Exemption of Specific Tax — Conditions

January 26, 1981 BIR RULING NO. 016-81 134-00 000-00 016-81 Asian Alcohol Corporation 1515 Roxas Boulevard Manila Attention: Mr . Andres O . Khan Sales Manager Gentlemen : This refers to your letter dated March 27, 1980 stating that Asian Alcohol Corporation is a duly registered corporation, organized and existing under the laws of the Philippines and engaged in the manufacture, sale and exportation of ethyl alcohol in commercial quantities; that you are the registered operator of three (3) BIR Alcohol Bonded Terminals located at Pulupandan, Negros Occidental (74-003A); at North Harbor, Manila (74-003B); and at Opao, Mandawe City (74-003D); that you have been a direct exporter of ethyl alcohol for the last decade and to assure your foreign markets of a continuous supply of the product and also to earn the much needed foreign currency to boost our economy you are planning to purchase from other distillers ethyl alcohol for export without the payment of the specific tax; that said alcohol will be removed underbond from the distillery premises of your local suppliers and likewise stored underbond in your different BIR Alcohol Bonded Terminals; and that the alcohol so accumulated will be exported in its original state to your foreign buyers without returning to the Philippines. Under the foregoing facts, you now request for a ruling as to whether or not you can purchase ethyl alcohol from other local distillers without the payment of specific tax to be removed to and stored underbond in your BIR Alcohol Bonded Terminals until actually exported to your foreign buyer. In reply, please be informed that Section 134 of the National Internal Revenue Code, as amended, provides as follows: "Sec. 134. Articles subject to specific tax . Specific internal revenue taxes apply to things manufactured or produced in the Philippines for domestic sale or consumption and to things imported, but not to anything produced or manufactured here which shall be removed for exportation and is actually exported without returning to the Philippines , whether so exported in its original state or as an ingredient or part of any manufactured article or product." (Emphasis ours) Under the aforequoted provision of Section 134, the specific tax does not apply to articles produced or manufactured here which shall be removed for exportation without returning to the Philippines. Such being the case, you can purchase ethyl alcohol from other local distillers without the prepayment of specific tax to be removed to and stored underbond in your BIR Bonded Terminals for exportation abroad, subject to the following conditions: 1. That you will maintain a BIR Alcohol Bonded Terminal in a port of entry in the Philippines complete with tank facilities that will sufficiently accommodate an entire bulk shipment of alcohol of no less than 1,000,000 gauge liters, where alcohol purchased shall be stored preparatory to shipment to the carrying foreign vessel; 2. That the BIR Alcohol Bonded Warehouse shall be under the joint custody of that firm and a representative of this Bureau and duly provided with the requisite official register books and other BIR forms needed in connection therewith; 3. That firm and the Distiller from whom alcohol is purchased shall file a joint bond in the amount of P500,000.00 conditioned upon your actual exportation of the total quantity removed from the distillery or Distiller without returning to the Philippines whether in its original state or as an ingredient or part of any manufactured article or product; 4. That the alcohol purchased for export must be earmarked by the Distiller-seller solely for export and shall be removed underbond from the distillery premises of the distiller-seller to your BIR Alcohol Bonded Terminal. 5. That no loss in handling in transit or storage shall be allowed and you shall pay the specific tax due on such losses incurred; and 6. That the alcohol to be exempt from tax must be actually exported without returning to the Philippines. You are required to submit to this Office proof of exportation of the alcohol. Failure to submit the same shall render you liable to the payment of the specific tax due thereon. Very truly yours, RUBEN B. ANCHETA Acting Commissioner