National Tube Co. v. Glander

• Citation: 105 N.E.2d 648,47 O.O. 313,157 Ohio St. 407
• Decision Date: 30 April 1952
• Docket Number: No. 32867,32867
• Parties: , 47 O.O. 313 NATIONAL TUBE CO. v. GLANDER, Tax Com'r, et al.
• Court: United States State Supreme Court of Ohio

Page 407

157 Ohio St. 407

105 N.E.2d 648, 47 O.O. 313

NATIONAL TUBE CO. v. GLANDER, Tax Com'r, et al.

No. 32867.

Supreme Court of Ohio.

April 30, 1952.

Syllabus by the Court

1. Under Sections 5546-2 and 5546-26, General Code, levying, respectively, sales and use taxes, the presumption obtains that every sale or use of tangible personal property in this state is taxable.

2. Statutes relating to exemption or exception from taxation are to be strictly construed, and one claiming such exemption or exception must affirmatively establish his right thereto.

3. Where the claim is made that the sale or use of certain machinery and equipment employed in unloading, moving and transporting materials is excepted from taxation under Section 5546-1 or Section 5546-25, General Code, the burden rests on the claimant to show that such items are used or consumed directly in the production of tangible personal property for sale by manufacturing, processing, refining, etc.

4. The terms, 'manufacturing' and 'processing,' as used in Sections 5546-1 and 5546-25, General Code, imply essentially a transformation or conversion of materials or things into a different state or form from that in which they originally existed--the actual operation incident to changing them into marketable products.

5. A finding and determination by the Board of Tax Appeals that machinery and equipment consisting of ore unloaders, used in removing iron ore and limestone from the holds of ships in substantially the same form in which they were taken from the mines or quarries, and an ore bridge, used in distributing such iron ore over storage areas and in placing it in conveyors for transportation to a central point preliminary to introduction into a blast furnace, are not used or consumed directly in producing tangible personal property for sale by manufacturing or processing within the contemplation of Sections 5546-1 and 5546-25, General Code, and that their sale or use is not excepted from taxation will not be disturbed as unreasonable or unlawful by this court on appeal.

The facts are stated in the opinion.

Squire, Sanders & Dempsey, Paul L. Holden and George Farr, Jr., Cleveland, for appellant.

C. William O'Neill, Atty. Gen., Robert E. Leach, James M. Burtch, Jr., and Paul Tague, Jr., Columbus, for appellees.

ZIMMERMAN, Judge.

This is an appeal to this court under Section 5611-2, General Code, from a decision of the Board of Tax Appeals, entered October 11, 1951, affirming an order of the Tax Commissioner refusing a refund of taxes, theretofore paid by appellant, National Tube Company of Lorain, Ohio, on the purchase or use of certain machinery and equipment employed by it in its business of manufacturing various types of steel pipe and tubular products, which purchase and use the company maintained were not subject to such taxes.

The ultimate question to be answered by this court is whether on the record such decision by the board is unreasonable or unlawful.

In presenting its cause, appellant relies on those parts of Sections 5546-1 and 5546-25, General Code, which, respectively, except from taxation the sale or use of tangible personal property used or consumed 'directly in the production of tangible personal property for sale by manufacturing, processing, refining,' etc.

The refund of the taxes is sought under Section 5546-8, General Code.

The machinery and equipment involved consist of two Hulett ore unloaders, with parts therefor, and an ore bridge. The unloaders are specially designed pieces of heavy machinery which are utilized in unloading iron ore and limestone from the holds of docked ships arriving over Lake Erie. These machines move along the length of the docks and are equipped with buckets which can be mechanically raised and lowered. The buckets scoop the material out of the bowels of a ship, place it on a conveyor apparatus contained in the unloader, and from there the material is deposited in a concrete ore trough which extends along almost the entire length of the docks.

The ore bridge, also equipped with buckets, removes the ore from the ore troughs and then proceeds to scatter it over an area called the storage yard. It is claimed that this scattering is done in such a way as to blend the ore preparatory to its introduction into blast furnaces. Also the ore bridge picks up from the storage pile the ore desired and loads it into cars called 'ore jimmies.' These cars then transport the ore to a central point known as the stockhouse from whence it is taken by a skip hoist to the blast furnaces.

It stands to reason that a determination in cases of this kind depends very largely on the peculiar facts of the particular case, and it is difficult, if not impossible, to formulate general rules which may be applied in other cases. Needless to say, some of the cases present close questions on the facts.

In approaching the problem, it must be borne in mind that under Sections 5546-2 and 5546-26, General Code, the presumption prevails that every sale or use of tangible personal property in this state is taxable. Moreover, laws relating to exemption from taxation are to be strictly construed, and one claiming exemption must affirmatively establish his right thereto. State ex rel. Foster v. Evatt, Tax Com'r, 144 Ohio St. 65, 56 N.E.2d 265, and Cleveland-Cliffs Iron Co. v. Glander, Tax Com'r, 145 Ohio St. 423, 62 N.E.2d 94.

Likewise, it must be remembered that both Sections 5546-1 and 5546-25, General Code, relating to the sales...