Liability to the Excise Taxes of Articles Given as Complimentary or Give-away Items

April 14, 1987 REVENUE MEMORANDUM CIRCULAR NO. 18-87 SUBJECT : Liability to the Excise Taxes of Articles Given as Complimentary or Give-away Items TO : All Internal Revenue Officers and Others Concerned Section 110(a) of the National Internal Revenue Code, provides: "Sec. 110. Payment of excise taxes on domestic products. (a) Persons liable; time for payment. Unless otherwise especially allowed, excise taxes on domestic products shall be paid by the manufacturer or producer before removal from the place of production: Provided, however , That excise tax on locally manufactured petroleum products levied under Section 128 of this Title shall be paid within fifteen (15) days from the date of removal thereof from the place of production. Should domestic products be removed from the place of production without the payment of the tax, the owner or person having possession thereof shall be liable for the tax due thereon." cd i Under the above-quoted provision, excise taxes on domestic products except petroleum products, are due and payable before removal from the place of production. In other words, such removal is necessary in order that the tax may accrue. And it is not necessary for the tax to accrue that said products be sold upon removal. It is for this reason that cigars and cigarettes actually consumed within the premises of the factory by its workers and employees are not subject to excise taxes because they are not yet removed from the place of production at the time they were consumed. (See Revenue Regulations No. 15-86) Accordingly, articles taxable under Title IV of the Tax Code which are removed from the place of production and given as complimentary or give-away items are subject to excise tax. All rulings already issued which are inconsistent herewith are hereby revoked. Henceforth, the same may not be cited as a precedent in securing exemption from the payment of the excise taxes or in securing claim for refund or tax credit in case said taxes have been paid. All concerned are enjoined to give this Circular as wide a publicity as possible. BIENVENIDO A. TAN, JR. Commissioner of Internal Revenue By: (SGD.) EUFRACIO D. SANTOS Deputy Commissioner