25% Compensating Tax — Textiles

July 31, 1981 BIR RULING NO. 145-81 196-g 13-80 145-81 Pulp and Paper Mfg., Association, Inc. Room 704, Katigbak Bldg. A. Mabini cor. T.M. Kalaw Sts. Ermita, Metro Manila Attention: Mr . Francisco P . Monge President Gentlemen : This refers to your letter dated April 4, 1981 requesting that "press and dryer felts" be classified as articles falling under Section 199, instead of Section 196(g) of the Tax Code, as amended. You claim that since the foregoing imported articles are for the exclusive use of your paper machine without which it would be impossible to produce paper, said articles should therefore be subject only to 10% compensating tax as ordinary articles pursuant to Section 199, as amended by Presidential Decree No. 1358 and Section 204, as amended by Presidential Decree No. 1457. In reply, please be informed that the term "felt" is defined as a "blanket of absorbent material (as wool) between pairs of which wet sheets of hand made paper are pressed in paper making; or a firm woven cloth of wool or cotton heavily napped and shrunk to form a smooth resilient texture and used widely by manufacturers especially of printing presses, pianos and textiles." (Webster's Third New International Dictionary). Under Section 196(g) of the Tax Code, textiles wholly or in chief value of silk, wool, nylon or other synthetic and/or chemical fabrics except those primarily intended for clothing are subject to 25% tax. Inasmuch as "press and dryer felts" imported by your company falls within the category of textiles under the aforesaid section, the same are subject to 25% compensating tax based on landed cost thereof pursuant to Section 204 in relation to Section 196(g) of the Tax Code. cdti Very truly yours, RUBEN B. ANCHETA Acting Commissioner