Tax Liability of the Blue Bar Coconut Company

July 13, 1959 BIR RULING NO. 346-59 2nd Indorsement Returned to the Chief, Investigation Division, the docket bearing on the case of the Blue Bar Coconut Company, 24th and Chicago Streets, Manila. The percentage tax and surcharge on the desiccated coconut referred to herein are not due because all the requirements necessary for exemption under section 189 of the Tax Code, namely, (1) removal of the desiccated coconut for exportation and (2) actual exportation of the desiccated coconut but without returning to the Philippines by the manufacturer or original owner thereof, are present. The taxpayer is, also not liable to the percentage tax on the coconut shells as by-products, used as fuel or power within the factory for the reason that the said shells were not removed from the factory. In order that the tax on the by-products referred to in section 189 of the Tax Code would accrue, there must be removal of the by-products from the factory or mill warehouse. The said taxpayer is, however, liable to the common carrier's tax, based on the gross receipts, because the privilege of shifting or passing on the percentage tax to customers referred to in B.I.R. General Circulars Nos. 431 and 440 does not extend to the common carrier's tax. cdi (SGD.) JOSE ARAAS Commissioner of Internal Revenue