Tax Liabilities of Firm Engaged in Buying and Selling Readily Usable Bunker Fuel Oil and Cleansed Oil

June 17, 1985 BIR RULING NO. 094-85 155-00 037-63 094-85 Gentlemen : This refers to your letter dated May 8, 1985 in effect requesting a ruling on the correct business taxes to be paid by you stating that, in your business, you buy readily usable bunker fuel oil from petroleum companies and sell the same "as is" to consumers; and that you buy used or degraded bunker fuel oil from establishments that have stopped using them, or from oil dealers who collected used bunker fuel from gasoline stations, repair shops, tank cleaners, marine vessels and others, then subject such used oil to decantation, dehydration process to separate the coarse particles and water from the so-called oil slops; or filtration to separate the solid impurities from the used oil. The cleansed oil are then sold to the consumers. In reply, please be informed that with respect to your buying readily usable bunker fuel oil from petroleum companies to be sold "as is" to your customers, you are subject to the graduated annual fixed tax under Sec. 192(2) of the Tax Code, the initial amount of which is P20.00; thereafter, the annual fixed tax payable will depend upon the gross sales during the preceding calendar year. With respect to the used bunker fuel oil which you cleansed through the process of decantation, dehydration, or filtration, before selling the same to the consumers, you are also subject to the annual graduated fixed tax under Section 192(2) of the Tax Code. In the process of subjecting the used or degraded bunker fuel oil to decantation, dehydration, or filtration, you did not come within the purview of manufacturer because you did not transform the so-called oil slops into a new and different article with a distinctive name, character and use. This Office has also ruled that for the purchase of used oil on which the specific tax had previously been paid and which a purchaser cleanses of contamination and purifies preparatory to the resale thereof, said purchaser is considered as engaged in the business of a mere dealer. (BIR Ruling No. 19, Series of 1961) cd Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner