10% Advance Sales Tax — Imported Pencil Leads, Metal Ferrules, Rubber Plugs and Cedar Wood Slates

April 24, 1980 BIR RULING NO. 036-80 Amalgamated Specialties Corporation Km. 21 South Super Highway Muntinlupa, Metro Manila Gentlemen : With reference to our letter-ruling dated August 7, 1978, holding that imported pencil leads, metal ferrules, rubber plugs and cedar wood slates used in the manufacture of ordinary lead pencils are subject to the 5% advance sales tax and 25% mark-up, I have the honor to inform you that after a re-study of the aforementioned ruling and the laws applicable thereto, this Office finds that 10% and not 5% is the correct rate applicable to the said importation. It must be noted that Section 201(c) of the 1977 Tax Code, as amended imposes the preferential rate of 5% only when the ordinary lead pencils are locally manufactured. Accordingly, even if the imported raw materials in question are necessary in the local production or manufacture of ordinary lead pencils, the same are subject to 10% advance sales tax plus 25% mark-up under Section 199 in relation to Section 193(b) of the Tax Code, considering that the raw materials used in the manufacture of articles taxable under Section 201 of the Tax Code are not mentioned therein as subject to tax under the same provision. (BIR Ruling No. 014-79 dated March 27, 1979) This revokes our ruling dated August 7, 1978. Very truly yours, EFREN I. PLANA Acting Commissioner