Imported Polyethylene Synthetic Resins to be Used Exclusively as Raw Materials in the Manufacture of Bags is Subject 10% Advance Sales Tax

July 20, 1987 BIR RULING NO. 214-87 162 (c) 134-87 214-87 Gentlemen : This refers to your letter dated July 10, 1987 requesting a ruling that your importation of 49.5 MT linear Low Density Polyethylene Synthetic Resins and 66 MT High Density Polyethylene Synthetic Resins to be used exclusively as raw materials in the manufacture of container bags for fertilizer shall be subject only to 10% advance sales tax. In reply, please be informed that under Section 163(2) of the Tax Code as amended by Executive Order No. 36, any article subject to the original sales tax, when used as a raw material in the manufacture or preparation of essential articles, shall, subject to certain conditions be taxed at the same rate as the finished products except when such materials are taxed at a lower rate. This Office has already ruled that containers are raw materials of the manufactured articles. (BIR Ruling No. 66-027 dated June 29, 1966). Accordingly, since the finished packaging bags will be used as raw materials in the packaging of fertilizer which is classified as an essential article, your importation of the aforesaid 49.5 MT Linear Low Density Polyethylene Synthetic Resins and 66 MT High Density Polyethylene Synthetic Resins which you manufacture into container bags shall be subject to 10% advance sales tax provided that as the importer/manufacturer, you will certify to this Bureau that your aforesaid importation as well as those purchased locally shall be used exclusively in the manufacture of said packaging materials. If you fail to issue the certification, you will be subject to the 20% advance sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner