For taxable goods used as raw materials for the manufacture of another kind of taxable goods, the manufacturer shall fill out a Material Computation Form for the said taxable goods and apply to the competent tax authority for inspection. After an inspection agency spot checks the quantity of said material under the instruction of the competent tax authority, the competent tax authority will determine the standards for calculating the commodity tax exemption. If there is a need to prescribe uniform standards for the use of said materials, the competent tax authority should submit the proposal to the Ministry of Finance for approval.
A taxable material may be exempted only if it constitutes an ingredient of the taxable goods; the fuel supply, testing or packaging materials for the manufacture of taxable goods are not exempted from commodity tax.

When a manufacturer produces taxable goods and purchases another taxable good as raw material for production, they can apply for exemption from commodity tax by filling out a Tax Exemption Application for Purchased Materials in triplicate; the first copy is the application, and the other two copies are approval document. After approval by the competent tax authority and retention of the first copy and two copies by the manufacturer, they should be processed according to the following provisions:
(1)If the taxable materials are purchased directly from a local supplier, the manufacturer will give the two copies to the supplier who shall keep the second copy, and submit the third copy to the local tax authority after affixing its own chop; the supplier should produce a tax exemption certificate.
(2)If the taxable materials are imported, the manufacturer will give two copies to Customs for exempting the collection of commodity tax. Customs will save the second copy and return the third copy, which has affixed the Customs chop, to the manufacturer after the exemption is approved. The manufacturer will then submit the third copy to the unit-in-charge of Customs in exchange for a tax exemption certificate.
(3)If the taxable materials are supplied by the manufacturer itself, the manufacturer will save the second copy of the application and submit the third copy to the local tax authority after affixing its own chop; the manufacturer will produce a tax exemption certificate itself.

If the tax-exempt material purchased by the manufacturer according to Item (1) of the foregoing article needs to be delivered to another manufacturer for processing and then returned to the factory for assembly into taxable goods, the following provisions shall be observed:
(1)If the purchased tax-exempt materials are delivered by the manufacturer to a contractor for processing, the manufacturer should fill out a provisional transport certificate each time the said materials are shipped out of the factory.
(2)If the purchased tax-exempt materials are to be directly delivered by the supplier to the contractor for processing, it should be noted so in the Tax Exemption Application for Purchased Materials. At the time of delivery, the contractor will check the goods received and return the tax exemption certificate to the supplier after affixing its chop thereon. The supplier will then submit the aforesaid tax exemption certificate to the local tax authority.

For tax-exempt materials purchased, the manufacturer should conduct a receiving inspection upon receipt, affix its chop and note the date of receipt on the original tax exemption certificate, and then submit it to the local tax authority for examination. After the local tax authority approves of the tax exemption status, a reply letter should be send to the manufacturer. Where the tax-exempt materials are produced domestically, the tax exemption certificate should be forward to the competent tax authority where the supplier is located.

A manufacturer may not supply tax-exempt materials it has purchased for use by another factory without the prior approval of the competent tax authority.

If a manufacturer did not go through the tax exemption formalities according to Article 75 herein in the purchase of taxable materials for use in the manufacture of another kind of taxable goods, and instead, purchased taxed goods in the market for use as raw material, the manufacturer may submit related documents and apply to the local tax authority or the Customs house for refund of commodity tax paid.