Everbest Shipping Agency

September 4, 2009 BIR RULING [DA-(EXT-004) 493-09] Everbest Shipping Agency 240 G. Sevilla Street 5th Avenue Grace Park Kalookan City Attention: Mr. Crisanto V. Zabala General Manager Gentlemen : This refers to your letter dated July 27, 2009 requesting for an opinion that the transhipments of cigarette products from one customs territory to another customs territory is exempt from excise tax pursuant to Revenue Regulations No. 3-2006. aIcHSC It is represented that Everbest Shipping Agency has been in the business of transhipping cigarette products from other countries, into the Philippines, and sent to other countries for their final destination; that whenever it transports cigarettes from a port under customs territory to another customs territory, the shipments are accompanied and guarded by customs personnel, in order to ensure the proper transport of these commodities; that it is required to pay a transhipment fee of Sixty pesos (P60.00) per case with the Bureau of Customs; and that it complies with the certain guidelines in performing its business functions, to wit: a. Strict compliance of the route stated in the cargo manifest; b. Transport of the products out of the Philippines within 15 days; c. Issuance of a guaranty in the amount equivalent to no less than the amount of internal revenue taxes and duties due for the shipment; and d. Submission to the Bureau of Customs of proof of delivery in the destined foreign port. In reply thereto, please be informed that Section 19 of Revenue Regulations No. 3-2006 provides that "SECTION 19. Transshipment of Alcohol or Tobacco Products. All alcohol or tobacco products intended for transshipment to a foreign port shall not be subject to the imposition and payment of excise and value-added taxes provided all of the following conditions are satisfied: (a) The foreign port of destination shall be clearly indicated in the cargo manifest accompanying the shipment; (b) The shipment shall not be unloaded or transported to any other Philippine port of entry prior to the transport thereof to the foreign port of destination as indicated in the cargo manifest; (c) The alcohol or tobacco products intended for transhipment shall be transported abroad within fifteen (15) days from the date of arrival thereof in the Philippine territory; CIETDc (d) A guarantee in the amount equivalent to not less than the amount of internal revenues taxes and duties otherwise due from the shipment, shall be filed with the Bureau of Customs (BOC), in a form and validity period acceptable to the Commissioner of Customs; and (e) Submission to BOC of any document satisfactorily showing that the transhipped products have actually arrived and have been unloaded in the foreign port of destination ( e.g. , certificate of discharge, import entry declaration duly received by the foreign port of entry, etc.). The cancellation/release of such guarantee shall be effected only upon submission of complete documents showing proof of actual shipment of the alcohol or tobacco products to, and receipt thereof by, the intended foreign port of destination. Failure to submit the liquidation documents within the period to be prescribed by the BOC or to transport the shipment to the intended foreign port of destination within the prescribed 15-day period shall cause the automatic forfeiture by the BOC of the guarantee." CAaDTH As represented, since Everbest Shipping Agency indeed is willing to abide with the above-mentioned conditions particularly that the shipment shall not be unloaded or transported to any other Philippine port of entry prior to the transport thereof to the foreign port of destination as indicated in the cargo manifest and that the same shall be transported abroad within fifteen (15) days from the date of arrival thereof in the Philippine territory, it is therefore safe to conclude that the transhipments of cigarettes from one customs territory to another is EXEMPT from the payment of excise tax. 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