VAT Ruling No. 059-00

December 18, 2000 VAT RULING NO. 059-00 Section 109 (d) 020-00 Fujisu Feed Mills Industries 281 Bo. Kaybiga Street Kalookan City Attention: Ms . Virginia R . Relatado Gentlemen : This refers to your letter dated September 8, 2000 requesting that your importation of broken rice (rice residue) which is said to be a raw material for the production of quality feeds, be exempted from Value Added Tax (VAT). In support of your request, you attached copies of the following: 1. Certificate of Registration No. M-655, as mixed-feed manufacturer, and IM-791 as feed/feedstuff importer; 2. Classification as to import duty by the Tariff Commission; 3. Import permit from the Department of Agriculture; and 4. Certification from the Bureau of Animal Industry BAI) dated March 17, 2000 certifying that broken rice (rice residue) is a feed ingredient. In reply, please be informed that Section 109(d) of the Tax Code of 1997 provides that the " sale or importation of fertilizers, seeds, seedlings and fingerlings; fish, prawn, livestock and poultry feeds, including ingredients, whether locally produced or imported, used in the manufacture of finished feeds (except specially feeds for race horses, fighting cocks, aquarium fish, zoo animals and other animals generally considered as pets) " shall be exempt from the value added tax (VAT). The above provision refers to three transactions exempt from the VAT, namely: 1. Sale or importation of fertilizers, seeds, seedlings or fingerlings; 2. Sale or importation of fish, prawn, livestock and poultry feeds; and 3. Sale or importation of feed ingredients used in the manufacture of finished feeds (fish, prawn, livestock and poultry feeds), except specially feeds. EDSAac It is significant to note that since the manufacture, importation, sale or distribution of feeds or feeding stuff require prior registration and permit from the Bureau of Animal Industry (BAI) under Republic Act No. 1556, as amended by Presidential Decree No. 7, the certification of the nature and composition of the commodities/items as stated in the registration and import permit issued by BAI shall govern the classification of the said items for purposes of VAT exemption under Section 109(d) of the Tax Code of 1997 (BIR Ruling No. 028-98 dated September 15, 1998). It is likewise worthy to state that this Office has previously ruled that the importation of "broken rice" or rice residue is exempt from the VAT (VAT Review Committee Ruling No. 020-00 dated May 11, 2000). Accordingly, your instant importation of broken rice or rice residue which is certified as feed ingredient by the BAI, shall be exempt from the imposition of the VAT. However, it is required that in all cases of importation of VAT-exempt items, the same shall not be released from customs custody unless a duly approved Authority to Release Imported Goods (ATRIG) is secured from the Revenue District Officer where the port of entry is located. This ruling is issued on the basis of the foregoing facts as represented. If upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal and Inspection Group