Denatured Alcohol from Tabacalera or Any Other Registered Distiller

September 18, 1958 BIR RULING NO. 528-58 3rd Indorsement Respectfully returned, thru the Revenue Operations Executive (Assessment) to the Chief, Alcohol and Prohibited Drugs Division, B.I.R., Manila, the within papers relative to the request of Mr. Leon Goldenberg, Vice-President of Helene Curtis Industries, 838 General Solano, Manila, to procure free of specific tax specially denatured alcohol from Tabacalera or any other registered distiller under the following formula "to every 200 liters of alcohol of not less than 180 proof there shall be added 5 kilos of lacquer concentrate". This specially denatured alcohol will be used in the manufacture of "Spraynet", a toilet preparation. In accordance with Section 124 the specific taxes on domestic products shall be paid by the manufacturer, producer, owner, or person having possession of the same; and except as otherwise specially provided, such taxes shall be paid immediately before removal from the place of production. From this provision it is clear that the specific tax on distilled spirits removed from any distillery is the direct liability of the owner thereof. Purchasers cannot claim exemption from the tax because they are not the persons liable thereto and as a rule a person cannot claim exemption from a tax to which he is not directly liable. Section 128 of the Tax Code provides the instances where denatured alcohol may be removed free from tax, among which is when it is used generally in the industries. In the La Tondea case, the Court of Tax Appeals hold that the phrase "used in the industries" does not include denatured alcohol merely used as an ingredient in the manufacture of another product. Since the denatured alcohol is to be used merely as raw material in the manufacture of a toilet preparation, it is necessarily subject to tax. As regards the alleged conflict between the provisions of Sections 124 and 127 of the Tax Code, we do not see any. (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue