20% Excise Tax on the Importation of Essential Oil

February 17, 1988 BIR RULING NO. 049-88 101 000-00 049-88 Gentlemen : This refers to your letter dated February 3, 1988 requesting reconsideration of the ruling of the Oils & Miscellaneous Tax Division, through ATRIG No. 044-88, to the effect that the importation by your client, Berli Jucker Industries, Inc., of 10 drums essential oil which arrived last January 29, 1988 on board s.s. "Scandutch Orient" is subject to 20% excise tax, in addition to the 10% value-added tax. You alleged that the abovementioned consignee is a leading soap manufacturer who uses the aforesaid importation as raw material in the production of bath soaps and not for resale, barter or exchange; that the non-essential goods described in said Section 150 of the Tax Code, e.g., perfumes and toilet water refer exclusively to finished products like colognes, skin bracers, perfumes, sachets and the like; and that soaps as well as ingredients thereof cannot be included in the category of jewelries, perfumes, toilet waters and pleasure crafts as enumerated in subsections (a), (b) and (c) of Section 150 of the Tax Code. In reply, please be informed that only perfumes and toilet waters are subject to 20% excise tax, pursuant to Section 150(b) of the Tax Code as amended by Executive Order No. 273. Essential oil used in the manufacture of bath soaps is not included in said subsection (b) as well in other subsections of Section 150. Accordingly, said essential oil is subject to the 20% excise tax imposed by Section 150 of the Tax Code, as amended. However, said importation of essential oil is subject to value-added tax equivalent to 10% 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 pursuant to Section 101 of the Tax Code, as amended by Executive Order No. 273 and as implemented by Revenue Regulations No. 5-87. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner