BIR Ruling No. 275-2022

BUREAU OF INTERNAL REVENUE PEPUBLIC OY THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

Section 148(e) of the Tax Code of 1997, as amended: BIR Ruling No.[DA-181-03] Ot-? ? s ?02? Ha? PHILIPPINE PROSP EPITY CHEMICALS, INC. Suite 914 Herrera Tow :r No. 98 Herrera corner ' 'alero Street Salcedo Village. Maka i ity

t ntion: MR. DIOSDADO P. COBIN Chief Operating Officer

Gentlemen:

This refers to y sur letter dated March 16. 2021 requesting on behalf of the Philippine Prosperity Chemicals. !nc (the "-PPCI") for a ruling on whether or not the following imported products are subject to :xise tax under Section 148(e) of the Tax Code of 1997. as amended. to wit:

2 1 SBP 80-100 al:o known as Exxsol DSP 80'10. Sclvent 1630. SBP: Pegasol 304 " HIso known as Low Aromatic White Spirit. LAWS. W'hite Spirit: 3 Exxsol Hex mi also known as n-Hexane. Haxane: 4. 5 6 Exxsol D40 al-o known as D40. YK-D40: and Isopar L: Exxsol D80 al:o known as D80. YK-D80.

Hereinafter refe "re I collectivel,' as "Hydrocarbon Fluids".

It is represente that the BIR has previously ruled through BIR Ruling No. [DA-181- 03 ] on the products sta' ed in Nos. 1 and 2 above. to wit:

IN YIEW' OF T HE FOREGOI\G. this Office holds that since SBP 80/100 and Pegasol 3040 : "e uot included in the list of petroletm products under Section 1+8 of the Tux Code of 199-. its importation'is nct subject to the P4.80-liter excise tax hut m'y to the 104 IAT under Sectioa 107 of the same Code. (Emphasis supr (ie-1)

Furthermore. in a letter dated May 28. 2014. BIR - Large Taxpayers Service stated that ISOPAR L is a widel used industrial liquid solvent used in paints and coating. consumer products. printing inks and agricultuiral chemical applications. It is not sold directly to the public for general con umer uses but it may be an ingred:ent in consumer and commercial applications such as pai Hits. cleaning agents. and as functional fluids in other consumer product. It has been clarified in t e said letter that ISOPAR L is not among the articles covered by excise tax under Title VI of tr : 1 ax Code of 1997. as amended.

Likewise. in a lener dated September 30. 2014. the BIR- Large Taxpayers Service st3ted that EXXSOL D-0 FLUID and EXXSOL D80 FLUID.which are classified as

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Code of 1997. as amer le t. petroleum solvents. ar: not among the articles covered by e>.cise tax under Title VI of the Tax

Lastly. EXXS( L HEXANE is a clear odorless liquid with a petroleum-like odor. It is

industrial. professional. and consumer products such as adhesives. coatings. tires. and rubber characterized as compl x mixture of aliphatic hydrocarbons. This liquid solvent is used in the

solutions. It may also be used in food contract applications such as a solvent for oil seed extraction.

In reply theret: : Fiease be informed that Section 148(e) of the Tax Code of 1997. as amended provides:

"Sec. 148. Mu:!!tutured Oil.: und Other Fuels. --- F'here shall be collected on refined and ma utactured mineral oils and motor fuels, the following excise taxes which sh: Il attach to the goods hereunder enumerated as soon as they are in existence as uc h:

X X X

(e) Naphtha. regular gasoline. pyrolysis gasoline and other similar (P10.00 : I'rovided. however. that naphtha and pyrolysis gasoline. when product. of distillation. per liter of volume capacity. Ten pesos

used as i r.iw material in the reproduction of petrochemical products or in refin ng of petroleum products. or as repiacement fuel for natural- gas-fire l-c.ombined cycie power plant in lieu of locally-extracted natural as during the non-availability therecf, subject to the rules and regulati.n: to be promulgated by the Secretary of Finance. per liter of volume apacity- zero (P0.00): Provided. further, That the production of petrolei m products. whether or not they are classified as products of distillati n and for use solely for the produetion of gasoline shall be exempt from excise tax: Provided. finaliy. That the by-product includir tuel oil. diesel fuel. kerosene. pyiolysis gasoline. liquefied petroleumn gases and similar ois having more or less the same generati:g power. which are produced in the processing of naphtha into petroch nical products shall be subject to the applicable excise tax specifie 1 in this Section. except when such by-products are transferred to any o: tl e local oil refineries through sale. barter or exchange. for the purpose of further processing or blending into finished products which are subj -ct to excise tax under this Section:"

for the imposition of tt e : xcise tax. it does make the distinetion if the subject product will be While the abov: provision does not distinguish the different grades or types of Naphtha

used as a raw material or purposes other than motor fuel. such as petrochemical products.

Section 148 ot th: Tax Code: of 1997. as amended. imposes taxes on end products primarily derived fron crude oil distillation used or intended to be used as motor fuel. the phrase "other similar pr ducts of distillation" must be iuterpreted in the context of the particular subsection w here it is found -- a product akin to naphtha and regular gasoline as end products primarily der ve t from distillation of petroleum cr crude oil intended to he used as motor fuel.

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OT:275-2022 MAY 30 2022

The principle oejusdem generis is applicable in the issue, which is defined in Benguet State University vs.Co mmiission on Audit.G.R.No.169637June 8.2007as

xxx where a statute describes things of a particular iclass or kind accompanied by words of a generic character. the generic word will usually be limited to things of a simitar nature with those particularly enunerated xxx

In determining the meaning ofother similar products of distillation" reference must be made to the preceding enumeration of Naphtha" and "regular gasoline" as their common

context of petroleum p oducts or mofor fuel. characteristics. Naphtha and regular gasoline are characterized in the subject provision in the

fuels. Consequently. th e s nid phrase does not include an artic le or product that will be used for restrictively to the lim ted characteristics of Naphtha and regular gasoline as used as motor consumer products oth r than motor fuel Accordingly.t ie phrase other similar products of distillation must be applied

already determined by the BIR. through the above cited various documents, to be only used as In this case, the enumerated Hydrocarbon Fluids except EXXSOL HEXANE are

not fall under the sam category as the Naphtha and regular gasoline since the former, by its solvents and raw mate ials for general purpose adhesive construction, automotive. shoes and for architectural coatings like household paints (solvent based.Accordingly,the same does

nature and description. whether in itself or as an ingredient. is not used as petroleum products or motor fuels.

Large Taxpayers Servi ce that it is not one of the products subject to excise tax under the Tax Code of 1997. as amen led. In the case of I XXSOL HEXANE.PPCI must also'submit a document issued by the

subject to excise tax uider Section 148(e) of the Tax Code of 1997, as amended. However. they are still subject ttelve percent12%Value-Added Tax VAT on importation of importation of the enu nerated Hydrocarbon Fluids except EXSSOL HEXANE shall not be In applying th above cited provision of the Tax Code of 1997,as amended, the

goods.

recommended. For thi: purpose, PPCI is hereby mandated to submit to the Large Taxpayers Field Operations Division a list of the buyers of the said articles, as well as other documents It bears stressin that monitoring of the actual use/application of the subject articles is

as may be required by ai office to facilitate the monitoring of the actual use and application of the aforesaid materi ls.

This ruling is bing issued on the basis of the foregoing facts as presented. However. if upon investigation.it ill be ascertained that the facts are different. then this ruling shall be considered null and vo d.

Very truly yours.

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Commissioner of Internal Revenue CAESAR R.DULAY

051692

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