Imported Liquid Caustic Soda, Soda Ash Dense and Yellow Phosphorous to be Used as Raw Materials in the Manufacture of Essential Articles is Subject only to 10% Advance Sales Tax

July 27, 1987 BIR RULING NO. 218-87 162 (c) 163 (2) 246-86 218-87 Gentlemen : This refers to your letter dated May 25, 1987 stating that you are a BOI registered enterprise Under RA 5186, PD 1789 and RA 6135; that you are engaged in the manufacture of sodium tripolyphosphate (STPP) and tetrasodium pyrophosphate (TSPP) under RA 5186; that STPP and TSPP are the active ingredients used exclusively in the production of detergents; that among your principal customers are Colgate Palmolive Phils., Inc., Philippine Refining Co., Procter and Gamble PMC, Peerless Products Manufacturing Corporation, Royal Industrial & Development Corp., Universal Robina Corp., Sun Moon Stars International Corp. and Essential Manufacturing; that among the materials used in the production of STPP and TSPP are imported liquid caustic soda, soda ash dense and locally manufactured technical grade phosphoric acid; that in the manufacture of technical grade phosphoric acid, you also import yellow phosphorous. You now request this Office for a ruling that your importation of caustic soda, soda ash dense and yellow phosphorous be subject only to 10% advance sales tax. In support of your request, you submitted to this Office certifications to the effect that liquid caustic soda and soda ash dense are the raw materials used in the production of STPP and TSPP which are in turn used in the preparation of detergents while yellow phosphorous is used in the production of phosphoric acid to be used in the preparation of detergents, processed food products beverages and cooking oil. You also submitted certifications issued by some of your customers/purchasers namely: Colgate Palmolive Phil., Inc., Philippine Refining, Co., Inc. and Coca-Cola Export Corporation to the effect that the articles purchased from you are exclusively used by them in the manufacture or preparation of essential articles. 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. Accordingly, and in line with the certifications you and your customers/purchasers submitted to this Office, your importation of liquid caustic soda, soda ash dense and yellow phosphorous which are exclusively used as raw materials in the preparation or manufacture of essential articles is subject only to 10% advance sales tax, pursuant to Section 162(c) in relation to Section 163(2) of the Tax Code as amended. This will authorize the Bureau of Customs to release your aforementioned importation upon payment of the corresponding 10% advance sales tax. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner