Cigarette Paper Regulations

October 31, 1950 REVENUE REGULATIONS NO. V-7 SUBJECT : Cigarette Paper Regulations TO : All Internal Revenue Officers and Others Concerned SECTION 1. Scope . Pursuant to the authority granted in Section 338, in relation to Sections 4 (j), 150 and 160 of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, the following regulations relative to the importation, exportation, manufacture, use, sale or disposition of cigarette paper in bobbins or rolls and the manner and procedure to be followed in keeping records of transactions therein are hereby promulgated and shall be known as Revenue Regulations No. V-7 or "The Cigarette Paper Regulations." SECTION 2. Definition of Terms . As used in these regulations, the following terms shall be taken to mean as follows: (a) "Cigarette paper" means any paper of whatever color, brand, texture, length, or breadth in bobbins or rolls used or intended to be used in the manufacture of cigarettes but does not include paper cut into convenient sizes in pads or booklets or similar forms intended to be used for making cigarettes by the hand. (b) "Person" includes natural persons and partnerships, associations, companies or corporations, no matter how created or organized. (c) "Permitee" means a person to whom a permit to import, export or manufacture cigarette paper in bobbins or rolls has been issued by the Collector of Internal Revenue. SECTION 3. Permit Required for Importation, Exportation, or Manufacture of Cigarette Paper. No person shall be permitted to import, export or manufacture cigarette paper without first securing the necessary permit therefor from the Collector of Internal Revenue. To obtain such permit, an application in writing shall be addressed to the Collector of Internal Revenue or his deputies, after which, the necessary investigation shall be conducted for the purpose of verifying the identity of the applicant, his place and kind of business, the schedule, paragraph, and assessment number of his privilege tax-receipt, if any, and the corresponding report shall be submitted to the Collector of Internal Revenue. If the findings warrant the approval of the application, a permit shall be issued showing among other things, the distinctive number assigned to the permittee and the specific purpose or purposes and conditions under which the permit is issued. The permit shall last as long as the permittee is in business, unless surrendered or sooner revoked. A permittee retiring from business shall surrender the permit to the Collector of Internal Revenue for cancellation after his stock of cigarette paper has been disposed of in accordance with the provisions of these regulations. A permittee, before making an order for the purchase of cigarette paper from without the Philippines, shall first secure a written authority from the Collector of Internal Revenue. The request therefor shall state the number, brand and color of the bobbins or rolls and the length in meters of each, and upon arrival, the permittee shall accordingly notify the Collector of Internal Revenue, if in Manila, or the Provincial Revenue Agent, if in the province. In case an importer orders for such article through a broker, it shall be the duty of such broker to notify the Collector of Internal Revenue in writing, within five (5) days after receipt of such order, of the quantity, color or brand and length in meters of the cigarette paper ordered. A manufacturer of cigarette paper shall not, for any reason, remove, withdraw, transfer or dispose of cigarette paper from the factory premises or place of business without first securing the written authority from the Collector of Internal Revenue. A request for such authority shall be filed with the Collector of Internal Revenue, stating therein the name and address of the purchaser or consignee, and the number, brand and color of the bobbins or rolls and the length in meters of each sought to be removed, withdrawn, or transferred and the place of destination. SECTION 4. Authority to Buy for Use, Sell or Dispose of Cigarette Paper . Only duly registered cigarette manufacturers are authorized to buy cigarette paper from a permittee for use in their factories, but before effecting a sale, it shall be obligatory upon the seller of the cigarette paper to secure a written authority from the Collector of Internal Revenue, accompanied by a written confirmation of the buyer, duly signed by him or his duly authorized representative. The request for such authority shall specifically state the name and address of the buyer, and the number, brand and color of the bobbins or rolls and length of each in meters, which information shall likewise appear in the written authority issued by the Collector of Internal Revenue. SECTION 5. Production of Permit or Authority in Case of Importation or Exportation . It shall be the duty of the Commissioner of Customs or the Collector of Customs of the port of entry, before allowing any removal of cigarette paper in bobbins or rolls from customs custody, to require of the importer the production of the written authority issued by the Collector of Internal Revenue for the importation thereof and to advise the Collector of Internal Revenue, if in Manila, or the Provincial Revenue Agent, if in the province, of such importation. In case of false declaration by the importer, the Collector of Internal Revenue may cancel the permit issued to such importer, in which case, the cigarette paper in bobbins or rolls shall be impounded and may duly be transferred or disposed of to other permittees or duly registered cigarette manufacturers. In the case of exportation of cigarette paper, the Commissioner of Customs or the Collector of Customs, of the port of entry shall, for every exportation, require the production of the authority issued by the Collector of Internal Revenue and give due notice to revenue officials concerned to verify if the article exported tally in every detail with the description appearing in the authority therefor before he allows the loading of the said article on the exporting vessel. In such case, proof of exportation, such as bill of lading, export entry, commercial invoice, or consular invoice shall be submitted to the Collector of Internal Revenue within ten (10) days after the exporting vessel has left port. In the case of goods shipped by freight, this proof shall consist of a certified copy of the bill of lading on the back of which the exporter shall execute a certificate in the following form: CAIHTE "_________________________, Philippines, __________________, 19____. I hereby certify that this shipment is composed of _________________________________ (description of articles exported), removed on ______________________________. _____________________________ (Signature of exporter)" SECTION 6. Records to be Kept by Importer, Exporter, Manufacturer, or User of Cigarette Paper. Persons granted permit to import, export or manufacture, or authority to buy for use, cigarette paper shall keep the register books prescribed in these regulations. The said book before being installed, shall first be approved and registered with the Collector of Internal Revenue and shall be kept in addition to the books of accounts and other records required in Revenue Regulations No. V-1. There shall be entered on the fly leaf of each register book, at the time it is installed, the name of the permittee and a declaration or certificate signed by him to the effect that all the provisions of the law and regulations governing his business and the use of said book, as well as the penalties for any violation thereof, have been explained to and understood by him and he promises strict compliance therewith. One copy of this declaration or certificate shall be forwarded to the Collector of Internal Revenue, another to the Supervisor of Tobacco Factories or the Provincial Revenue Agent concerned, and the third copy shall remain permanently in the fly leaf of the register book. SECTION 7. Manner of Keeping Records . All cigarette paper received in the establishment or place of business of a permittee or manufacturer of cigarettes and any removal or use thereof shall be duly entered in the register book of such permittee or manufacturer. He shall keep a separate record, consisting of debit and credit accounts, for each color, brand and length of cigarette paper. The cigarette paper on hand, if any, and those subsequently received shall be entered in the debit column of the record, while the cigarette paper sold, used or disposed of shall be entered in the credit column. The permittee or user shall strike a balance at the end of each calendar month of the stock on hand, if any, of each particular color, brand and length in meters of all the cigarette paper, which shall be indicated in red ink and carried over as the first entry for the succeeding month. A true and exact transcript of all the entries made on both the credit and debit columns of the register book shall be prepared for each calendar month and furnished the Collector of Internal Revenue, if in Manila, or the Provincial Revenue Agent concerned, if in the provinces, within ten (10) days after the end of the calendar month, and the permittee or user shall certify that all of the entries therein are correct and complete and that they are the exact copies of the original entries contained in his register book. An importer of cigarette paper, who is a manufacturer of cigarettes at the same time, shall keep two separate register books; one for recording his importation and removal or disposal thereof, and the other for recording his receipt and use of cigarette paper in his cigarette factory. For every transfer of cigarette paper, he shall likewise secure the required authority from the Collector of Internal Revenue and upon the issuance thereof, the quantity transferred, together with the required description, shall be credited in his importer's register book, and debited in his manufacturer's register book. (a) Debit entries . Each entry shall show the following: 1. The date the cigarette paper is received; 2. The date of the authority issued by the Collector of Internal Revenue; 3. The name and address of the person from whom received; and 4. The number, brand, and color of bobbins or rolls received, showing also the length in meters of each. (b) Credit entries . Each entry of cigarette paper disposed of or used shall be made within twenty-four (24) hours after disposal or use showing: 1. The date of disposal or use; 2. The date of the letter authorizing the disposal; 3. The name and address of the person to whom sold; and 4. The number, brand, and color of bobbins or rolls disposed of or used, showing also the length in meters of each. SECTION 8. Preservation of Register Books, Other Records and Supporting Papers . All register books and other records relating to the importation, exportation, manufacture, sale, use or disposal of cigarette paper shall be preserved intact and in good condition for a period of at least five years from the date of the last entry in each book or record, together with all the supporting papers, and shall be made available or surrendered to internal revenue officers for examination and inspection at any time. SECTION 9. Stock-Taking and Allowance for Waste of Cigarette Paper. The Supervisor of Tobacco Factories and all Provincial Revenue Agents, except those for the provinces of Rizal, Cavite and Bulacan, shall take physical inventory of the stock of cigarette paper of all importers, exporters and manufacturers thereof and manufacturers of cigarettes within their respective units, once every three months or as often as may be found necessary. The stock-taking report shall show a summary of all debit and credit transactions in cigarette paper and any shortage or overage found in the inventories of stock, together with the necessary recommendations. Registered manufacturers of cigarettes may be credited with allowance for wastage of cigarette paper destroyed in the process of manufacture of cigarettes. All waste cigarette paper should be preserved, and before the same is destroyed, the manufacturer of cigarettes shall make proper application therefor with the Supervisor of Tobacco Factories or the Provincial Revenue Agent, as the case may be, who shall authorize and witness such destruction. A certificate of destruction in triplicate shall be signed by the manufacturer and the internal revenue officer who witnessed the destruction. The credit for allowance shall only be entered in the register book after the accomplishment of the certificate of destruction, a copy of which shall constitute the supporting paper for such entry. It shall be the duty of the permittee or user to keep his stock of cigarette paper in his factory, warehouse or place of business arranged separately and marked or tagged in accordance with their classification as to brand, color and length and in such manner as to facilitate an accurate physical inventory thereof by internal revenue officers. SECTION 10. Reports to be Made of Loss or Destruction of Cigarette Paper through Any Cause; Assessment of Deficiency Specific Tax . It shall be the duty of all permittees and manufacturers of cigarettes to report in writing to the Collector of Internal Revenue any loss or destruction through any cause of cigarette paper for which they are accountable within twenty-four (24) hours after such loss or destruction. Upon receipt of the report, the Collector of Internal Revenue shall cause to be ascertained the veracity of the loss or destruction and, if the loss or destruction is not due to fraud, fault, or negligence of the permittee or manufacturer of cigarettes, the entries shall be made in the register book by the representative of the Supervisor of Tobacco Factories or the Provincial Revenue Agent concerned, who shall submit a report of his findings to the Collector of Internal Revenue, stating the number of bobbins or rolls, the color brand, and the length in meters of the cigarettes paper destroyed or lost and the cause or causes of the loss or destruction. Failure on the part of a cigarette manufacturer to report any loss or destruction of cigarette paper or the removal, withdrawal, or transfer of cigarette paper from the factory premises or place of business of the manufacturer without a written authority from the Collector of Internal Revenue shall be considered prima facie evidence that the cigarette paper alleged to have been lost or destroyed, or removed, withdrawn or transferred was used in the manufacture of cigarettes, which have been removed for sale or consumption without the prepayment of the specific tax. In such case, the corresponding specific tax shall be assessed and collected pursuant to the provisions of Section 150 of the National Internal Revenue Code. SECTION 11. Cancellation of Permit or Authority. The Collector of Internal Revenue shall have authority to cancel any permit or authority issued to any importer, exporter, manufacturer or user of cigarette paper, or withhold the issuance of any such permit or authority, if the holder thereof, or applicant therefor, has violated any of the provisions of the National Internal Revenue Code, or of the regulations promulgated thereunder. His decision on any such case may be appealed to the Secretary of Finance. SECTION 12. Penalties . Any violation of these regulations for which no specific penalty is imposed shall be punished by a fine of not more than three hundred pesos or by imprisonment for not more than six months, or both, pursuant to the provisions of Section 352 of the National Internal Revenue Code. SECTION 13. Date of Effectivity . These regulations shall take effect upon publication in the Official Gazette. (SGD.) PLACIDO L. MAPA Acting Secretary of Finance RECOMMENDED BY: (SGD.) S. DAVID Collector of Internal Revenue