Imported High Carbon Ferro Manganese and Graphite Electrode Used in the Production of Steel Bars is Subject to 10% Advance Sales Tax

November 3, 1987 BIR RULING NO. 342-87 163 (2) 000-00 342-87 Gentlemen : This refers to your letter dated November 17, 1986 requesting a ruling as to the rate of advance sales tax payable by you on your importation of Dead Burned Magnesite, High Carbon Ferro Manganese and Graphite Electrode. It appears that you are engaged in smelting, purifying, refining and manufacturing of steel or products thereof out of scrap iron ores and from imported pig iron for alloying purposes; and that the above imported articles are the essential raw materials in the production of steel bars and are not intended for resale. In reply, please be informed that among the essential articles subject to 10% sales tax are steel bars. (Section 163(2) (k), Tax Code, as amended by Executive Order No. 36) The imported Dead Burned Magnesite, High Carbon Ferro Manganese and Graphite Electrode which are the raw materials used in the production of steel bars shall be taxed at the same rate as the finished product provided that you, as importer, shall certify to this Office that the above imported articles shall be used exclusively in the manufacture or preparation of essential articles. (Section 6, II, Revenue Regulations No. 11-86) Accordingly, and in line with your certification dated August 5, 1987, your importation of Dead Burned Magnesite, High Carbon Ferro Manganese and Graphite Electrode is subject to advance sales tax at the same rate of 10% based on the total value used by the Bureau of Customs in determining tariff and customs duties, including customs duties and other charges, pursuant to Section 163(2) in relation to Section 162(c) of the Tax Code, as amended. atdc Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner