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COMMONWEALTH PENNSYLVANIA v. AIR PRODUCTS & CHEMICALS (11/16/76)

decided: November 16, 1976.

COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF REVENUE
v.
AIR PRODUCTS & CHEMICALS, INC., APPELLANT



Appeal from the Order of the Pennsylvania Board of Finance and Revenue in case of Appeal of Air Products and Chemicals, Inc., Docket No. SR-4539.

COUNSEL

Samuel C. Harry, with him, of counsel, Morgan, Lewis & Bockius, for appellant.

Eugene J. Anastasio, Deputy Attorney General, with him Donald J. Murphy, Deputy Attorney General, and Paul S. Roeder, Deputy Attorney General, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers and Blatt. Judge Kramer did not participate. Opinion by Judge Mencer.

Author: Mencer

[ 27 Pa. Commw. Page 137]

Air Products and Chemicals, Inc. (Air Products) appeals from an order of the Board of Finance and Revenue (Board) sustaining an order of the sales-tax Board of Review, which denied Air Products' petition for a refund of use taxes paid between January 1967 and January 1970.*fn1 A partial stipulation of facts was filed by the parties, and additional testimony was taken at a hearing in this Court before Judge Rogers.

Under Section 1104 of The Fiscal Code, Act of April 9, 1929, P.L. 343, as amended, 72 P.S. ยง 1104, appeals from the Board are heard de novo. We adopt, with one minor alteration,*fn2 the relevant and material facts in the partial stipulation as our findings of fact.

[ 27 Pa. Commw. Page 138]

We will briefly set forth those facts as well as certain additional findings of fact based on testimony at the hearing.

Air Products is a Delaware corporation with its principal place of business in Allentown, Pennsylvania. It is primarily engaged in manufacturing, distributing, and selling oxygen, nitrogen, hydrogen, and argon gases (product), which are provided to its customers in either bulk liquid or bulk gaseous form. Air Products makes bulk gas sales in any one of three ways: by direct pipeline from on-site plants placed near customers who use large amounts of product, by returnable cylinders filled at Air Products' plant and delivered to customers requiring small quantities of gases, or by direct line from customer stations installed by Air Products on the sites of customers requiring intermediate quantities of gas. The customer stations are the only subject of this appeal.

In order to finance its construction of the customer stations, Air Products transfers the completed stations to leasing companies and then leases them back pursuant to a lease-purchase agreement. The customer stations consist of large insulated tanks used to hold the product in a liquid state. Piping, valves, controls, and vaporizers are also employed to return the liquid to gas at the proper temperature and pressure before it enters the customer's internal distribution system. Air Products delivers product in the liquid state by tank truck to the customer stations. Billings are metered from the delivery truck, and amounts are expressed in terms of cubic feet of gas used. The customer stations are evidently preset and are activated automatically when the customer draws on the system.

The sole question involved in this appeal is whether the customer stations should be excluded from liability for use tax ...


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