BIR Ruling No. 037-83

March 10, 1983 BIR RULING NO. 037-83 Gentlemen : This refers to your letter dated November 18, 1980 stating that your client Rambi Development Corporation, 1002 Pasay Road, Makati, Metro Manila, plans to undertake a business which shall involve production of an improved bunker fuel called emulsified bunker; and, requesting clarification on the following: (1) tax status of your clients, (2) kind and rates of taxes to be paid, (3) when such taxes are to be paid, (4) forms to be used, and (5) place where payable. cdtech Verification conducted by this Office disclosed that your client, employing the emulsification process, will produce an improved bunker fuel by mixing bunker, water and additive in the following proportions: Bunker fuel 85% to 90% Water 10% to 15% Emulsifier additive 1% to .2% The resulting product is said to have an improved burning efficiency with the heating value of bunker exchanged. Profit derived is due to the increase in volume through the addition of water and additive. The selling cost of each liter of improved bunker will be equal to the procurement cost of the bunker used in the mixture. In reply, I have the honor to inform you that under the foregoing facts, the emulsification process did not transform the bunker fuel into a new and different article having a distinctive, name, character and use: hence, you do not come within the purview of a manufacturer. However, for the sale or resale thereof, you are subject to the graduated annual fixed tax under Section 192(2) of the Tax Code, the initial amount of which is P20.00; thereafter, the annual fixed tax payable will depend upon the gross sales during the preceding calendar year. cdta Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue