Ordinary Ice Considered as Processed Food Products for Human Consumption is Subject to 10% Sales Tax

July 1, 1987 BIR RULING NO. 186-87 163 (2) (a) 000-00 186-87 S i r : This refers to your letter dated September 11, 1986, for and in behalf of "RACSTILL ICE", requesting, in effect, confirmation of your opinion that "ordinary ice" is an agricultural product and, therefore, subject to the 0% sales tax. It is represented that the sole material used in the making of ice is plain, simple, undiluted and unadulterated water (H20) pumped up directly from under the ground (deepwell) and rain water, and that in the process, water is just transformed into solid form by freezing. The solid form is called ordinary ice. To support your contention that ordinary ice is subject to the 0% sales tax, you cited Section 163(3) of the Tax Code, as amended by Executive Order No. 36 which provides: "(3) Zero per cent (0%) on the following agricultural products: "(a) Agricultural food products including ordinary salt and all kinds of fish and its by-product in their original state. "(b) Agricultural non-food products in their original state. "Agricultural products shall still be considered in their original state even if they have undergone the simple processes of preservation such as freezing, drying, salting, smoking or stripping. Rice and corn shall be considered in their original state even when milled." The above-quoted provision imposes the 0% sales tax on "agricultural products". The term "agricultural products" is not limited to vegetable substance directly resulting from the tillage of the soil but includes domestic and domesticated animals, animal products, and fish grown in ponds. (Molina vs. Rafferty, 38 Phil. 167). The agricultural food products include ordinary salt and all kinds of fish and its by-products. Accordingly, water which is transformed into ordinary ice could hardly be considered agricultural product. Assuming for the sake of argument that the process of making salt is not different from the processing of making ordinary ice, the fact that for sales tax purposes, ordinary salt is included within the term "agricultural product" does not justify the inclusion of ordinary ice within the said term. This is so because ordinary salt is not ordinary ice. However, this Office is of the opinion, and so holds, that the aforesaid ordinary ice is considered processed food products for human consumption; hence, subject to the 10% sales tax, pursuant to Section 163 (2)(a) of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner