Exemption of Imported Denatured Alcohol from Excise Tax

September 13, 2000 BIR RULING NO. 040-00 Alto Chemicals Unit 506 Park Trade Center Daang Hari, Madrigal Business Park Alabang, Muntinlupa City Attention: Mr . Honorato V. Sumadohat Manager Gentlemen : This refers to your letter dated July 20, 2000 stating that on May 30, 2000, you have imported from Pharmco Products, Inc. 13,353 liters of 200 proof Ethanol (Ethyl Alcohol) valued at US$27,907.77 as shown in the Commercial Invoice No. 2K0530PRO duly issued by the latter and Bill of Lading No. 1019194; that the said alcohol is denatured and it is unfit for human consumption and can be lethal when ingested; and that the general purpose of this alcohol is for cleaning microchips products used by multi-national companies who are your customers. In connection therewith, you now request for a ruling as to whether or not imported denatured alcohol which is unfit for human consumption is exempt from excise tax. In reply thereto, please be informed that Section 134 of the Tax Code of 1997 provides that domestic alcohol of not less than one hundred eighty degrees (180) proof (ninety percent (90%) absolute alcohol) shall, when suitably denatured and rendered unfit for oral intake, be exempt from the excise tax prescribed in Section 141: Provided, however, That such denatured alcohol shall be subject to tax under Section 106(A) of the said Code: . . . A careful scrutiny of the above-cited section disclosed that only domestic denatured alcohol which are unfit for human consumption shall be exempt from excise tax. However, considering that no provision in Title VI of the said Code which provides for the rate and basis of excise tax on imported denatured alcohol, this Office is of the opinion as it hereby holds that the same rates and basis of excise taxes applicable to locally manufactured articles, like domestic denatured alcohol in this case, pursuant to Section 131 (B) supra shall be applied. Accordingly, your importation of denatured alcohol which are unfit for oral intake shall be exempt from excise tax. The importation and sale however, of the said denatured alcohol are respectively subject to the 10% VAT under Sections 107(A) and 106(A) of the Tax Code of 1997. ASICDH This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) DAKILA B. FONACIER Commissioner of Internal Revenue