Removal of Cigarettes from the Base Free From Tax

November 18, 1959 BIR RULING NO. 591-59 La Suerte Cigarette Co., Inc. M a n i l a Gentlemen : Reference is made to the letter of the Resident Manager of the Philip Morris Overseas, of which you are the local affiliate, relative to the 1,690.000 sticks of Philip Morris tax-free cigarettes at Clark Air Base which are represented as no longer salable. It is now intended to rip these cigarettes of their fillers which shall then be used by you in the manufacture of Philip Morris cigarettes. Apparently, the question posed is whether or not the contemplated transaction can be achieved without giving rise to tax consequence. In reply thereto, I have the honor to inform you that, inasmuch as the cigarettes in question are to be removed from the Base not for domestic sale or consumption as is but are to be ripped in your factory and the fillers thereof used in the manufacture of cigarettes which are subsequently to be subjected to the specific tax, said cigarettes may be removed from the Base free from tax, pursuant to section 183 and 190 of the Tax Code, but subject to the following terms and conditions: (1) Before clearance from the Base, the cigarettes shall be removed from the packs and placed in a receptacle of strong materials, preferably empty hogshead and shall be securely covered and sealed in the presence of a representative of this Office. (2) The sealed receptacles shall be transported from the Base to your factory accompanied by a representative of this Office; and (3) Upon arrival in your factory, the cigarettes shall, in the presence of the representative of this Office, be immediately ripped and the salvaged fillers weighed and debited in your L-7 official register book as raw material, to be credited in your A-5 official register book upon removal as cigarettes from your factory. This ruling is without prejudice to whatever customs duties and other levies that may be due in the transaction. Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue