20% Advance Sales Tax Exemption on the Importation of Agricultural Chemicals

August 9, 1988 BIR RULING NO. 381-88 105 (c) 381-88 Gentlemen : This refers to your letter dated May 26, 1988 reiterating your request for exemption from 20% advance sales tax on your importation of 7,500 kilograms of agricultural chemicals which arrived at the port of Manila on December 17, 1985 but still not yet withdrawn from the Bureau of Customs. You stated that said shipment was misstated as Industrial Chemicals in the commercial invoice being concentrate used in the formulation of pesticides and herbicides for your commercial soybeans plantation but under packinglist/Certificate of Origin and Bill of Lading of the Carrier, the said shipment consisted of Pesticides, Aatrex L Weed Killing CMPD, Pails Rescue Weed Killing CMPD and Lorox L Weed Killing CMPD. Hence, you contended that being herbicides (weed killer) and pesticides, the aforesaid imported articles are not subject to the 20% advance sales tax but instead exempt from the VAT law. In reply, please be informed that your aforesaid request is hereby granted. Being pesticides and herbicides, they are exempt from the value-added tax pursuant to Section 103(c) of the Tax Code, as amended by Executive Order No. 273. The provisions of then Section 165(c)(2) of the Tax Code which impose a 20% advance sales tax on pesticides cannot be made applicable on your aforesaid importation because while the same arrived at the Manila Port on December 17, 1985, you have not caused the release/withdrawal thereof from customs custody as of this date. Pursuant to Section 1202 of the Tariff and Customs Code, importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unload therein. Importation is deemed terminated upon the payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry an the legal permit for withdrawal shall have been granted. (Sec. 1202, Tariff and Customs Code) "As it is in the will of the importer or the owner of the imported goods to choose the moment for making payment of the internal revenue tax from its arrival at the port of Manila until immediately before its withdrawal from the Customhouse, the law in force when the payment is made is the one that should prevail, for human voluntary acts are governed by the laws in force at the time of their performance, unless there is a legal provision to the contrary ." (Emphasis supplied, Luzon Brokerage Co., Inc. vs. Posadas, 51 Phil. 305). Thus, it is clear from then Section 204 of the Tax Code that compensating tax is to be computed as of the date of withdrawal or removal of the goods from the customhouse; hence, the rate of tax prevailing on such date has perforce to be applied. (F.F. Hamlin vs. Collector, G.R. No. L-12991, Dec. 23, 1953 cited in BIR Ruling No. 24-86 dated March 24, 1986). In other words, your importation is governed by the VAT law (Executive Order No. 273) which became effective on January 1, 1988. aisadc Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner