REVENUE REGULATIONS NO. 3-2006 issued on January 5, 2006 prescribes the implementing guidelines on the revised tax rates on alcohol and tobacco products pursuant to the provisions of Republic Act (RA) No. 9334, and clarifies certain provisions of existing Revenue Regulations (RR) relative thereto. Any variation in the color and/or design of the label (such as logo, font, picturegram, and the like), manner and/or form of packaging or size of container of the brand originally registered with the BIR shall not, by itself, be deemed an introduction of a new brand or a variant of a brand: Provided, That all instances of such variation shall require a prior written permit from the BIR. In case such BIR-registered brand has more than one (1) tax classification as a result of the shift in the manner of taxation from ad valorem tax to specific tax, the highest tax classification shall be applied to such brand bearing a new label, package, or volume content per package. In case a letter(s), number(s), symbol(s) or word(s) is/are deleted from or replaced by another letter(s), number(s), symbol(s) or word(s) in the root name of a previously BIR-registered brand, the same shall be classified as a variant of such previously registered brand: Provided, that where the introduction of such brand by another manufacturer or importer will give rise to any legal action with respect to infringement of patent or unfair competition, such brand shall be considered a variant of such previously registered brand. There shall be levied, assessed and collected a specific tax on alcohol or tobacco products, in accordance with the schedule specified in the Regulations. The tax classification of the following brands of alcohol and tobacco products shall remain in force until revised by Congress: a. Brands enumerated in Annexes “A”, “B”, “C” and “D” of R. A. No. 8240; b. Brands listed in RR Nos. 1-97 and 2-97; and c. New brands introduced in the domestic market between January 1, 1997 and December 31, 2003. With respect to any of the brands listed in said Annexes of RA No. 8240, the owner of the brand may file with the BIR a notarized request for the delisting thereof from the said Annexes. The filing of such request shall be deemed a waiver of the statutory protection against reclassification of such brand; Provided, further, that in the event that the same brand shall be manufactured or imported by another entity subsequent to the filing of such request, such brand shall be considered a new brand subject to the prohibition on downward reclassification specified under Section 5 of the Regulations, which states that any downward reclassification of a brand of alcohol or tobacco product that is duly registered with the BIR on or after January 1, 2005, which will reduce the tax imposed herein or the payment thereof, shall be prohibited. The said prohibition shall also apply to the brands enumerated in the aforecited Annexes of RA No. 8240 and RR Nos. 1-97 and 2-97, with tax rates imposed other than the regular tax rates prescribed in Section 3 of the Regulations, including any other brand of alcohol or tobacco product that was introduced before the date of effectivity of the Act. A variant of an existing brand that was introduced between January 1, 2004 and December 31, 2004 shall be classified under the highest tax classification for that brand. On the other hand, a new brand, as well as, a variant of a new brand, that is introduced before the effectivity of the Act shall be classified according to its current net retail price determined in the same manner as that for a new brand: Provided that: a. The tax classification thereof shall not be lower than the highest tax classification for such new brand or any existing variant thereof; b. Such brand or variant shall not be subject to the minimum volume requirements for commercial production and marketing prescribed in the Regulations; and c. The same shall still be subject to the validation and revalidation requirements. A new brand, a variant of an existing brand and of a new brand of alcohol or tobacco product that is introduced in the domestic market beginning January 1, 2005 shall be initially classified according to its suggested net retail price as declared in the manufacturer’s or importer’s sworn statement: Provided that: a. The classification of a variant of an existing brand and a variant of a new brand shall not, in any case, be lower than the highest tax classification for that brand; and b. Such brand or variant must be commercially produced and marketed; otherwise, the same is subject to the validation and revalidation requirements of the Regulations. The validation and revalidation requirements for purposes of determining the tax classification of an alcohol or tobacco product are the following: a. Within 45 days immediately after the end of 3 months from the product launch, the BIR or the National Statistics Office (NSO), when deputized by the BIR for the purpose, shall conduct a price survey to validate the suggested net retail price of the new brand, variant of existing brand or variant of new brand, as declared in the manufacturer’s or importer’s sworn statement, against the surveyed net retail price. Based on the survey’s results, the BIR shall determine the correct tax bracket to which such brand of alcohol or tobacco product shall be classified. b. Within 45 days immediately after the end of 18 months from such initial validation, the BIR or the NSO, shall conduct another price survey to revalidate the net retail price against the surveyed net retail price as of the time of revalidation in order to determine the proper tax bracket to which such brand shall be classified: Provided, that the minimum requirements on ‘commercial production and marketing’ of the brand have been continuously satisfied during the entire validation period; Provided, further, that another revalidation shall be conducted in the event that there is willful understatement of the suggested net retail price. In the event the BIR or NSO, as the case may be, fails to conduct the initial validation at the end of 3 moths after the product launch of the new brand variant of existing brand and variant of new brand, the proper initial tax classification of such brand shall be based on the suggested net retail price as declared in the manufacturer’s or importer’s sworn statement. On the other hand, in case the BIR or the NSO, as the case may be, fails to conduct the prescribed revalidation after the end of 18 moths from the date of initial validation or from the time the prescribed minimum volume requirements for commercial production and marketing of brands has been continously satisfied, whichever comes later, the proper tax classification for such brand based on the net retail price declared in the manufacturer’s or importer’s sworn statement shall remain. However, the foregoing rules on validation and revalidation shall not apply if, for meritorious reasons, the BIR is prevented from conducting such validation or revalidation. Meritorious reasons shall include force majeure, court injunctions or any other events beyond the control of the BIR. Accordingly, the BIR shall, upon the cessation or lifting of such reasons or grounds, conduct the required validation or revalidation. In case the suggested net retail price of the brand, as declared in the manufacturer’s or importer’s sworn statement, is understated by at least 15% of the actual net retail price, the same shall be deemed a prima facie proof of willful intent to evade payment of the correct excise tax. Failure to provide convincing evidence that there is no willful intent to understate the suggested net retail price of the brand shall render the manufacturer or importer liable for additional excise tax equivalent to the tax due and difference between the understated suggested net retail price and the actual net retail price. Manufacturers and importers of alcohol or tobacco products shall prepare a monthly sworn statement of the volume and amount of sales per brand, including the name, address and Tax Identification Number (TIN) of customer(s) per brand. In case of absence of the customer’s TIN, the words “NO TIN” shall be clearly indicated. The sworn statement shall be submitted to the Large Taxpayers Program Divisions (LTPD), for excise taxpayers duly registered as Large Taxpayers or to the BIR office where the concerned manufacturer or importer is registered or required to be registered as an excise taxpayer, within 25 days immediately after the end of each taxable quarter, whether fiscal or calendar. In the case of transshipment, the owner of the goods, the transshipment operator or their duly authorized representative shall likewise prepare and submit within the same prescribed period a sworn statement containing information on the inbound and outbound shipments of alcohol or tobacco products such as, but not limited to, quantity and value for each brand, the names and addresses of the consignors and consignees, the ports of origin and destination and transshipment ports in the Philippines. Stemmed leaf tobacco, leaf tobacco prepared or partially prepared with or without the use of any machine or instrument or without being pressed or sweetened, fine cut shorts and refuse, scraps, clippings, cuttings, stems, midribs, and sweepings of tobacco resulting from the handling or stripping of whole leaf tobacco, shall be transferred, disposed of, or otherwise sold, without any prepayment of the excise tax: Provided, that the same are to be directly exported by the owner thereof or to be used by the transferee or buyer as raw materials in the manufacture of cigars, cigarettes or other excisable tobacco products on which the excise tax will eventually be paid on the finished product. For this purpose, the importation of the said partially manufactured leaf tobacco and leaf tobacco wastes to be used in the manufacture of excisable tobacco products shall, likewise, be exempt from the imposition of excise tax: Provided, however, that in case the partially manufactured leaf tobacco or leaf tobacco waste has been sold, transferred or disposed of without the prepayment of excise tax and subsequently used by the transferee or buyer in the manufacture of excisable tobacco products which was eventually exported, the partially manufactured leaf tobacco or leaf tobacco wastes actually used in the manufacture of the exported tobacco products shall be subject to excise tax to be paid by the manufacturer on or before removal from the place of production. With respect to the removals of tobacco wastes attributable to the tax-exempt partially manufactured leaf tobacco actually used in the manufacture of exported tobacco products, the said tobacco wastes shall be subject to excise tax, regardless of whether or not the same shall be used for industrial or agricultural purposes. For this purpose, the bond previously posted by the manufacturer to guarantee payment of its excise tax liabilities shall be required to be adjusted to such amount which shall include the total amount of excise tax due on estimated annual volume of partially manufactured leaf tobacco actually used in the production of tobacco products intended for export and the estimated volume of tobacco wastes attributable to the tax-exempt partially manufactured leaf tobacco actually used in the manufacture of tobacco products. In case of exportation of partially manufactured leaf tobacco and leaf tobacco wastes, delivery of partially manufactured leaf tobacco by a cigar/cigarette manufacturer to another cigar/cigarette manufacturer, and removals of tobacco wastes without residual value arising from the production of excisable tobacco products, a prior permit for such transactions shall be secured from the BIR office where the owner of the said partially manufactured leaf tobacco and leaf tobacco wastes is registered or required to be registered as an excise taxpayer. In the event that the owner fails to submit the necessary proof of exportation or transfer within 30 days from the date of actual removal from its place of production/warehouse, the products removed shall be subject to the corresponding excise tax including penalties. With respect to the sale or transfer of such products to another manufacturer of excisable tobacco products, the transferee or buyer must be a valid holder of a permit to manufacture cigars, cigarettes or other excisable tobacco products duly issued by the BIR. Accordingly, the sale, transfer or disposition of such products without the prepayment of excise tax thereon to another who is not a holder of a valid permit to manufacture cigars, cigarettes or other excisable tobacco products, or who is a dealertrader, whether or not a holder of a valid permit to operate as a dealer or trader of such tobacco products, shall not be allowed. In case the said tax-exempt products are not used in production but are, instead, sold, transferred or disposed of in any manner other than as raw materials in the production of its own excisable tobacco products without the prescribed permits from the BIR, the excise tax that is otherwise due thereon shall be paid by the said transferee or buyer before removal thereof from its place of production or warehouse, inclusive of all the applicable penalties. The importation of alcohol or tobacco products, even if destined for tax and dutyfree shops, shall be subject to all applicable taxes, duties, charges, including excise taxes thereon. Likewise, the importation thereof directly into the following chartered or legislated freeports shall be subject to such duties and taxes: a. Subic Special Economic and Freeport Zone, R.A. No. 7227; b. Cagayan Special Economic Zone and Freeport, R.A. No. 7922; c. Zamboanga City Special Economic Zone, R.A. No.7903; and d. Such other freeports as may hereafter be established or created by law. However, the importation of these excisable products made directly by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP) shall be exempt from all applicable duties but shall be subject to excise and value-added taxes. For excise tax purposes, the owner or importer, including DFP, of alcohol or tobacco products that are to be imported in commercial quantity and intended to be sold in the domestic market or to be subsequently re-exported, shall be subject to the regular requirements of registration. In addition, an application for Authority to Release Imported Goods (ATRIG), for each and every importation of such products, shall be secured from the BIR Office where he is registered or required to be registered as an excise taxpayer. All brands of alcohol and tobacco products actually imported upon the effectivity of the Act by registered-enterprises and/or locators within the freeport zones and by the DFP shall be treated as new brands subject to certain registration, validation and revalidation requirements. On the other hand, in case of brands imported by the said enterprises/locators in the freeport zones and by the DFP whose proper tax classifications are determined by the BIR but the same shall be subsequently imported by another importer or locally manufactured, such subsequent importation/manufacture of the same brands shall, likewise, be treated as a new brand; Provided, that the tax classification thereof shall not be lower than that determined for the introduction of the same brand within the freeport zones or DFP. An alcohol or tobacco product that is removed from the place of production for delivery to, or directly imported by, international airlines or vessels shall be subject to the payment of excise tax. In case there is express provision under the charter of the international airline/vessel, or under any international treaties or agreements which the Philippines is a signatory, that exempts international airlines or vessels from excise tax on alcohol or tobacco products, a claim for tax refund or credit shall be filed by the concerned international airlines or vessels with the appropriate BIR Office. Distilled spirits such as, but not limited to, ethyl alcohol, may be removed from the place of production for purposes of rectification by another establishment without prepayment of the specific tax. For this purpose, the distiller and the rectifier shall file separately an application for a permit to remove tax-exempt alcohol and an application for a permit to purchase tax-exempt alcohol, respectively, with the BIR offices concerned where the distiller and the rectifier are registered or required to be registered as excise taxpayers. A joint bond executed by the distiller and the rectifier shall be filed together with their respective applications for permit to remove and purchase tax-exempt alcohol, to guarantee the payment of the excise tax due on such removal of conditionally taxexempt alcohol. The amount of the joint bond shall be based on the excise tax due on the estimated total annual volume of alcohol to be delivered by the distiller to the rectifier or the excise tax due on the minimum volume capacity of registered under-bond tanks, whichever is lower. In case the amount of the joint bond is no longer sufficient to cover the total estimated excise tax due on the subsequent conditionally tax-exempt removals until the expiration of the joint bond, the amount of the joint amount shall be revised accordingly. The revised joint bond shall be submitted immediately after the determination of the estimated excise tax otherwise due up to the validity period of the submitted joint bond. No subsequent tax-exempt removal shall be allowed unless the revised joint bond shall have been submitted by the manufacturer and the rectifier. Any allowance for losses or actual losses incurred, whether or not due to negligence, in-transit, handling/storage or during the rectification process shall not be allowed or granted. The excise tax due on losses shall be paid by the rectifier on or before the 8th day of the month immediately following the month of operation. Alcohol removed for purposes of rectification shall be delivered directly from the distillery to the place of production of the rectifier or rectifier-compounder, and shall only be stored at duly approved storage tanks dedicated for this purpose. Under-bond removals of alcohol from the distillery plant to any storage facility outside the distillery premises, even if intended for subsequent delivery to the place of production of the rectifier, shall not be allowed. Commingling of tax-exempt and tax-paid alcohol on the same storage tank is prohibited. Alcohol or tobacco products that are produced or manufactured, whether or not the same have been bottled or packed, as the case may be, and are subsequently consumed within the place of production shall be subject to the payment of excise tax by the manufacturer. On the other hand, corresponding specific tax shall be assessed and collected by the BIR on any alcohol or tobacco product that is intended to be imported into the Philippines upon which revenue labels and/or strip stamps are requisitioned in advance by the importer from the BIR for subsequent affixture on the primary and secondary containers of the alcohol or tobacco products by the foreign supplier. No application for the advanced requisition of revenue labels and/or strip stamps shall be processed and issued without the prepayment in full by the importer of the corresponding specific tax on the alcohol and tobacco products intended to be imported. Alcohol or tobacco products intended for exports may be removed from the place of production without the pre-payment of excise tax, subject to certain terms and conditions. In case of failure to comply with said terms and conditions, the removal of the product shall be subject to excise tax, inclusive of penalties. All alcohol or tobacco products intended for transshipment to a foreign port shall not be subject to the imposition and payment of excise and value-added taxes provided that all of the following conditions are satisfied: a. The foreign port of destination shall be clearly indicated in the cargo manifest accompanying the shipment; b. The shipment shall not be unloaded or transported to any other Philippine port of entry prior to the transport thereof to the foreign port of destination as indicated in the cargo manifest; c. The alcohol or tobacco products intended for transshipment shall be transported abroad within 15 days from the date of arrival thereof in the Philippine territory; d. A guarantee in the amount equivalent to not less than the amount of internal revenues taxes and duties otherwise due from the shipment, shall be filed with the Bureau of Customs (BOC), in a form and validity period acceptable to the Commissioner of Customs; and e. Submission to BOC of any document satisfactorily showing that the transshipped products have actually arrived and have been unloaded in the foreign port of destination (e.g., certificate of discharge, import entry declaration duly received by the foreign port of entry, etc.). The cancellation/release of such guarantee shall be effected only upon submission of complete documents showing proof of actual shipment of the alcohol or tobacco products to, and receipt thereof by, the intended foreign port of destination. Failure to submit the liquidation documents within the period to be prescribed by the BOC or to transport the shipment to the intended foreign port of destination within the prescribed 15 day period shall cause the automatic forfeiture by the BOC of the guarantee. Domestic alcohol of not less than 180° proof (90% absolute alcohol) shall, when suitably denatured and rendered unfit for oral intake, be exempt from the payment of excise tax. The rules and procedures in the conduct of denaturation of ethyl alcohol and sale of the denatured alcohol are specified in the Regulations. Any person who is engaged as a sub-contractor to manufacture alcohol or tobacco products or to undertake any part of the manufacturing process such as bottling, packaging, etc. shall first be registered with the BIR as an excise taxpayer. For each brand of alcohol or tobacco products, the manufacturer or importer/owner and the sub-contractor shall file separate applications for a permit with the BIR Office having jurisdiction over their respective excisable activities prior to the initial production of the brand. The sub-contracted activity is subject to certain terms and conditions specified in the Regulations. No claim for excise tax refund or credit shall be allowed on distilled spirits that have been lost or destroyed after removal thereof from the place of production or released from the customs’ custody. In case of losses incurred on bonded distilled spirits, the corresponding excise tax due on such losses shall be paid to the BIR. All manufacturers, exporters and importers of alcohol or tobacco products shall comply with the following administrative requirements: a. Prior to the initial manufacture or importation of new brands and variants of existing brands and variants of new brands, an application for registration shall be filed with the BIR Office where the manufacturer or importer is registered or required to be registered as an excise taxpayer. The application shall be accompanied by the required documents specified in the Regulations. b. Only ‘master’ cases with information prominently printed in specified areas of the ‘master’ case prescribed below shall be used for packaging of alcohol and tobacco products: i. On all sides • Complete name of the brand; • For cigarette products, the number of sticks printed in the following order, (i) per pack, (ii) per carton and (iii) per ‘master’ case; and • For alcohol products, the specific contents printed in the following order: (i) number of bottles, (ii) content in gauge liter and proof per bottle and (iii) total content in gauge liter per ‘master’ case. ii. On at least one side • If for export market, the phrase “FOR EXPORT ONLY”; or, if for local consumption, the phrase “FOR DOMESTIC SALE ONLY”; • The phrase “Made in the Philippines”, if applicable; • Manufacturer’s complete name and address where the alcohol or tobacco products are actually produced; and • Assessment number of the factory/plant where the alcohol or tobacco products are actually produced. Except for fermented liquors packed in beer ‘shells’, all ‘master’ cases to be used for packaging of alcohol and tobacco products shall be pre-approved by the BIR, subject to the applicable registration requirements prescribed in these Regulations. The use of ‘master’ cases that are not pre-approved by the BIR shall be a ground for confiscation or seizure by any authorized BIR personnel. c. A written notice shall be filed with the BIR Office where the manufacturer is registered or required to be registered as an excise taxpayer with the information that a particular brand(s) shall not be manufactured whether on a permanent or temporary basis. For this purpose, the prescribed notice for temporary stoppages shall be applicable in cases of production shutdown due to scheduled maintenance program, major repairs, labor strikes, orders by other concerned government agencies, and such other similar incidents; or due to occurrence of fortuitous events such as typhoons, floods, fire, etc. It shall be filed at least 5 days before the actual date of production stoppage of the brand(s). However, in case of occurrence of unforeseen events which will cause the temporary stoppage of production of any brand, and the manufacture cannot comply with the filing of such prior notice, the BIR shall be notified within 3 days from the actual occurrence of such unforeseen event. d. All importers of alcohol or tobacco products shall file an application for Authority to Release Imported Goods (ATRIG) with the BIR Office where they are registered or required to be registered as an excise taxpayer prior to the release of such products from the customs’ custody, in accordance with existing revenue rules, regulations, policies and procedures. No ATRIG shall be issued in case the imported alcohol or tobacco products are already released from the customs’ custody. Likewise, no subsequent application for ATRIG shall be processed unless the importer has submitted proofs of payment of the excise tax due on the imported products covered by previously issued ATRIG. e. Regular labels (for locally produced ethyl alcohol, imported distilled spirits and wines), auxiliary labels (for imported distilled spirits and wines), and internal revenue strip stamps (for imported chewing tobacco, cigars and cigarettes) shall be requisitioned from the BIR Office where the importer is registered or required to be registered for excise tax purposes. For imported alcohol or tobacco products, the said labels and strip stamps shall be firmly affixed on the said products under the supervision of an authorized representative from the BOC before the products are removed from the customs’ warehouse. For locally produced ethyl alcohol, the regular labels shall be firmly affixed in the manner provided in the Regulations before the said product is removed from the distillery. The internal revenue labels and strip stamps may be requisitioned in advance from the concerned BIR Office for purposes of sending them abroad and subsequent affixture thereof while the alcohol or tobacco products are still being packed by the foreign manufacturer/supplier: Provided, however, that the corresponding excise tax on the alcohol or tobacco products where the internal revenue labels and strip stamps are to be attached shall be paid to the BIR prior to the issuance of the labels and stamps. f. In lieu of the existing BIR forms, the Excise Tax Removal Declaration (ETRD) (BIR Form No. 207) is prescribed to be used and issued by all registered manufacturers and identified importers/dealers/traders for all removals of alcohol or tobacco products. g. The submission of all transcript sheets of Official Record Books (ORBs) by all manufacturers, importers and dealers, including sub-contractors, for alcohol or tobacco products to the concerned BIR Office shall be on or before the 8th day of the month immediately following the month of operation and every 8th day of every month thereafter in the form prescribed under existing rules and regulations. h. The amount of bond to be posted by a manufacturer or importer of alcohol or tobacco products, for each place of production or warehouse, as the case may be, shall be subject to the following conditions: i. Initial Bond – In case of initial bond, the amount shall be equal to P100,000.00: Provided, that if after 6 months of operation, the amount of initial bond is less than the amount of the total excise tax paid during the period, the amount of the bond shall be adjusted to twice the tax actually paid for the period. ii. Bond for the Succeeding Years of Operation – The bonds for the succeeding years of operation shall be equivalent to the actual total excise tax paid on locally manufactured and/or imported alcohol or tobacco products during the year immediately preceding the year of operation. However, for taxpayers availing of the tax prepayment, advance deposit, or similar schemes, the amount of bond herein prescribed shall be in accordance with the following schedule: Excise Tax Payment Minimum Amount of Bond P 1,000,000 and below P 100,000 Over P 1,000,000 up to P 5,000,000 P 500,000 Over P 5,000,000 up to P 10,000,000 P 1,000,000 Over P 10,000,000 up to P 25,000,000 P 2,500,000 Over P 25,000,000 up to P 50,000,000 P 5,000,000 Over P 50,000,000 up to P 100,000,000 P 10,000,000 Over P 100,000,000 up to P 500,000,000 P 15,000,000 Over P 500,000,000 up to P 1,000,000,000 P 30,000,000 Over P 1,000,000,000 up to P 10,000,000,000 P 50,000,000 Over P 10,000,000,000 up to P 20,000,000,000 P 75,000,000 Over P 20,000,000,000 P 100,000,000 Provided, however, that a higher amount of bond may be required from any manufacturer or importer, for meritorious reasons, subject to the prior written approval by the Commissioner of Internal Revenue. The Commissioner of Internal Revenue may, when deemed necessary, also require any dealer or trader of alcohol or tobacco products to post a bond in accordance with the above provisions. The bond shall be subject to the regular examination by the BIR to be assured of the continued obligations and responsibilities of the taxpayer and the bonding company. Upon the effectivity of the Act, the following transitory provisions specified in the Regulations shall be strictly observed by all concerned: a. Manufacturers and importers of distilled spirits and wines shall submit to the BIR Office where it is registered or required to be registered as an excise taxpayer a sworn statement of the volume and amount of sales, including the name, address and TIN of customer(s) per brand of said products, summarized on a monthly basis covering the last quarter of the calendar year 2004 within 30 days from the effectivity of these Regulations. b. All manufacturers-importers and importers of alcohol or tobacco products, including DFP, duty-free shops, locators within the economic and freeport zones, shall prepare and submit the following duly notarized inventory lists as of December 31, 2004: i. Imported alcohol or tobacco products already covered by final import entry declarations (warehouse entries) whether or not the same are already in their possession; and ii. Imported alcohol or tobacco products that have already arrived at the ports of entry but are not yet covered by final import entry declarations. Goods shipped by foreign suppliers that are still in-transit as of December 31, 2004, including importations covered by pre-selling arrangements/advance purchase orders that have not yet been shipped out by foreign suppliers, shall not qualify as part of the aforesaid inventory lists for tax-exemption purposes. The notarized inventory lists shall be submitted to the Chief, LT Assistance Division II (LTAD II) of the BIR National Office, not later than 15 days immediately after the date of effectivity of these Regulations. The same shall contain the complete name and description of each brand, content per packaging/container, proof per bottle/container (for distilled spirits), gross and net retail prices per bottle/pack/piece, the corresponding quantity for each brand, as well as the reference number of the covering final import entry declaration. The said inventory list shall be subject to verification by the BIR for purposes of determining the accuracy thereof. Imported alcohol or tobacco products that have already arrived at the ports of entry and already covered by import entry declarations and to which the corresponding VAT and excise tax have already been paid to the BOC, although still in the customs’ premises at the date of the effectivity of the Act, shall still be covered by the provisions of R.A. No. 8240. However, if any of the aforementioned conditions are not satisfied, such products shall be deemed imported after the effectivity of the Act and shall be subject to the imposition of the new excise tax rates prescribed under the Act. In case of failure by the DFP and the locators within the freeport zones to submit the prescribed inventory list or has submitted an erroneous inventory list, the unreported inventory on-hand as of December 31, 2004 shall be deemed to be importation made on or after the effectivity of the Act. All inventories of imported alcohol or tobacco products, except fermented liquors, in the possession of DFP, duty-free shops and locators within the economic and freeport zones shall comply with the labeling requirements (affixture of regular and labels on alcohol products and strip stamps on tobacco products) as well as with the printed information on the labels (“For Export to the Philippines; Tax and Duty Free” and “Not For Resale Outside of Free Port Zone”), if applicable, as prescribed under the existing rules and regulations. In the absence thereof, the corresponding VAT and excise tax shall be immediately paid; otherwise, the same shall be subject to forfeiture and confiscation by the BIR. The said products forming part of the inventory that fall under the provisions of R.A. No. 8240 shall only be sold to duly accredited locators in the freeport zones for their consumption within the said zone. In the event that these goods will be sold to non-registered locators, the purchaser/consignee thereof, shall be deemed the importer of these articles and, therefore, liable to the payment of the applicable excise and value-added taxes imposed pursuant to the Act. c. Upon the date of the effectivity of these Regulations, all under-bond ethyl alcohol in the possession of rectifiers and rectifiers-compounders that do not fall squarely under the definition of rectification prescribed by these Regulations shall be immediately subject to the payment of excise tax imposed under the Act. For this purpose, all rectifiers and rectifiers-compounders shall submit to the Chief, LTAD II or EXTA, as the case may be, a duly notarized inventory list of ethyl alcohol, whether tax-paid or under-bond, that are on-hand as of the date of effectivity of these Regulations. The said inventory list shall be submitted within 15 days immediately after the date of effectivity of these Regulations. The excise tax due on the under-bond stocks shall be paid within 5 days after actual date of receipt of notice of disqualification as a rectifier or rectifier-compounder from the BIR. d. Pursuant to the provisions of these Regulations, all under-bond ethyl alcohol owned by distillers that are stored outside their distillery plants shall be immediately subject to the payment of excise tax imposed under the Act. For this purpose, all distillers maintaining extension warehouses/storage facilities outside the distillery plants shall submit to the Chief, LTAD II or EXTA, as the case may be, a duly notarized inventory list of under-bond ethyl alcohol stored therein as of the date of effectivity of these Regulations. The said inventory list shall be submitted within 15 days immediately after the date of effectivity of these Regulations. The excise tax due on the under-bond stocks shall be paid within 5 days after actual date of receipt of notice of revocation of the permit to maintain under-bond warehouse/storage facilities from the BIR. e. The ETRD prescribed by these Regulations shall be used and issued only after all the unused ODIs and GUIAs are completely exhausted. For this purpose, all concerned taxpayers shall submit an inventory list of all unused ODIs and GUIAs in their possession as of the date of effectivity of these Regulations. The inventory list shall be submitted to the LTFOD not later than 15 days from the date of effectivity of these Regulations. In case of failure to submit the inventory list, or submission of incomplete inventory list, the unreported inventory of unused old form shall be deemed cancelled. All transactions covered by “deemed cancelled” old forms shall be subject to all applicable penalties under existing revenue rules and regulations. f. With respect to a new brand or a variant of a new brand of an alcohol or tobacco product that was introduced between January 1, 2004 and December 31, 2004, as well as a new brand, variant of a new brand or variant of an existing brand that was introduced from January 1, 2005 up to the effectivity of these Regulations, the manufacturer/importer thereof shall submit to the Chief, LTAD II, not later than 10 days from the effectivity of these Regulations, a notarized statement stating whether its brand of alcohol or tobacco product was nationally or regionally marketed. The said notarized statement shall also indicate the specific name(s) of the region(s) where the brand was introduced or marketed. A copy of the sworn statement duly received by the BIR for such brand shall be attached to the said notarized statement. For a new brand or a variant of a new brand that was introduced between January 1, 2004 and December 31, 2004 which was not yet subjected to the initial validation, its tax classification according to its suggested net retail price as reflected in the manufacturer’s/importer’s sworn statement shall be deemed its proper tax classification pursuant to these Regulations. However, the running of the 18-month period for the revalidation of such brand shall commence from the date of actual receipt of the aforesaid notarized statement or from the time the herein prescribed minimum volume requirements for commercial production and marketing of the brand has been continuously satisfied, whichever comes later. However, for a new brand, a variant of a new brand or a variant of an existing brand that was introduced from January 1, 2005 up to the effectivity of these Regulations, its tax classification according to its suggested net retail price as reflected in the manufacturer’s/importer’s sworn statement shall still be subject to initial validation notwithstanding the lapse of 3 months. For this purpose, the 3- month period subject to the initial validation shall be reckoned from the date of actual receipt by the BIR of the said notarized statement, subject to the minimum requirements for commercial production and marketing as prescribed in these Regulations. g. A notarized list of inventory-on hand as of the date of effectivity of these Regulations of all unused labels previously approved by the BIR without the marking “FOR DOMESTIC SALE ONLY”, for products intended for domestic market, as well as all the printed reams, cartons, boxes or ‘master’ cases without the necessary information prescribed under the provisions of Section No. 23.A(1) and 23.B hereof, indicating the complete name of brands of alcohol or tobacco products to be packed and the quantity thereof (in pieces), shall be submitted to the Chief, LTFOD not later than 10 days immediately after the date of effectivity of these Regulations. Failure to submit the said list shall be tantamount to the inexistence of such inventories as of the effectivity of these Regulations. Accordingly, the use of primary and secondary containers not containing the information prescribed herein without the submission of the said inventory list or the use of such containers for brands not included in the inventory list or in excess of the quantity declared in the inventory list shall be subjected to confiscation and seizure by any authorized BIR personnel.