Request for a Modification of the Dispositive Portion of BIR Ruling No. 132-92 Insofar as it Subjects to a Second Round of Specific Tax the "Used Oil" Purchased from the Local Gasoline Stations Which are Merely Cleaned and Restored to Its Original Use Through the Addition of Additives

January 25, 1994 BIR RULING NO. 030-94 100 (a) 145 (a) 000-00 030-94 Atty. Benjamin L. Rabo Counsel for Bensan Industries, Inc. 1148 EDSA, Balintawak Quezon City S i r : This refers to your letter dated July 15, 1993 in effect, requesting for a modification of the dispositive portion of BIR Ruling No. 132-92 dated April 20, 1992 insofar as it subjects to a second round of specific tax the "used oil" purchased from the local gasoline stations which are merely cleaned and restored to its original use through the addition of additives. Quoted below is the dispositive portion of the adverted ruling: ". . . if the raw materials consist of basestocks (of virgin oil) where the specific tax had already been paid, your finished product is no longer subject to another round of specific tax. If your raw materials however consist of local and/or imported used oil where no specific tax has been paid immediately before the re-refining process, the volume of re-refined oil produced out of the used oil shall be subject to a specific tax of P4.50 per liter pursuant to Section 145 of the Tax Code . In both cases, the entire volume of your finished product (re-refined oil) shall be subject to 10% value added tax under Section 100(a) of the Tax Code." (emphasis supplied) It is represented that the technology of recycling used oil was developed during the oil crisis when, in order to conserve the scarce dollar reserves, the Government called on all sectors of the business community to economize on the use of petroleum products. You responded to that call by developing the technology to recycle used oil which used to be treated as wastes and, either thrown away, or used for less economically apt purposes such as lubricating push carts, or as wood preservatives. In reply, please be informed that under Section 145(a) of the Tax Code, "lubricating oils and grease produced from basestocks and additives on which the specific tax has already been paid, shall no longer be subject to specific tax." It is our opinion that under this provision, non-virgin oil such as the "used oil" accumulated by various gasoline stations in the course of re-oiling the motor vehicles of their clients, which have previously been subjected to specific tax while in its virgin state, are no longer subject to another round of specific tax. It is understood that the recycling process will be subjected to the in-premises supervision by the authorized internal revenue officers. Such recycled oil however shall be subject to the 10% value-added tax pursuant to Section 100(a) of the Tax Code. Moreover, the person selling the used oil to you shall be subject to the value-added tax based on the gross selling price of said products. aisadc Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue