Taxability of Bananas to be Used in the Manufacture of Banana Sauce

October 25, 1966 BIR RULING NO. 048-66 Universal Food Corporation P.O. Box 130 Quezon City Attention : Mr . Ciriaco L . de Guzman Secretary-Treasurer Gentlemen : This refers to your letter dated March 10, 1966 which was received by this Office only on August 15, 1966 requesting information as to whether or not the cost or value of bananas to be produced in your own banana plantation and used as raw material in the manufacture of your Mafran banana sauce will be deductible from the gross selling price thereof in determining the sales tax due thereon. In reply, I have the honor to inform you that under the law, only the cost of raw materials which have been previously subjected to the same rate of tax as the finished product can be deducted from the gross sales of the finished product. Since the banana fruits are not raw materials previously subjected to the 7% sales tax under Section 186 of the Tax Code, the cost thereof cannot be deducted from the gross selling price of the manufactured banana sauce for purposes of the sales tax. lexlib Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue