Lubricant NA Not Subject to Excise Tax

October 24, 2001 BIR RULING NO. 049-01 148 000-00 Exim Cargo Systems Unit 311 Trader's Royal Bank Building A. Soriano St., Intramuros Manila Attention: Mr. Jaime C. Vicente Lic. Customs Broker Gentlemen : This refers to your letter dated July 30, 1999 requesting, in effect for a ruling whether Lubricant NA is subject to excise tax. It appears from the records that DMH Industrial Sales, Inc. with address at #30 M.H. del Pilar St., Brgy. San Antonio, SFDM, Quezon City imported Lubricant NA from Australia under Commercial Invoice No. 106805 dated May 19, 1997; and that an excise tax of P118,552.00 was slapped by the Bureau of Customs. In reply, please be informed that based on the report of analysis by the Philippine Institute of Pure and Applied Chemistry, Ateneo de Manila, LUBRICANTS L-A and N-A are water-based lubricants, water being 95% and 82% (w/w), respectively. On the other hand, the BIR Laboratory Section of the Tax Fraud Division merely stated that on the basis of the aforementioned report, LUBRICANTS L-A and N-A are not subject to excise tax under Section 148 of the Tax Code of 1997. Such being the case, it is not classified as a manufactured oils and other fuels under the aforecited provision of the Tax Code of 1997. Accordingly, it is not subject to excise tax. However, the importation is subject to 10% value-added tax based on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs duties, excise tax, if any, and other charges, such tax to be paid by the importer prior to the release of such goods from customs custody: Provided, That where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on the landed cost pursuant to Section 107(A) of the Tax Code of 1997. This ruling is 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.) RENE G. BAEZ Commissioner of Internal Revenue