Application of the Excess Tax Credit Against the Sales Tax Liability Due from the Manufacturer

April 7, 1987 BIR RULING NO. 100-87 166 (c) 000-20 100-87 Gentlemen : This refers to your letter dated September 22, 1986, requesting information as to whether BIR Ruling No. 260-82 dated October 14, 1982 is still in force, in so far as said ruling holds that the excess advance sales tax paid on raw materials can be credited only against the sales tax due on the finished product of which the raw materials form part. In reply, please be informed that if a taxpayer has excess tax credit, 2 of his 3 options are, as provided in Section 166(c) of the Tax Code, as amended by Executive Order No. 36, as follows: "Sec. 166. Tax Credit . xxx xxx xxx "(c) Excess tax credit . If at the end of a taxable year, the total tax paid on the raw material, part, accessory or other article exceeds the amount of the sales tax due on the finished product, the manufacturer or producer may elect to: 1. Carry over such excess or a portion thereof to be credited against his sales tax liability in the succeeding taxable quarter or quarters; and/or 2. File an application for the issuance of a tax credit certificate for such excess or a portion thereof which can be used in payment of any advance sales tax. xxx xxx xxx From the aforequoted provisions, it is clear that the above ruling is no longer in force. In other words, excess tax credit can now be applied against the sales tax liability due from the manufacturer regardless of whether the raw materials covered by the excess tax credit were used in manufacture of the finished products upon which the sales tax is due. Such being the case, your other query whether the excess tax credit on one product can now be applied against the sale tax liability due on another product belonging to the same manufacturer is answered in the affirmative. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner