BIR Ruling No. 135-65

December 20, 1965 BIR RULING NO. 135-65 Mr. Bienvenido G. Escasinas Certified Public Accountant P. O. Box 151 Cebu City S i r : In reply to your letter dated August 28, 1965, I have the honor to inform you as follows: The extraction of oil from the corn germ either by mechanical or chemical process constitutes manufacturing. The oil thus extracted is subject to 7% sales tax under Section 186 of the Tax Code and not the 2% tax. The cost of the corn germ is not deductible from the gross selling price of the oil extracted therefrom because corn germ as by-product of corn milled is neither subject to the 7% sales tax now nor to the 2% tax, corn mills having been removed from the purview of Section 189 of the Tax Code by R.A. No. 3704. Under the law, only the cost of raw materials which have been previously subjected to the same rate of tax as the finished product or to the 2% tax under Section 189 of the Tax Code can be deducted from the gross sales of the finished product. cdll Very truly yours, (SGD.) MISAEL P. VERA Acting Commissioner of Internal Revenue