VAT Ruling No. 039-90

February 14, 1990 VAT RULING NO. 039-90 Advance Brokers Corporation Room 306, Domestic Insurance Bldg. Anda Circle, Port Area M a n i l a Attention: Mr . Narciso E . Santiago Executive Vice-President S i r s : This refers to your letter dated April 27, 1989 stating that you client, USA Generics Pharmaceuticals made an order for the purchase of 500,000 Pronol Tablets 10 mg. the shipment of which arrived last November 30, 1988 via AWB No. 077-1742-1526 and was released from customs custody by paying in full the following taxes and duties under Customs Official Receipts Nos. 1357861 and 1357677: Import duty P69,753.00 VAT 42,035.00 P111,788.00 ========= that in the aforecited shipment of 500,000 Pronol Tablets 40 mg. (instead of the specified 10 mg.) were sent by mistake and that the aforementioned articles, being a wrong shipment were returned under AWB 220-9550-6902 by virtue of a CB letter to Philtrust Bank (your client's negotiating bank) dated March 15, 1989 approving the return of the wrong original item and the replacement by the correct item subject to some conditions. Based on the foregoing facts, you now request that the shipment intended to replace the erroneous delivery of tax paid articles be exempt from VAT. This is premised on BIR Ruling No. 110-86 (dated July 11, 1986) which ruled that since an advance sales tax is levied only once, it shall not be levied on the importation of an article replacing an erroneous shipment on which an advance sales tax had already been paid. In reply, please be informed that while the value-added tax paid on the first importation is considered proper and final, nevertheless, considering that the imported goods upon which the tax was paid, were returned to the exporter, and replaced with the correct goods as ordered by the importer, the value-added tax on the first importation may be credited against the value-added tax on the replacement importation. LexLib Very truly yours, JOSE U. ONG Commissioner of Internal Revenue