING Wines as claimed by the Revenue Officer; that it appears in the letter-reply dated November 28, 2006 of Cavicchioli U. & Figli S.p.a. Iltalia to your query to them that your importations under Export Invoice No. 600611900 are all still wines, and your wine importations were all subjected to carbonation solutions, thus, the FRIZZANTE is indicated in the label which means that your wine is not subject to second fermentation; that if a wine is subjected to second fermentation, the words "BRUT SPARKLING" is clearly indicated in the label and now termed as SPUMANTE which is generally used to denote sparkling wine; that SPUMANTE wines generally owe their bubbles to second fermentation in tank while FRIZZANTE alludes to a wine with just a lot of carbonation in solution, not enough to force out the cork or make the bottle open with a loud pop, but just sufficient to give the wine a pleasant "prickly" or "crackling" character that can add a delicious note of refreshment to what would likely be an otherwise simple still wine; that FRIZZANTE is an Italian wine term which means semi-sparkling wine; that it is your contention that your importation is not a sparkling wine since as ruled in BIR Ruling No. DA-170-97 dated April 15, 1997, there are two (2) elements in order for a variant to be considered a sparkling wine, to wit: 1) that it contains an average of 12% alcohol by volume and 2) that it is carbonated by secondary fermentation; and that your importation of the hereunder list does not fit the above conditions since the alcohol content only ranges from 7.5 to 11% alcohol by volume and likewise not carbonated by secondary fermentation: Per Importation Invoice No. Alcohol Manufacturing Process 600611900 Volume Lambrusco Dell' Emilia IGT Rosso 7.5% Carbonated by carbonation solution Lambrusco Dell' Emilia IGT Rosato 7.5% - do - Lambrusco Dell' Emilia IGT Bianco 7.5% - do - Malrasia Dell' Emilia IGT 11% - do - Lambrusco Grasparossa Di Castelvetro 11% - do - DOC Lambrusco Reggiano DOC 11% - do - In reply, please be informed that under Revenue Regulations No. 2-97, sparkling wine is defined as an effervescent table wine usually white but occasionally red in color, containing an average of 12% alcohol by volume which is carbonated by secondary fermentation. This includes champagne. This definition shows that neither the production process nor the alcohol content will justify the categorization of your importation of the above-stated list of Cavicchioli wine products as sparkling wine, since the same do not meet the criteria for sparkling wine from the aspect of production process and alcohol content. Thus, the above-stated list of Cavicchioli Wine Products shall be classified as still wines subject to the rate of the excise tax as provided under the Tax Code of 1997, as amended. TSacCH 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.) JAMES H. ROLDAN Assistant Commissioner Legal Service