Taxability of Zinc Ingots Processed in Japan

July 30, 1959 BIR RULING NO. 423-59 4th Indorsement Respectfully returned to the Honorable, the Secretary of Finance, Manila, the within papers bearing on the case of Elizalde & Co., Inc. regarding the taxability of zinc ingots processed in Japan and returned to the owner in the Philippines. LLjur It appears that the Elizalde & Co., Inc. will send to Japan zinc concentrates which are extracted from the mines of the said company in Davao for the purpose of converting the same into zinc ingots. The zinc ingots will then be returned to Elizalde & Co., Inc. in the Philippines. Under the foregoing facts, this Office believes that an importation is not deemed made when the zinc ingots are returned by the processor in Japan to Elizalde & Co., Inc., and, therefore, no advance sales or compensating tax is payable thereon. Moreover, the zinc ingots are mineral products and, as such, are exempt from the sales tax pursuant to subparagraph (c) of the first paragraph of section 188 of the Tax Code. Furthermore, even if the zinc concentrates were processed in Japan, Elizalde & Co., Inc. continue to remain as the producers of the returning ingots on which it pays the royalties or ad valorem tax, as the case may be, prescribed in sections 242 and 243 of the Tax Code. It may be stated that, in transactions of this nature, the royalties or ad valorem tax due on the mineral products involved are finally computed on the basis of the actual market value of the incoming processed products, the payment made at the time of the removal thereof or quarterly where the lessee or concessionaire had filed a bond to guarantee payment of such taxes being considered tentative. For the foregoing considerations, this Office is of the opinion that Elizalde & Co., would not be liable to the sales tax upon the return to it of the zinc ingots processed in Japan. cdtech (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue