Exemption from the Payment of the VAT on Incoming Shipment of Marathon Hoses

April 12, 1989 BIR RULING NO. 072-89 101 (a) 000-00 072-89 Gentlemen : This refers to your letter dated March 20, 1989 requesting exemption from the payment of the value-added tax on incoming shipment of marathon hoses which will be a replacement of a previous defective shipment of same articles the duties, taxes and other charges on which had already been allegedly imposed. aisadc It is represented that PNOC Shipping and Transport Corporation (PSTC), a wholly-owned and controlled subsidiary of that company with VAT Registration No. 12-5560006-3421, ordered from Trelleborg A.B., through the latter's resident agent OKPHIL, Inc., sixteen (16) lengths of marathon hoses more particularly described as follows: a. Five (5) lengths Trelleborg Trelloil Heavy Duty Cargo Hose No. 16064, 152 mm (6") I.D. x 152 meters (500 ft.) long, light, pliant, can be rolled flat for reel storage and manufactured according to BS 1435 standard per Quotation No. TRG-051/Q dated July 18, 1986. b. Eleven (11) lengths Trelleborg Trelloil Heavy Duty Cargo Hose No. 16064, 152 mm (6") I.D. x 152 meters (550 ft.) long, light, pliant, can be rolled flat for reel storage and manufactured according to BS 1435 per Quotation Ref. No. TBG-069/Q dated November 25, 1986. that said shipment was already released under a deferred payment scheme pursuant to Department Order No. 31-77 of the Department of Finance; that PSTC could not utilize the same because it turned out to be defective, on account of which PSTC filed with the Regional Trial Court of Manila a civil case against OKPHIL, Inc. and Trelleborg A.B.; that on January 20, 1989, the parties submitted a Compromise Agreement to the court whereby it was agreed that (i) Trelleborg A.B. shall ship and deliver to PSTC 16 lengths of marathon hoses within 120 days from the time the Agreement is approved by the court in replacement of the previous defective shipment and (ii) PSTC shall deliver and return to Trelleborg A.B. the defective 16 lengths of marathon hoses which are to be replaced by the incoming shipment. In reply, please be informed that the 10% value-added tax imposed on every importation of goods under Section 101(a) of the Tax Code as amended by Executive Order No. 273, is, like the advance sales tax which it replaced, levied and paid only once. Consequently, the second shipment of 16 lengths of marathon hoses that would replace the defective shipment which is subsequently re-exported is no longer subject to another value-added tax if the taxes and duties thereon had already been previously paid. Very truly yours, (SGD.) JOSE U. ONG Commissioner