Coverage of the Term "Steel Bars" and Tax Applicable to Wire Rods or Bars in Coils and Billets

August 1, 1986 BIR RULING NO. 139-86 165-A 3-j 000-00 139-86 Gentlemen : This refers to your letters dated January 27 and 29, 1986 requesting (1) confirmation of your opinion to the effect that the term "steel bars" under Section 165(A)(3) of the Tax Code, as amended by P.D. No. 2006, encompasses all kinds of steel bar products; and (2) clarification as to the tax applicable to wire rods or bars in coils and billets, the raw materials used in the manufacture of nails and steel bars. In reply, please be informed as follows: 1. Your opinion that the term "steel bars" covers all kinds of steel bar products is confirmed. Accordingly, the following construction materials: concrete bars for reinforcements, structural bars such as angle bars, square bars, H-beams, Channels, I-beams and flat bars fall within the contemplation of the term "steel bars" subject to 10% sales tax based on the gross selling price, pursuant to Section 165(A)(3)(j) of the Tax Code, as amended by P.D. No. 2031. 2. Under Section 6 of Revenue Regulations No. 5-86 amending Revenue Regulations No. 2-86 which reads: "Sec. 6. Tax Rates Applicable to Materials , Parts (and) Accessories and Breeding Stocks . In general, materials, parts and accessories of articles subject to sales tax on original sale shall be subject to tax at the same rate as the finished articles: Provided, that materials, parts and accessories which are of common or general use such as copper tubes, metal sheets, screws, bolt nuts, wires shall be taxed as ordinary articles under Section 165(A)(2) of the Tax Code; Provided further , that materials, parts and accessories of articles classified as essential articles which are taxable at 10% under Section 165(A)(3) . . . shall be taxed at the same rate as the finished product, only if such materials, parts, (and) accessories . . . can only be used in the manufacture or production of an article taxable at 10% . . .". (Emphasis ours) wire rods or bars in coils and billets used in the manufacture of nails and steel bars may only be subject to the same rate of sales tax if such materials can only be used in the manufacture or production of articles taxable at 10%. If such materials are of common or general use so that they can also be used in the manufacture of articles subject to tax at 20% or 30%, then the rate of tax shall be 20%. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner