VAT Ruling No. 070-01

October 11, 2001 VAT RULING NO. 070-01 Section 109 (c) 094-97 Monde Nissin Corporation 22F, 23F 6750 Office Tower Ayala Avenue 1200 Makati City Attention: Mr. Raymond Chan Purchasing Manager Gentlemen : This refers to your letter dated July 2, 2001 requesting exemption from VAT your importation of Freeze Dried (FD) Beef from the USA. It is represented that your company is engaged in the food production business; that the meat being processed is imported from the U.S.A.; and that a brief description and flow in the imported freeze-dry meat process is as follows: 1. Raw Material Receiving; 2. Freezer Storage; 3. Cold Room Loading of Raw Material on Trays and into Carts; 4. Freeze Dry Chamber; 5. Vacuum and Low Heat Application; 6. Unloading Chamber; 7. Transport to Warehouse; 8. Finished Product Inspection; 9. Metal Detection (Magnetic and Non-Magnetic); 10. Packaging; 11. Weighing In reply, please be advised that Section 109 (c) of the 1997 Tax Code provides: "Sale or importation of agricultural and marine food products in their original state, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic materials therefor." "Products classified under this paragraph and paragraph (a) shall be considered in their original state even if they have undergone the simple processes of preparation or preservation for the market, such as freezing, drying, salting, broiling, roasting, smoking or stripping. Polished and/or husked rice, corn grits, raw cane sugar and molasses, and ordinary salt shall be considered in their original state;" Considering that the meat has only been freeze dried without further processing nor any preservatives added, the same remains food products in its original state since it has merely undergone a simple process of preservation and preparation for the market. What would be outside the scope of the term "simple process" is the kind of physical or chemical process which would alter the exterior texture or form, or inner substance of a product in such manner as to prepare it for special use to which it could not have been put in its original form or condition. (VAT Ruling No. 007-2001 dated February 16, 2001) Accordingly, your importation of Freeze Dried (FD) Beef from the U.S.A. is within the purview of the definition of a food product in its original state, hence, exempt from the 10% value-added tax. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner Legal and Inspection Group