BIR Ruling No. 052-63

July 12, 1963 BIR RULING NO. 052-63 Messrs. Sycip, Gorres, Velayo & Co. Certified Public Accountants P. O. Box 589 Manila Attention : Mr . M . Gutierrez Tax Department Gentlemen : Reference is made to your letter dated April 8, 1963, requesting confirmation of your opinion on the following facts: "One of our clients is engaged in business primarily as a producer of desiccated coconut. In its manufacturing operations, coconut meat is removed from the coconut shells. The shells are sometimes used to the company as fuel in cooking coconut into copra. From the shell used in the cooking of copra, the company also derives as charcoal. "Under the foregoing facts, our client would like to knew if the proceeds from the sales of coconut shells used by it as fuel in cooking copra could be subject to internal revenue business tax. We believe that since coconut shell are not by-products of copra or desiccated coconut and charcoal is merely incidental in the production of copra, the sale of these articles is not subject to any internal revenue business tax. However, before advising our client we would appreciate it if you could give us your confirmation on the above matter." "In answer thereto, I have the honor to inform you that the sale of coconut shells 'as is" is subject to the graduated annual fixed tax prescribed in Section 182(A)(2) of the Tax Code. (See BIR Ruling No. 105.02, dated August 13, 1957) On the other hand, as charcoal is a manufactured products your client for manufacturing the same is hereby constituted a manufacturer subject to the fixed and percentage tax imposed in Section 182(A)(1) and 186 of the same code. The fact that charcoal is produced only as an incident in the production of copra is not of any moment. cdpr Very truly yours, (SGD.) JOSE B. LINGAD Acting Commissioner of Internal Revenue