Mineral Product Talc Powder Haichen No. 1 Subject to Excise Tax

May 3, 2004 BIR RULING NO. 005-04 Section 151 (B) (3) 00-00 Sytengco Enterprises Corporation No. 10 Resthaven Street, SFDM Quezon City Attention: Necisto U. Sytengco President Gentlemen : This refers to your letter dated February 12, 2002 requesting exemption from excise taxes on your importation of 10 x 20' Talc Powder Haichen No. 1 325 MESH (Talc, for brevity). It is represented that your shipment of talc is subject to the Value Added Tax; that it undergoes further processing and refining by flotation and acid-leaching to remove any traces of heavy metal (e.g. lead, mercury, cadmium, etc.); that to assure microbiological purity, it is subjected to passage through a heated chamber by an ethylene oxide chamber; that talc is normally used in cosmetics, pharmaceutical, and even confectionery industries where excellent purity, particularly the absence of bacteria and of heavy metals is required; that the talc is so pure that all cosmetic manufacturers needs only to add, when preparing body powders, the fragrance and anti-caking agent; and that talc of high chemical purity is used in low-loss insulators in a wide variety of electronic and electrical uses. In reply, please be informed that in the laboratory analysis conducted by the BIR Laboratory Section and as per Memorandum dated April 11, 2002 of the Assistant Commissioner, Large Taxpayers Service, it was ascertained that the aforesaid product underwent physical processes to upgrade the talc quality which is 60.03% silicon dioxide, 30.02% magnesium oxide, and water. Since the processes of flotation and leaching have no major effect or reaction on the composition or substance of the mineral/mineral products, these are considered as simple treatment processes that will subject a mineral product to excise tax under Section 151 (B)(3) which provides that: "Mineral products' shall mean things produced and prepared in u marketable state by simple treatment processes such as washing or drying, but without undergoing any chemical change or process or manufacturing by the lessee, concessionaire or owner of mineral lands." In view thereof, this Office is of the opinion as it hereby holds that TALC POWDER HAICHEN NO. 1 is a mineral product subject to excise tax under Section 151(B)(3) of the Tax Code of 1997. Hence, you request for exemption is denied for lack of legal basis. IcESDA Very truly yours, (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue