10% Sales Tax — Oil Mill Spare Parts

June 30, 1980 BIR RULING NO. 086-80 Tri-Square Metal Engineering and Machinery Incorporated 221 N. Domingo Street San Juan, Metro Manila Attention: Mr . Arthur C . Chua President Gentlemen : This refers to your letter dated January 16, 1980 requesting that oil mill spare parts manufactured by you be subject only to the 5% sales tax. It is represented that you are engaged in the manufacture of oil mill spare parts like worm shafts, feed worm, collars driving sleeves, barrel rings, knife bars and allied parts or accessories used in crushing copra to extract coconut oil which is an ingredient for laundry soap and detergents; and that said parts or accessories are supplied by you to Procter & Gamble Manufacturing Co., Philippine Refining Co., Legaspi Oil Mill, Inc. and San Pablo Oil Mill, Inc.. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. Section 201 of the Tax Code of 1977, as amended, imposes the 5% sales tax on any part or accessory of the articles taxed under said provision. Part or accessory means any article adapted for use as a component part of another article or as a replacement part thereof. [Section 2(c) of Revenue Regulations No. 8-78 dated May 12, 1987]. The said oil mill spare parts are not parts or accessories of any article taxable under Section 201, since they are not component parts or replacement parts thereof. In fact, said spare parts are parts or accessories of a machinery which is taxable under Section 199. Consequently, your sales of said manufactured parts or accessories of machineries are subject to the 10% sales tax, in accordance with Section 199 of the Tax Code, as amended. aisadc Very truly yours, RUBEN B. ANCHETA Acting Commissioner