Imported Aluminum Beer Cans Used in Beer Production Exempt from Compensating and/or Advance Sales Tax

November 17, 1986 BIR RULING NO. 248-86 162 (c) 000-00 248-86 Gentlemen : This refers to your letter dated November 11, 1986 requesting permission to withdraw from Customs House, Manila, free from compensating tax and/or advance sales tax, your importation consisting of the following: cd "Item : 4 x 4 contrs. 2-pc. Aluminum Beer Cans with easy open ends "Date of Arrival : November 1, 1986 "Vessel : Neptune Agate "B/L No. : HKMNL 121 "User : Polo Brewery'" In reply, please be informed that under Section 162(c) of the Tax Code, as amended, reading: "Sec. 162. Returns and Payment of Sales and Other Taxes . xxx xxx xxx (c) Imported articles . When the articles are imported, the percentage taxes established in Section 163 of this Code shall be paid in advance by the importer prior to the release of such articles from customs custody, based on the total value used by the Bureau of Customs in determining tariff and customs duties including customs duties and other charges. On the original sale, barter, exchange or transfer of such imported articles by importer himself, there shall be levied, assessed and collected a sales tax at the same rate on the gross value in money of the articles so sold, bartered, exchanged or transferred. Provided, that the tax paid in advance by the importer shall be credited against the sales tax due on the original sale. This tax required to be paid herein shall not apply to articles to be used by the importer himself in the manufacture or preparation of articles subject to excise tax (except automobiles) under Title IV of this Code . Provided, however , That where the National Economic and Development Authority certifies to the availability of local raw materials of sufficient quantity, comparable quality and price to meet the needs of manufacturers subject to excise tax, the importation of such raw materials shall be subject to the tax herein imposed." imported articles to be used (as raw material) by the importer himself in the manufacture or preparation of articles subject to excise tax are not subject to advance sales tax imposed by Section 163 of the same Code. Accordingly, since that Corporation will use the said imported aluminum beer cans in the production of beer at its Polo Brewery, the same is exempt from the payment of compensating and/or advance sales tax. (See also. Sec. 169(b)(2), NIRC). cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue