Importation of Clinkers for the Production of Cement Exempt from 2% Excise Tax

May 14, 1996 BIR RULING NO. 055-96 151 (a) (2) 000-00 055-96 2100 Customs Brokers, Inc. 4/F Cargohaus Building, NAIA Complex Barangay Vitalez, Paraaque Metro Manila Attention: Ms . Teresita M . Maligaya-Malic Sales Manager Gentlemen : This refers to your letter dated February 8, 1996, in effect requesting for a ruling exempting your client, Grand Cement Manufacturing Corporation, from the 2% excise tax imposed under Section 151(a)(2) of the Tax Code, as amended by Republic Act No. 7723, on its importation of cement clinkers. LLpr In support of your request, you presented a certification from the Mines and Geo-Sciences Dev't Service, Department of Environment and Natural Resources (DENR) that "clinker is not an in-situ or run-off mine ore mineral but a mixture of clayey and limey minerals which have been heated and fused under adequate chemical conditions. . . ." In addition, you presented another certification dated March 18, 1996 issued by the Philippine Cement Manufacturers Corporation that clinker is an industrial product produced from highly technical, complex and heat-intensive process of manufacture; that the raw materials containing calcium, silica, alumina and iron are extensively chosen, crushed and ground to desired fineness and composition and then blended thoroughly, subsequently burned to a sintering temperature (1400 C) in a large cement kilo to achieve the formation clinker compounds; and that as the desired level of incipient fusion is attained through pyroprocessing operations, chemical changes occur allowing the production of clinker containing essential calcium silicates and aluminates. Based on the foregoing, clinkers cannot be considered mineral products which is defined as "things produced and prepared in a marketable state by simple treatment processes such as washing or drying, but without undergoing any chemical change or process or manufacturing by the lessee, concessionaire or owner of mineral lands" (Section 151(b)(3), Tax Code). Such being the case, the importation by your client, Grand Cement Manufacturing Corporation, of clinkers for the production of cement is exempt from the 2% excise tax impose under Section 151(a)(2) of the Tax Code, as amended by R.A. No. 7729, but subject to the 10% value-added tax imposed under Section 101(a) of the same Code. prLL Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue