Revocation of BIR Ruling No. 260-88

June 25, 1990 BIR RULING NO. 121-90 100 (d) 166-88 121-90 Gentlemen : This refers to BIR Ruling No. 260-88 dated June 23, 1988 granting your request for reconsideration of BIR Ruling Nos. 156-88 and 166-88 dated April 19, 1988 and April 28, 1988, respectively, reading: cdta "In reply, please be informed that . . . . The 10% value-added tax on the alcohol shall be based on the gross selling price, excluding the VAT. The excise tax or the specific tax, if any, on said alcohol shall form part of the gross selling price. [Sec. 100(d), Tax Code, as amended] Accordingly, even if the withdrawal of the alcohol is under bond, i.e., without the prepayment of the specific tax, still in the computation of the 10% value-added tax due thereon, the gross selling price shall include the specific tax. This is so because under the joint bond filed by the distiller and the rectifier, the latter shall pay the specific tax due on the rectified alcohol. (Sec. 134, Tax Code)" It appears that the aforesaid BIR Ruling No. 260-88 is based on the fact that the gross selling price off under bond alcohol sold by the distiller to you (rectifier-permittee) does not include excise tax because the condition of the bond provides that you will pay the excise tax on your finished product, which is rectified alcohol; and that the actual payment of the excise tax on under bond alcohol takes place only upon your transfer of the rectified alcohol from the rectifier's tank to the compounder's tank under BIR supervision. In connection therewith, please be informed that under Section 2(k) of Revenue Regulation No. 5-87, "gross selling price" for VAT is defined as follows: "Sec. 2. . . . (k) "Gross selling price" means the total amount of money or its equivalent which the purchaser pays or obligated to pay to the seller in consideration of the sale, barter or exchange of the goods, excluding the value-added tax. The excise tax, if any, on such goods shall form part of the gross selling price . It shall include other charges such as packaging, delivery and insurance, even if these amounts are separately billed or invoiced." The portion of the above quoted provision which states that "the excise tax, if any, on such goods shall form part of the gross selling price," implies that the goods upon which the VAT is being levied are subject to the excise tax. Accordingly, this applies to the under bond alcohol in question even if the same is withdrawn from the place of production without the pre-payment of the excise tax. Said alcohol is still subject to excise tax although under Section 134 of the Tax Code, the tax is payable by the rectifier on the finished product. BIR Ruling No. 260-88 is, therefore, revoked, in which case, BIR Rulings Nos. 156-88 and 166-88 are hereby revived and maintained. Very truly yours, (SGD.) JOSE U. ONG Commissioner