Excise Tax on Imported Cigarettes, Due and Payable to Bureau of Customs Before Withdrawal from Customhouse

July 13, 1998 BIR RULING NO. 112-98 131 RR#16-97-000-00-112-98 Sycip Gorres Velayo & Co. 6760 Ayala Avenue Makati City Attention: Atty . E . C . Alcantara Tax Division Gentlemen: This refers to your letter dated March 23, 1998 requesting on behalf of your client, British American Tobacco (BAT), for our opinion on the following: (1) that excise tax on imported cigarettes shall be due and payable to the Bureau of Customs (BOC) before the cigarettes are withdrawn from the customhouse; and (2) that the internal revenue stamps to be affixed on each pack of imported cigarette shall be issued by the BIR to the importer upon the approval of the Permit to Import as required under Revenue Regulations No. 1-97, as amended by Revenue Regulations No. 16-97. It is represented that BAT is a corporation duly organized and existing under and by virtue of the laws of United Kingdom (UK); that it has a representative office in the Philippines at 25c Citibank Tower, 8741 Paseo de Roxas Street, Makati City, which oversees the marketing of its cigarette brand, Lucky Strike; and that the UK office exports into the Philippines through Sterling Tobacco as importer and distributes said cigarettes through JAKA Distribution, Inc. In reply, please be informed that Section 131 (A) of the Tax Code of 1997 provides, viz: "SEC. 131. Payment of Excise Taxes on Imported Articles . (A) Persons Liable . Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customshouse, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. . . ." In relation to the above, Section 8.2 of Revenue Regulations No. 1-97, as amended by Revenue Regulations No. 16-97, states that: "SEC. 8.2 For Imported Cigars and Cigarettes . The excise tax on imported cigars and cigarettes shall be paid by the importer to the Customs Collector prior to the release of such goods from customs custody. . . ." Accordingly, the excise tax due on imported cigarettes shall be due and payable to the BOC before the cigarettes are withdrawn from the customhouse. With regard to your second query, please be informed that under Section 7 of Revenue Regulations No. 1-97, the importer of cigarettes must first secure a Permit to Import from the Revenue District Office (RDO) where its Head Office is located. In view of the new rule requiring the filing of the excise tax return and payment of the tax due with the BOC, prior to the release of the goods from customs custody as provided under Section 131 of the Tax Code of 1997, the internal revenue strip stamps to be affixed to the cigarettes intended for shipment to the Philippines shall be issued to the importer of cigarettes provided that the Permit to Import the cigarettes has been secured from the RDO having jurisdiction over the principal place of business of BAT. Accordingly, the internal revenue stamps to be affixed on each pack of imported cigarette shall be issued by the BIR to the importer upon the approval of the Permit to Import as required under Revenue Regulations No. 1-97, as amended by Revenue Regulations No. 16-97. LLpr This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue