Taxability of Importation of Hoki Fish Blocks Which are Not Considered as Marine Products in Its Original Form

July 22, 1992 BIR RULING NO. 210-92 103 (b) 000-00 210-92 Genosi, Inc. 6/F Corinthian Plaza 121 Paseo de Roxas Makati, Metro Manila Attention: Mr . Gilbert A . Romero Gentlemen : This refers to your letter dated 03 June, 1992 requesting for exemption from value-added tax your importation of Hoki Fish blocks from New Zealand, through Perseco Asia-Pacific, Hong Kong, under Bill of Lading No. LYKMA 400 dated May 22, 1992 and Invoice No. 939-000131 dated May 8, 1992. cdti It appears from the Hoki, Fish Product Information Manual submitted to this Office that Hoki Fish from New Zealand is available in a wide range of product forms. The principal types and grades are: Fillets which are individually layer packed or wrapped by hand and quick frozen in 10 kg. shatter packs; Loins and Specialty Cuts designed specifically for food service use; and Added Value Products which include fish sticks, nuggets, smoked fillets and portions, oven-ready dinners and surimi based formulations such as squid. In reply, please be informed that the "simple processes of preparation or preservation for the market" could be illustrated by the smoking of milkfish, locally called "tinapa" and the salting of fish called "daing". On the other hand, the processing, of the Hoki fish product involves chilling/freezing, filleting, skinning, defat, checking for blood spot, bone or other defects and phosphate application to prevent dehydration or "freezer-burn". There is a physical transformation from fish to fillet. Then, these are reduced to marketable shape for sale or distribution. There is manufacturing involved in these processes, as defined in the former section 194(x) of Tax Code; hence, the Hoki fish product should be subject to VAT, inasmuch as it could not legally be considered as marine food product "in its original state". cdtech Very truly yours, JOSE U. ONG Commissioner of Internal Revenue