BIR Ruling No. 132-84

July 31, 1984 BIR RULING NO. 132-84 196 (g)-145-81-132-84 Gentlemen : This refers to your letter dated May 20, 1083, requesting reconsideration of our Authority to Release Imported Goods No. NARD 83-007729 dated May 19, 1983 subjecting your importation of 8,481.11 kgs. of nylon yarns under Import Entry No. 222832 of the Bureau of Customs to 25% advance sales tax with 25% mark-up. It is represented that you have in the past imported yarns for carpet manufacturing, both woolen and synthetic which have been classified under essential or ordinary goods subject to 10% sales tax and 25% mark-up; that carpet yarns, this shipment included, are merely raw materials and cannot be sold or used as an end-product in their unprocessed form; and that these yarns can only be used in the manufacture of carpet and cannot be used in textile as the yarns are of a coarser variety. In reply, please be informed that the term "textile" which originally applies only to woven fabric, is not a general term for fibers, yarns and other materials that can be made into fabrics and for fabrics produced by interlacing or other construction method. Thus thread, cords, ropes, braid, lace, embroidery, nets and fabrics made by weaving, knitting, bending, felting, or buffing are considered textiles . (18 Ency. Britannica 170) Carpet is defined as a heavy woven or felted fabric usually made of wool, as a floor covering made in breadths to be sewed together and tacked to the floor. (Websters' Third New International Dictionary) Accordingly, carpet comes within the term "textile" under Section 196(g) of the Tax Code, as amended. Considering that your said importation of nylon yarns will be used as raw materials, part or accessory of carpet, the same shall be subject to the 25% advance sales tax based on the landed cost thereof plus 25% mark-up imposed by Section 196(g) in relation to Section 193(b) of the same Code, as amended by Executive Order No. 883. In view thereof, your request for reconsideration cannot be granted. Such being the case, your claim for tax credit in the amount of P113,857.32 as alleged overpayment of the advance sales tax on the above importation has to be, as it is hereby denied. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner