Whether the Cost of Cement Used in the Manufacture of Hollow Blocks is Deductible from the Gross Selling Price in Determining the Sales Tax

November 25, 1966 BIR RULING NO. 062-66 Mr. Isidro R. Garcia, Jr. 23 Ist Street, New Banicain Olongapo City S i r : This refers to your letter dated October 11, 1966, requesting information as to whether or not the cost of cement used in the manufacture of hollow blocks is deductible from the gross selling price thereof for purposes of determining the sales tax due thereon. In reply, I have the honor to inform you that as a general rule, only the cost of raw materials which is subject to tax under the same section to which the finished product is subject can be deducted from the gross selling price of the finished product. Since cement is subject to the ad valorem tax under Section 243 of the Tax Code, the cost thereof cannot be deducted from the gross selling price of the manufactured hollow blocks for purposes of the sales tax. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue