Non-exemption of the Processed Ramie from Japan

March 14, 1958 BIR RULING NO. 208-58 7th Indorsement Respectfully returned to the Honorable, the Under-Secretary of Finance, Manila. From an investigation conducted by this Office, it appears that the Agricultural Credit and Cooperative Financing Administration (ACCFA) purchases raw ramie from the producers thereof, ships them to Japan for the purpose of processing, and thereafter the processed ramie (textiles) are shipped back to the Philippines. The textiles are deposited in bonded warehouses of the Bureau of Customs, and from there are resold to the producers by the ACCFA. These producers-purchasers, or some of them, in turn have the textiles embroidered before selling them. Under the foregoing circumstances, the request of the ACCFA that the processed ramie coming from Japan, intended as raw materials in the manufacture of embroidered ramie for export abroad, be exempt from the advance sales tax cannot be granted, in view of the express provision of Section 183(b) of the Tax Code that for an imported article to be exempt from the tax prescribed therein, such article must be for the use of the importer himself in the manufacture or preparation of articles for consignment abroad. However, pursuant to Section 188(e) of the same Code, as amended, the exportation of the embroidered ramie, if done by the manufacturer himself, is exempt from the 7% sales tax otherwise due thereon. (SGD.) JOSE ARAAS Commissioner of Internal Revenue