Taxability of the Importation of Silub X-PSE, Neosilk 6608 Conc. and Neotex PS-25

September 20, 1988 BIR RULING NO. 460-88 145 (a) (1) 000-00 460-88 Gentlemen : This refers to your letter dated June 7, 1988 requesting a ruling on the taxability of your importation of Silub X-PSE, Neosilk 6608 Conc. and Neotex PS-25. The records show that said articles are water-based lubricating preparations used in the manufacture of clothing materials; that the Industrial Technology Development Institute (formerly National Institute of Science and Technology) has certified to the following percentage of water content by volume: Silub X-PSE-69.0%; Neosilk 6608 Conc.-80.0% and Neotex PS-25-68.5%; that the report of analysis by the Assistant Chief, B.I.R. Laboratory show that Neotex PS-25 is a low molecular weight polyethylene-based lubricating substance which is derived from ethylene prepared by the decomposition of petroleum gas or dehydration of alcohol. In reply, please be informed that based on the foregoing facts, Neotex PS-25 is a petroleum product subject to both excise tax and value-added tax; but Silub X-PSE and Neosilk 6608 Conc. containing 69.0% and 80.0% water, respectively by volume are not; hence, your importation of the latter two substances are not subject to excise tax under Section 145(a)(1) of the Tax Code, as amended. However, the same are subject to the value-added tax of 10% pursuant to Section 101 of the same Code, as amended by Executive Order No. 273. The value-added tax, to be paid by the importer before the release of the goods from customs custody, shall be based on the total value used by the Bureau of Customs in determining tariff and customs duties plus customs duties and other charges; Provided, that where the customs duties are determined on the basis of the quantity or volume of the goods, the value-added tax shall be based on landed cost. aisasdc Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner