Taxability of Quarried Minerals; Cement Not Considered a Mineral Product

August 2, 1972 BIR RULING NO. 020-72 Taxability of quarried minerals ; cement not considered a mineral product . This has reference to BIR Ruling No. 064-71 dated December 21, 1964, wherein this Office ruled that the window and sheet glass produced by the XYZ Glass Corporation is a mineral product and, therefore, exempt from the sales tax, pursuant to Section 188(c) of the Tax Code. In the said BIR Ruling No. 064-71, this Office ruled that a product is still a mineral product, although ordinary manufacturing process is applied, provided that 80% of the product constitute minerals extracted by the manufacturer himself. To support this ruling, this Office cited the decision of the Court of Tax Appeals in CTA Case No. 345 which treated and taxed cement as a mineral product. Since 80.15% of the window and sheet glass produced by the XYZ Glass Corporation constituted minerals of its own extraction, said products were considered mineral products, exempt from the sales tax. However, the aforesaid decision in CTA Case No. 345 has already been overruled by the Supreme Court in the case of Cebu Portland Cement Co. vs. Commissioner of Internal Revenue, G.R. No. L-18649, February 27, 1965 and in another case between the same parties in G.R. No. L-22605, January 17, 1968. In both cases, it was held that for purposes of Section 243 of the Tax Code, what is taxable are the quarried minerals used in producing cement, in which case, cement is not considered a mineral product. Moreover, in the explanatory note of House Bill No. 325, which later became Republic Act No. 1299, amending Section 246 of the Tax Code, it is stated that in defining the term "mineral product" due weight has been given to its construction in the case of Spiller vs. McGehee, 68 S.W. 2d 1093. In this case, the construction given to the said term is limited to things produced from mineral land through mining operation. In view thereof, the window and glass sheet product by the aforementioned corporation are not considered mineral products entitled to the exempting provisions of Section 188(c) of the Tax Code. Accordingly, said window and sheet glass are subject to the 7% sales tax imposed by Section 186 of the Tax Code. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue