3% Excise Tax on Quarry Sources

May 28, 1990 BIR RULING NO. 101-90 151 (a) (2) 000-00 101-90 Gentlemen : This refers to your letter dated March 2, 1990 stating that you are a company principally engaged in producing ready mixed concrete whose raw materials are, aside from cement, aggregates and white sand; that you are buying the pit run materials from quarry owners near your site although some are extracted from your own operated quarry; that these pit run materials are then put in and processed by your crusher plant thus transforming said materials into aggregates; and that all your white sand requirements are supplied by the different quarry owners and not produced by your own quarry. You are now requesting a ruling as to whether you are subject to the 3% excise tax imposed by Section 151(a)(2) of the Tax Code, as amended by Executive Order No. 273. aisadc In reply, please be informed that quarry "resources" shall mean any common stone or other common mineral substances as the Director of Mines and Geo-Science may declare to be quarry resources such as but not restricted to marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate. (Section 151 (b) (4), Tax Code, as amended by E.O. No. 273) Under Section 2(h) of Revenue Regulations No. 13-80, quarry resources include sand and gravel. The pit run materials which you extract from your own operated quarry for processing into aggregates fall under the said definition; hence, you are subject to the 3% excise tax based on the actual market value of the annual gross output thereof at the time of removal pursuant to Section 151 (a) (2) of the Tax Code, in addition to the 10% VAT under Section 100 (a) thereof. (Section 126, Tax Code) On the other hand, the persons liable to the 3% excise tax on the white sand are your suppliers. However, if the said 3% tax has not been paid by your suppliers, you are the one liable for payment thereof pursuant to Section 127 of the same Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner