BIR Ruling No. 444-61

October 6, 1961 BIR RULING NO. 444-61 With reference to your letter . . . , I have the honor to inform you that as a general rule, the cost of raw materials is deductible from the gross selling price of the manufactured articles if they had been previously subjected to the same rate of sales tax as the finished product. The cost of raw materials previously taxed under Section 189 of the Tax Code is also deductible. Applying this rule, your query is answered as follows: LexLib (1) The cost of coconut coil fibers represented by you as a manufactured product subject to sales tax, is deductible. (2) The cost of abaca waste is not deductible because, being a mere waste, said abaca waste is not subject to the sales tax. However, the cost of abaca wastes purchased from rope factories (if at all) is deductible because it is then a by-product subject to the 2% tax. (3) Being also subject to sales tax, the cost of resin is deductible. (4) The cost of chemicals represented by you for water and fire proofing constituting a component part of the manufactured insulating board is deductible. cdrep