Clarification of the Ruling dated January 19, 1960

April 28, 1960 BIR RULING NO. 219-60 Anaco Trading 213 F. Gonzales St. Cebu City Gentlemen : In reply to your letter dated March 31, 1960, wherein you requested for a clarification of our ruling dated January 19, 1960, I have the honor to inform you as follows: In CTA Case No. 182 entitled La Tondea vs. Collector of Internal Revenue, which was decided on December 16, 1957, the Court of Tax Appeals held that, rubbing alcohol is a medicinal preparation the chief ingredient of which is distilled spirit and hence subject to specific tax. In the permit issued to you by this Office on October 9, 1957, you were allowed to procure specifically denatured alcohol free of specific tax, in accordance with the following formula: "To every 48 gauge liters of ethyl alcohol not less than 180 proof there shall be added 52 gauge liters of isoprophyl". to be used by you in the manufacture of rubbing alcohol in your establishment (C-1-(S)-35 located at Mabiling, Cebu City. In view of the aforesaid decision of the Court of Tax Appeals, however, you can no longer purchase denatured alcohol tax-free for use in your manufacture of rubbing alcohol. Inasmuch as the rubbing alcohol manufactured by you is not subject to the sales tax, but to the specific tax, the question of whether or not the cost of raw materials, containers and labels is deductible from the gross selling price of the rubbing alcohol does not come in anymore. prcd Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue