Tax Imposed on Local Products Used as Raw Materials in the Manufacture of Food Packages, Medicine Packs, Crown Caps, Cannisters and Detergents

May 4, 1987 BIR RULING NO. 121-87 162 (c) 163 (2) 165-86 121-87 Gentlemen : This refers to your letter dated March 17, 1987 stating that your firm is engaged in the manufacture of printing inks such as flexographic inks, gravure inks, coatings and varnishes; and that the above finished products are used by your various customers as raw materials in the manufacture of food packages, medicine packs, crown caps, cannisters and detergents. Based on the foregoing, you now request our opinion if said raw materials are subject to 10% sales tax; and whether or not imported raw materials such as chemical pigments and synthetic resins which are components of said products are subject to 10% customs duties. In reply, please be informed that your aforementioned local products which are used as raw materials in the manufacture of food packages, medicine packs, crown caps, cannisters and detergents are also subject to the same rate of 10% under Section 163(2) of the Tax Code, as amended by Executive Order No. 36 provided that the purchasers thereof, shall certify to you that the same shall be used exclusively in the manufacture of food packages, medicine packs, crown caps cannisters and detergents. (Section 6.II, Revenue Regulations No. 11-86). If the purchasers fail to issue the certification, you will be subject to 20% sales tax. (BIR Ruling No. 165-86). On the question as to whether or not your imported raw materials consisting of chemical pigments and synthetic resins are subject to 10% customs duties, the same is under the jurisdiction of the Bureau of Customs. However, it may be stated that said articles which are likewise, used as raw materials in the manufacture of said food packages, medicine packs, crown caps, cannisters and detergents are subject to 10% advance sales tax based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duties and other charges, pursuant to Section 162(c) in relation to Section 163(2) of the Tax Code, as amended by Executive Order No. 136 which took effect August 1, 1986, provided you certify to this Bureau that said chemical pigments and synthetic resins shall be used exclusively in the manufacture of the products aforesaid. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner