BIR Ruling [UN-040-95]

January 17, 1995 BIR RULING [UN-040-95] Sycip Gorres Velayo & Co. 6760 Ayala Avenue, Makati City Metro Manila Attention: Atty . F . G . Tagao Gentlemen : This refers to your letter dated January 4, 1995 stating that your client, Philippine Mining Service Corporation (PMSC) has been engaged by Dolomite Mining Corporation (DMC) as its service contractor in connection with the exploitation and development of dolomite in Alcoy, Cebu; that DMC is the owner and/or lessee of various mining claims from which the dolomite ores are being mined; that after the dolomite ores are mined, they are bought by PMSC from DMC which it processes into marketable form for subsequent sale in the domestic and export markets; that DMC being the owner and/or lessee of the mining claims, already pays the excise tax due on the dolomite ore, upon its removal from the mining claims and prior to its sale to PMSC; and that considering that DMC as the lessee of the mining claims has already paid and continues to pay the excise tax on the dolomite ore extracted upon its removal from the mining claims and prior to its sale to PMSC, your client, PMSC is no longer liable to pay the 2% excise tax on the same dolomite ore which it processes for both the domestic and export markets. cdtech In connection therewith, you are requesting confirmation of your opinion that since the excise tax on the dolomite ore has already been paid by DMC which is the owner or lessee of the mining claims, PMSC which purchases said dolomite ore for processing for the domestic and export markets is no longer liable for the payment of the excise tax. In reply thereto, please be informed that your opinion is hereby confirmed. The excise tax on minerals and mineral products shall be payable by lessees, concessionaires, owners or operators of mines, processors of minerals, licensees or permittees of quarry/mines, producers or manufacturers of mineral products, whether natural or juridical persons, upon removal from the minesite and/or place of production. Should minerals, mineral products or quarry resources be removed from the minesite and/or place of production without payment of the excise tax, the owner or person having possession thereof shall be liable for the tax due thereon. (Sec. 4, Revenue Regulations no. 13-94). If the taxpaid mineral or mineral products are subsequently sold by the producer, owner or lessee of the mining claims, it shall be subject only to the 10% VAT under Section 100 of the Tax Code, as amended. It is no longer subject to the additional ad valorem tax. Since as represented, DMC as the owner or lessee of the mining claims has already paid the excise tax on the dolomite ore, PMSC which purchases said dolomite ore for processing for the domestic and export market is no longer liable to the payment of additional excise tax. Moreover, pursuant to Section 5 (B) (4) of Revenue Regulations No. 13-94 every shipment of minerals, mineral products and mineral concentrates intended for export shall be covered by a permit to be secured from the Revenue District Officer having jurisdiction over the mine site or place of production as the case may be. Thus, PMSC is required to secure a permit from the Revenue District Officer having jurisdiction over the mine site or place of production as the case may be when it exports the processed dolomite ore. (BIR Ruling No. 380-92 dated December 28, 1992). cd Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)