Imported Nylon Filament or Polyester Yarn Used Solely in the Manufacture of Exportable Fishing Nets is Subject to 20% Advance Sales Tax

August 7, 1987 BIR RULING NO. 232-87 163 (4) 204-85 232-87 Gentlemen : This refers to your letter dated January 24, 1987, in effect, requesting a ruling on the correct rate of advance sales tax to be paid on your importation of nylon filament and polyester yarn to be used exclusively in the manufacture of fishing nets. It is represented that nylon filament or polyester yarn is used exclusively in the manufacture of fishing nets which are intended for export; that it cannot be used as raw material or accessory of nylon or synthetic fabric which is taxable under Section 163 (1)(l) of the Tax Code; and that the Director of Inorganic Industries Department of the Board of Investments has certified that there are no known substitutes for nylon filament or polyester yarn in the manufacture of exportable fishing nets. In reply, please be informed that "nylon or other synthetic and/or chemical fabric not intended for clothing" which are taxed under subsection (l) of Section 163(1) of the Tax Code are made by weaving, knitting, bonding, felting or tufting (Vol. 18, page 170, Encyclopedia Britannica, BIR Ruling No. 204-85). Accordingly, the nylon filament or polyester yarn in question being continuous strands and not having undergone any of said processes are not taxed under said subsection (l) covering non-essential articles. Neither are said imported articles covered by subsections 2 and 3 of Section 163 dealing on essential articles and agricultural products. Such being the case, and since the said imported nylon filament or polyester yarn is used solely in the manufacture of exportable fishing nets, the same is subject to 20% advance sales tax pursuant to Section 163 (4) in relation to Section 162 (c), both of the Tax Code, as amended. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner