BIR Ruling No. 029-62

January 30, 1962 BIR RULING NO. 029-62 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 529, Manila Gentlemen : In answer to your letters dated December 1 and 8, 1960, I have the honor to inform you as follows: As a distiller of alcohol, your client La Tondea, Inc. is not liable for the payment of specific tax on alcohol stored within its place of production if, by reason of fire, it is lost prior to removal therefrom. (See sec. 124, Tax Code; Asiatic Petroleum Co. vs. Rafferty, 38 Phil. 475) On the other hand, the fact that alcohol purchased by your client from other distillers for further ratification is lost by reason of fire or spilling thereof while enroute from the manufacturer's place of production to the premises of the former does relieve the manufacturer or your client, as the case may be, of the obligation to pay the specific tax. The same thing is true in the case where alcohol purchased from other distillers is lost due to fire or other fortuitous event while stored in the premises of your client. "In the case at bar, the crude alcohol which were removed from Biscom's Central were lost in transit and not as a consequence of the transformation thereof into a finished product. In fact, it had not reached the stage of rectification which was one of the conditions imposed for the withdrawal of the same without the prepayment of the specific tax. Obviously, the purpose of the rectification and transformation into a finished product for which the postponement of the payment of the tax was allowed was not attained. Under such circumstances, the alcohol in question should be deemed subject to the general rule that the specific tax on such 'domestic product shall be paid by the manufacturer, producer, owner' and not being covered by the special condition contemplated by the law, 'such taxes shall be paid immediately before removal from the place of production' (Sec. 124, Tax Code. In other words, upon the failure of the condition subsequently, the tax is deemed to have already attached upon the removal of the alcohol from Biscom's compound in Negros Occidental. Indeed, petitioner, under the alcohol sale contract . . . had bound itself to pay for the corresponding specific tax on the alcohol shortages occurring in the course of transportation." (La Tondea, Inc. vs. Acting Collector of Internal Revenue, C.T.A. Case No. 393, September 30, 1958. cd Very truly yours, MELECIO R. DOMINGO Commissioner of Internal Revenue