BIR Ruling No. 025-63

March 25, 1963 BIR RULING NO. 025-63 The Regional Director BIR Regional District No. 8 Iloilo City S i r : Reference is made to the letter of the Victorios Milling Co., Inc., addressed to that District, in connection with the alleged conflict between BIR Ruling No. 621, s. of 1960 and BIR Ruling No. 310, s. of 1959. cdti For sales tax purposes, the value of locally purchased cement is not deductible from the gross selling price of articles manufactured therefrom because it is a mineral product pursuant to Section 246 of the Tax Code, as amended by R.A. No. 1510. Only raw materials subject to sales tax are deductible, pursuant to Section 186 of the Tax Code. cdt In the case of Tan Chiu (O.R. No. L-15008, January 28, 1961), the Supreme Court held that the value of cotton knitting materials manufactured by tax-exempt industry and sold to and used by undershirt manufacturers is not deductible, for sales tax purposes, from the gross selling price of the manufactured undershirts prior to the effectivity of Section 186-A of the Tax Code. Considering the theory embodied in this decision, it is the considered opinion of this Office that since cooperative associations organized under Act 3425, as amended, are exempt from the 2% miller's tax on its raw sugar, the cost thereof when used as materials by a refined sugar factory is not deductible, for purposes of 2% miller's tax, from the selling price or market value of the refined sugar. This ruling modified BIR Ruling No. 261, s. 1960. cdll Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue