Rate of Advance Sales Tax to Be Imposed on Importation of Spices and Dehydrated Vegetables

July 22, 1986 BIR RULING NO. 118-86 165 (A) (4) 039-86 118-86 Gentlemen : This refers to your letter dated May 22 and 26, 1986 requesting a ruling as to the correct rate of advance sales tax to be imposed on your importation of the following articles: S P I C E S 1. Tarragon Leaves 12. Marjoram Leaves 2. Rosemary Leaves 13. Cinnamon (bark) 3. Sage Leaves 14. Basil Leaves 4. Oregano Leaves 15. Coriander Seed 5. Savory Leaves 16. Cumin Seed 6. White Pepper 17. Anise Seed 7. Sesame Seeds 18. Allspice 8. Fennel Seed 19. Nutmeg 9. Cloves 20. Laurel or Bay Leaves 10. Celery Seed 21. Caraway 11. Red Pepper 22. Thyme Leaves 23. Tea Leaves Dust DEHYDRATED VEGETABLES 1. Dehydrated Onions 5. Dehydrated Red Pepper 2. Dehydrated Garlic 6. Dehydrated Parsley 3. Dehydrated Cabbage 7. Dehydrated Mushroom 4. Dehydrated Celery You also want to know your tax liability when you repack the aforesaid imported articles and thereafter sell them. In reply, please be informed that the above-mentioned imported spices and dehydrated vegetables are classified as agricultural products subject to 0% advance sales tax pursuant to Section 162(c) of the Tax Code as amended by P.D. No. 2031 in relation to Section 165(A)(4) of the Tax Code, as amended by P.D. No. 2006. In other words, your imported spices and dehydrated vegetables are not subject to advance sales tax. Likewise, on your original sale thereof, after having them repacked, you are not subject to the sales tax under Section 165(A)(4) of the same Code. Moreover, with regard to the whole black pepper which your purchase from traders in Divisoria or from provinces and from the farmers in Batangas, Davao and Cavite; clean of dirt particles, leaves and branches or stems; grind in grinding machines into the desired coarseness or fineness; then pack into glass bottles, tin cans or bags for resale, please be informed that since black pepper is also an agricultural product, your sale of ground black pepper is considered a subsequent sale of agricultural product in its original state and, therefore, not subject to the 1.5% sales tax. (Sec. 165(B), Tax Code as amended by P.D. No. 2006) However, you shall be subject to the C-13 graduated annual fixed tax imposed by Section 161(2) of the Tax Code. (Revenue Memorandum Circular No. 2-86) cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner