Non-Affixture of BIR Strip Stamps or Secondary Labels on Locally Manufactured Compounded Liquors

May 26, 1988 BIR RULING NO. 215-88 156 122-88 215-88 Gentlemen : This refers to your letter dated April 29, 1988 requesting a ruling that your locally manufactured compounded liquors, i.e., bottled whisky, brandy, rum, gin, vodka and other brands of intoxicating beverages, are no longer subject to the requirement of affixture of BIR strip stamps or secondary labels. It is represented that you are a rectifier-compounder and a grantee of Rectifier's Permit designated as Assessment Nos. A-1-3, (Manila) and A-1-30 (Cebu); and Compounder's Permit designated as Assessment Nos. A-1-3A (Manila) and A-1-12A (Cebu); that you are engaged in the manufacture of alcoholic beverages such as whisky, brandy, rum, gin, vodka and other similar products; that as a rectifier-permittee, you are allowed to purchase alcohol from the distiller without the prepayment of the specific tax provided a joint bond is filed conditioned upon the payment by you of the excise tax due on the finished product; that as a rectifier, your finished product is rectified alcohol; and that the specific tax due thereon is paid by you as a rectifier-permittee upon the transfer of alcohol from your rectifier's tank to your compounder's tank. In reply, please be informed that your request is hereby granted. From the moment of delivery of the bonded alcohol to your rectifier's bonded tank and throughout the rectification process until the rectified alcohol (the finished product in the rectification or purification process) is transferred to your compounder's tank, the same is subject to monitoring and supervision by the Specific Tax Service of this Bureau. (BIR Ruling No. 122-88) Before said transfer, the specific tax due on the rectified alcohol must be paid. Compounders, in the manufacture of any intoxicating beverages whatever, are not allowed to make use of spirits on which the specific tax has not been previously paid. (Sec. 170, Tax Code) Since the specific tax on the rectified alcohol transferred to the compounder's tank is already paid, further monitoring of its handling by you as a compounder-permittee is no longer necessary. Beginning January 1, 1988, the date of effectivity of Executive Order No. 273, or the VAT Law, compounded liquors are no longer subject to the excise ( ad valorem ) tax but to the 10% value-added tax, pursuant to Section 100 of the Tax Code, as amended by Executive Order No. 273. Accordingly, the affixture of BIR strip stamps and secondary labels is no longer required on said compounded liquors, pursuant to Section 156 of the same Code. (BIR Ruling No. 05-88) Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner