Rate of Sales Tax Applicable on Crown Caps Purchased as Accessory in the Manufacture of Softdrinks

August 18, 1986 BIR RULING NO. 151-86 165 (A) (3) 182-85 151-86 Gentlemen : This refers to your letter dated April 25, 1986 requesting in effect a ruling as to the correct rate of sales tax applicable on crown caps you purchased to be used as part or accessory in the manufacture of softdrinks. It is represented that your firm is engaged in the business of manufacturing softdrinks; that you purchase crown caps from tin plate manufacturer who charges you sales tax of 20%; and that the crown caps are used exclusively as accessory or part in the manufacture of softdrinks. In reply, please be informed that materials, parts and accessories of articles classified as essential articles which are taxable at 10% under Section 165(A)(3) of the Tax Code, shall be taxed at the same rate as the finished product, only if such materials, parts and accessories can be used exclusively in the manufacture or production of an article taxable at 10% rate. (Sec. 6, Revenue Regulations No. 5-86) Accordingly, the softdrink crown caps which are used exclusively in the manufacture of softdrinks are subject to the 10% sales tax. In other words, the manufacturers of said softdrink crown caps which are used exclusively as cover of the container of softdrinks are subject to 10% sales tax on the original sale thereof. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner