Imported Jute Bags Used by Bogo-Medellin Milling Co., Inc.

March 3, 1959 BIR RULING NO. 116-59 Bogo-Modellin Milling Co., Inc. c/o Theo H. Davies & Co., Far East, Ltd. Bonifacio Drive, Manila Attention : Mr . H . C . Rivilla Supervisor, Purchasing Dept . Gentlemen : This is with reference to your letter dated February 18, 1959, requesting this Office to advise the Collector of Customs of Cebu City that the 43,000, out of the 60,000 pieces of imported jute bags used by Bogo-Modellin Milling Co., Inc. as containers of domestic sugar, sold locally, be exempted from the payment of the sales and compensating taxes. As presented, the facts are as follows: The Bogo-Modellin Milling Co., Inc., imported 75 bales containing 60,000 pieces of jute bags from Calcutta, India; shipped thru M/S "Bawaan", B/L No. 16; arrived at Manila on November 2, 1955 and transhipped to Cebu on board M/S "Bais" where it was unloaded. By virtue of the "Authority to Release Imported Goods" dated November 3, 1955, issued by this bureau, the said shipment was released to the consignee by the Collector of Customs of Cebu City, exempt from the sales or compensating tax imposed in Sections 183(b) and 190, respectively, of the Tax Code, on the premise or condition that " the said shipment will be used exclusively as container of manufactured sugar for exportation abroad ". However, the Bogo-Modellin Milling Co., Inc. failed or was not able to re-export 43,000 pieces of jute bags out of the above shipment, but instead used the same as containers of domestic sugar which it sold for local consumption. Inasmuch as the 43,900 pieces of jute bags were not actually exported, they were necessarily subject to the advance sales tax. The argument that the company is exempt from the provisions of Section 186 by virtue of Section 188(d) of the Tax Code because it already paid the 2% percentage tax imposed in Section 189 of the same Code is erroneous. Jute bags are not subject to the percentage tax imposed under Section 189 but under Section 186 in relation to Section 183(b) of the Tax Code. aisadc In view of the foregoing, you are hereby requested to pay the advance sales tax demanded from you by the Collector of Customs, Cebu City. Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue