Rate of Advance Sales Tax Payable on the Importation of Hot Rolled Forging-Quality Steel Bars

April 1, 1987 BIR RULING NO. 090-87 164 278-86 090-87 Gentlemen : This refers to your letter dated October 24, 1986 requesting, in effect, a ruling as to the rate of advance sales tax payable by you on your importation of Hot Rolled Forging-quality steel bars, which you used in the manufacture of Transmission Gear Forgings which ultimately become spare parts that go into transmission assemblies or pure spare parts in the form of first gear, second gear, third gear, reverse gear, and main drive gears. In reply, please be informed that any article, subject to the original sales tax, when used as a raw material in the manufacture or preparation of essential articles, shall, subject to certain conditions be taxed at the same rate as the finished product, except when such material is taxed at a lower rate. (Section 163(2), Tax Code, as amended by Executive Order No. 36). Consequently, since the raw materials imported by you, are used in the production or manufacture of essential articles considered as spare parts and accessories of motor vehicles, enumerated in Section 163(2)(n) of the Tax Code, the same shall be taxed at the same rate of 10%. In such a case, you as importer shall certify to this Bureau that the raw materials shall be used exclusively in the manufacture or preparation of the said essential articles. If you fail to issue the certification, the raw materials shall be taxed at the rate of 30% and 20%, respectively. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner