BIR Ruling No. 098-83

June 8, 1983 BIR RULING NO. 098-83 Gentlemen : This refers to the pending internal revenue tax case of your client, LU DO & LU YM CORPORATION, Tupaz Street, Cebu City, involving the amount of P4,404,641.33 as deficiency manufacturer's sales tax for the year 1978, which is now the subject matter of CTA Case No. 3596 of the Court of Tax Appeals. cdti It appears that the above assessment is based on the ruling of this Office that edible cooking oil is a manufactured product subject to the 10% sales tax imposed under Section 199(a) of the Tax Code. In connection therewith, I have the honor to inform you that this Office, after a re-study of its position on the matter, has finally concluded that edible cooking oil is not subject to the 10% sales tax under Section 199(a) of the Tax Code but to the 2% miller's tax imposed under Section 203 of the same Code for the following reasons: 1. Edible cooking oil is a product derived through the process of refining by removing from crude coconut oil certain impurities and is actually pure coconut oil with copra as basic raw material. acd 2. That previous rulings issued by this Office have held that refined coconut oil or edible oil is subject to the 2% miller's tax under Section 203 of the Tax Code because said provision clearly imposes said tax on all coconut oil manufactured, processed or milled by proprietors or operators of coconut oil mills; and that the law does not distinguish between crude or refined oil and it is enough that what is produced is coconut oil. 3. That the above rulings should be respected as a contemporaneous and practical interpretation of that part of Section 203 of the Tax Code relative to coconut oil; they are not to be disturbed except for cogent reasons unless contrary to the statute or exceeding departmental authority and they are binding upon the Commissioner and the taxpayer alike. (Sutherland, Statutory Construction, Vol. II, page 522.) 4. That although it is true that Section 203 includes manufacturers as defined under Section 187(x) of the Tax Code, since refined coconut oil, although a manufactured product, falls squarely under Section 203, it cannot be taxed under Section 199. In the light of the following, your client is not liable for the payment of the above tax liability. In view thereof, the above assessment is hereby withdrawn and cancelled. This revokes our previous rulings/decisions holding that edible cooking oil is subject to 10% (formerly 7%) manufacturer's sales tax. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue