BIR Ruling No. 120-65

October 25, 1965 BIR RULING NO. 120-65 Mr. Oscar G. Tuason Managing Partner Jose V. Limgenco & Co. M a n i l a S i r : This is with reference to your letter dated August 9, 1965, stating as follows: "Jose V. Limgenco & Co., a duly registered partnership, sells lubricating oil which it has reclaimed from discarded used oil, using the following process: "In essence, to reclaim oil is to remove the impurities from the oil. In order to easily remove these impurities, materials such as clay, acid, lime and/or lye are mixed with the used oil. Heat is likewise applied to facilitate the precipitation of the impurities into bigger solids. "It should be noted that the materials added to the oil do not, in any manner, react with, nor become part of the mineral oil reclaimed. Then the mixture is filtered to physically separate the impurities from the oil. "The oil thus reclaimed usually lacks the desired viscosity and color of conventional lubricating oils. In order to be able to use the reclaimed oil for any specific lubricating purpose, new oil is added to attain the desired viscosity and color. "Please note also that specific taxes on both the used oil and the new oil added have previously been paid by the major oil companies (Esso, Shell, Caltex, Mobiloil, etc.). "In this connection, we wish to inquire whether the sale of such lubricating (reclaimed) oil is subject to the 7% sales tax under Section 186 of the Revised Internal Revenue Code or the additional specific tax under Section 142(b). In reply thereto, I have the honor to inform you that the reclaimed oil is not subject to the sales tax, but to the specific tax under Section 142(b) of the Tax Code. prcd Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue