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BEASLEY INDUSTRIES v. COMMONWEALTH PENNSYLVANIA (06/02/88)

decided: June 2, 1988.

BEASLEY INDUSTRIES, INC., PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



Appeal from the Order of the Board of Finance and Revenue, dated June 9, 1976, No. RST-1181.

COUNSEL

Robert L. Weldon, Keefer, Wood, Allen & Rahal, for petitioner.

Bryan E. Barbin, Deputy Attorney General, with him, LeRoy S. Zimmerman, Attorney General, for respondent.

Judges MacPhail and Doyle, and Senior Judge Narick, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 116 Pa. Commw. Page 506]

Beasley Industries, Inc. (Petitioner) appeals an order of the Board of Finance and Revenue denying Petitioner's appeal of a use tax reassessment. We affirm.

The Department of Revenue's Bureau of Sales and Use Tax conducted an audit of Petitioner for the period January 1, 1971 to June 30, 1974. As a result, Petitioner was issued a notice of assessment dated December 2,

[ 116 Pa. Commw. Page 5071974]

, in the amount of $10,669.16.*fn1 According to the Department, use tax was assessed against Petitioner for purchases of machinery, equipment, tools and supplies used by Petitioner in its engine remanufacturing business, because of the auditor's determination that the work performed by Petitioner did not fall within the manufacturing exclusion from use tax contained in Section 201(o)(4)(B)(i) of the Tax Reform Code of 1971 (Code), Act of March 4, 1971, P.L. 6, as amended, 72 P.S. § 7201(o)(4)(B)(i).*fn2

Petitioner appealed the assessment to the Department's Board of Review. On October 15, 1975, the Board issued a decision abating the assessed penalties, but otherwise sustaining the assessment, finding that Petitioner's "refurbishing operations" were not manufacturing within the meaning of the Code exclusion. As previously noted, Petitioner's appeal of this decision was denied by the Board of Finance and Revenue.

The sole issue before this Court is whether Petitioner's business constitutes "operations of . . . manufacture" within the meaning of Section 201(o)(4)(B)(i) of the Code. If Petitioner's operations do constitute manufacturing, use tax, otherwise chargeable under Section 202 of the Code, 72 P.S. § 7202, should not be imposed on Petitioner's personal property.

Under Section 201(o)(4) of the Code, tax is not imposed on the use of tangible personal property directly in any of the operations of the manufacture of personal property. "Manufacture" is defined as:

The performance of manufacturing, fabricating, compounding, processing or other operations, engaged in as ...


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