3% Excise Tax and/or the 10% VAT on Sand and Gravel

May 29, 1990 BIR RULING NO. 103-90 151 (a) (2) 000-00 103-90 S i r : This refers to your letter dated November 23, 1989, requesting opinion as to whether sand and gravel (imported or locally extracted) are subject to the 3% excise tax and/or the 10% value-added tax (VAT). In reply, please be informed that Section 151(b)(4) of the Tax Code defines "quarry resources" as follows: "Sec. 151. Mineral Products . (a) Rates of Tax . . . . "(b) For purposes of this Section, the term . . . "(4) Quarry resources" shall mean any common stone or other common mineral substances as the Director of the Bureau of Mines and Geo-Sciences may declare to be quarry resources such as but not restricted to marl, marble, granite, volcanic cinders, basalt, tuff and rock phosphate: Provided, that they contain no metals or other valuable minerals in economically workable quantities." Said definition is contained in then Section 257(d) of the Tax Code, as amended by Batas Pambansa Blg. 84. Moreover, Section 2(h) of Revenue Regulations No. 13-80 dated November 7, 1980 or the Regulations Governing the Taxation of Minerals and Mineral Products implementing B.P. Blg. 84 contains the foregoing definition and also provides, in the second paragraph thereof, that "quarry resources include sand and gravel whether removed from river beds or quarried." Such being the case, it can safely be concluded that quarry resources as defined in the above-quoted provisions of Section 151(b)(4) include sand and gravel, in which case, said products are subject to the 3% excise tax based on the actual market value of the annual gross output thereof at the time of removal, in the case of those locally extracted or produced; or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax in the case of importation, pursuant to Section 151(a)(2) of the Tax Code, as amended by Executive Order No. 273. In addition, said products are subject to the 10% VAT pursuant to Section 126 of the same Code. Very truly yours, (SGD.) JOSE U. ONG Commissioner