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STEWART HONEYBEE PRODUCTS v. COMMONWEALTH PENNSYLVANIA (08/15/89)

decided: August 15, 1989.

STEWART HONEYBEE PRODUCTS, INC., PETITIONER,
v.
COMMONWEALTH OF PENNSYLVANIA, RESPONDENT



PETITION FOR REVIEW (BOARD OF FINANCE AND REVENUE).

COUNSEL

Lloyd R. Persun, Shearer, Mette, Evans & Woodside, Harrisburg, for petitioner.

Michael A. Roman, Deputy Atty. Gen., Ernest D. Preate, Jr., Atty. Gen., Harrisburg, for respondent.

Crumlish, Jr., President Judge, and Craig, Doyle, Colins, Palladino, McGinley and Smith, JJ. Palladino, Judge, dissenting.

Author: Crumlish

[ 128 Pa. Commw. Page 133]

OPINION

Stewart Honeybee Products, Inc. (Stewart Honeybee) has filed exceptions*fn1 to this Court's Order*fn2 affirming a Board of Finance and Revenue resettlement which denied Stewart Honeybee an exemption to its capital stock tax assessment.*fn3 We sustain the exceptions.

According to the stipulated facts, Stewart Honeybee, a Pennsylvania corporation, produces marketable honey out of raw honey which is obtained either from its own beehives or purchased from commercial beekeepers. When it arrives at the plant, raw honey is unfit for human consumption -- it arrives as a crystallized solid and contains various impurities such as pollen, colloids, beeswax, honeycomb particles, wood chips from beehive frames, and bee body parts. At the plant, the raw honey is rendered marketable through a process combining testing, liquefaction, blending, pasteurization, filtration, cooling, and finally packaging.

The sole issue for consideration is whether Stewart Honeybee demonstrated that it qualifies for the manufacturing exemption to the capital stock tax.

The Pennsylvania Supreme Court recently refined the definition of manufacturing for purposes of capital stock tax exemption in Ski Roundtop, Inc. v. Commonwealth, 520 Pa. 227, 553 A.2d 928 (1989). Manufacturing is "(1) the

[ 128 Pa. Commw. Page 134]

    application of labor and skill (2) which changes a material (3) substantially (4) into a new, different and useful item." Id., 520 at 231, 553 A.2d at 930.*fn4

Applying that test to these stipulations, we must first determine if the transformation of Honeybee's product is accomplished through the application of labor and skill. As ...


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