Appeal from the Order of the Board of Finance and Revenue in case of In Re: Beckwith Machinery Company, Assessment A-72022.
Edward T. Baker, with him Reed, Smith, Shaw & McClay, for appellant.
Paul S. Roeder, Deputy Attorney General, for respondent.
President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Rogers, Blatt and DiSalle. Opinion by Judge Mencer. Dissenting Opinion by Judge Rogers.
[ 35 Pa. Commw. Page 139]
Beckwith Machinery Company (Beckwith) appeals from that portion of an order of the Board of Finance
[ 35 Pa. Commw. Page 140]
and Revenue (Board) which reassessed a use tax, in the amount of $12,791.71, for the period of April 1, 1972 through February 27, 1975, on property used in the operations performed by Beckwith at its plant located at Indiana, Pennsylvania. A partial stipulation of facts, which we adopt, was filed by the parties, and additional testimony was taken at a hearing held on June 15, 1977. The stipulated facts and additional evidence may be summarized as follows:
Beckwith is a Delaware Corporation and is qualified to do business in Pennsylvania as a manufacturer and dealer in machinery and equipment. Its principal place of business is in Murraysville, Pennsylvania, with other locations throughout our Commonwealth. Beckwith is the franchise dealer for western Pennsylvania and the northern portion of West Virginia for Caterpillar Tractor Company. As such, Beckwith has the responsibility for selling new Caterpillar equipment and providing replacement parts and the necessary service to keep the equipment in operation.
The construction and operation of Beckwith's Indiana plant was the result of the gradual evolution of Caterpillar equipment as to size and complexity. Beckwith determined that it would be feasible and competitively to its advantage to provide a service where entire engines, transmissions, and torques could be replaced, rather than to make repairs or do maintenance on these items while they remained a part of the customer's machine.
When the Indiana facility obtains a piece of equipment, such as a diesel engine, which has been removed from a customer's Caterpillar tractor as a result of a replacement arrangement, it is first cleaned and completely disassembled. All of the useable component assemblies are reconditioned and new parts obtained, if required. The same engine is placed in an
[ 35 Pa. Commw. Page 141]
assembly bay where a mixture of new parts, reconditioned parts, and still-useable parts are assembled, terminating in a reconditioned engine.*fn1 Thereafter, the engine is painted, tested, ...