Excise (ad valorem) Tax Imposed on Solvex 34

March 17, 1988 BIR RULING NO. 106-88 103 (d) 000-00 106-88 Gentlemen : This refers to your letter dated January 12, 1988 requesting confirmation of your opinion that your product commercially known as Solvex 34 is not subject to the value-added tax (VAT). It is represented that you are a duly registered corporation engaged in the production and marketing of liquid zerographic toners and dispersants called Solvex 34; that Solvex 34 is a special formula that your company produces from naphtha for bigger volume production requirements and solvent for smaller volume requirements; but that since the solvents are now subject to the value-added tax of 10% you plan to dispense with the use of solvents as raw materials in the production of Solvex 34 and as substitute you intend to use petron gas as raw materials for Solvex 34. Petron gaas is the commercial trademark for a product commonly known as kerosene. It is already subject to excise tax upon its removal from the place of production. In its original state, it has a typical kerosene odor which, besides being carcinogenic, contains properties that attack synthetic rubber and other plastic materials, making it unsuitable as a liquid dispersant for xerographic machines. By subjecting petron gaas to a filtration process the odor from the substance is removed and the resulting product after filtration is called Solvex 34. Solvex 34 is commonly used as xerographic toners and dispersants of photocopying machines. In reply, please be informed that based on the foregoing representations, Solvex 34 remains a petroleum product which is similar in chemical composition to the original petroleum products commercially known as petron gaas or otherwise known as kerosene; hence, it is subject to the excise ( ad valorem ) tax imposed under Section 145(b) of the Tax Code, as amended by Executive Order No. 273. Such being the case, Solvex 34 is exempt from the value-added tax pursuant to Section 103(d) of the same Code. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner