Youngstown Bldg. Material & Fuel Co. v. Bowers

• Decision Date: 19 March 1958
• Docket Number: 35340,Nos. 35335,35346,s. 35335
• Citation: 167 Ohio St. 363,149 N.E.2d 1,5 O.O.2d 3
• Parties: , 5 O.O.2d 3 The YOUNGSTOWN BUILDING MATERIAL FUEL CO., A/PPELLEE, v. BOWERS, Tax Com'r, Appellant. The YOUNGSTOWN BUILDING MATERIAL FUEL CO., A/PPELLANT, v. BOWERS, Tax Com'r, Appellee. COLLINWOOD SHALE BRICK & SUPPLY CO., Appellant, v. BOWERS, Tax Com'r, Appellee.
• Court: Ohio Supreme Court

Page 363

167 Ohio St. 363

149 N.E.2d 1, 5 O.O.2d 3

The YOUNGSTOWN BUILDING MATERIAL FUEL CO., A/PPELLEE, v.BOWERS, Tax Com'r, Appellant.

The YOUNGSTOWN BUILDING MATERIAL FUEL CO., A/PPELLANT, v.BOWERS, Tax Com'r, Appellee.

COLLINWOOD SHALE BRICK & SUPPLY CO., Appellant, v.BOWERS, Tax Com'r, Appellee.

Nos. 35335, 35340, 35346.

Supreme Court of Ohio.

March 19, 1958.

Syllabus by the Court

In determining whether tangible personal property is used or consumed directly in the production of tangible personal property for sale by manufacturing or processing, and, therefore, whether its sale or use is excepted from taxation under the provisions of subdivision (E)(2) of Section 5739.01, or subdivision (C)(2) of Section 5741.01, Revised Code, the test is not whether such property is essential to the operation of an 'integrated plant,' the test to be applied being, when does the actual manufacturing or processing activity begin and end, and is the property used or consumed during and in the manufacturing or processing period.

Cases Nos. 35335and35340 grew out of an appeal by The Youngstown Building Material & Fuel Company from a sales and use tax assessment made by the Tax Commissioner.

Case No. 35346 grew out of an appeal from a similar assessment against the Collinwood Shale Brick & Supply Company.

The property involved in all cases consists chiefly of machinery known in the ready-mix concrete trade as 'a batching plant.'The description of the various items of property and their use as revealed by the records is as follows:

Cases Nos. 35335and35340

1. 52-ton 3-compartment bin To hold sand and two kinds of stone prior to their being united in a common weigh hopper

2. 200-ton 4-compartment bin Same as item 1, except as to size and number of compartments

3. 200-ton conveyor To elevate or convey sand and aggregates from storage bins at or below the ground to items 1 and 2

4.Structrual steel cat walk For purposes of inspection, repair and maintenance of item 3

5 Two steam generators To heat water used in mixing and to blow steam into feeder compartments to take chill off aggregates and melt any frozen lumps

6. 42.5 yards of concrete and wire Used in construction of footers for the foundations of item 2

Items 1 through 5 were held by the Board of Tax Appeals to be not excepted in respect to sales and use taxes under the provisions of subdivision (E)(2) of Section 5739.01, and subdivision (C)(2) of Section 5741.01, Revised Code.From that part of the decision, The Youngstown Building Material & Fuel Company has appealed (case No. 35340).Item 6 was held to be excepted as to such taxes, and from that part of the decision the Tax Commissioner has appealed (case No. 35335).

Case No. 35346

7.Buda lift truck To move bags of cement and other materials in and about the batching plant

8.Parts for Fairfield conveyor To unload coal from railroad cars and transport it to brick kilns

9.Steam generator Same as item 5

10.Browning bucket crane To remove sand and other materials from railroad cars and deposit them in bins or compartments at top of batching plant

11.Cement storage bin or silo To store bulk cement before it is elevated to cement bins at top of plant

12.Screw feeder To remove dry cement from item 11 and deposit it on conveyor belt which elevates cement to bins at top of plant

Items 7 through 12 were held by the board to be not excepted in respect to taxation, from which decision the Collinwood Company has appealed (case No. 35346).

Manchester, Bennett, Powers & Ullman and Paul J. Fleming, Youngstown, for appellee in case No. 35335 and appellant in case No. 35340.

William Saxbe, Atty. Gen., and John M. Tobin, Columbus, for appellant in case No. 35335 and appellee in case No. 35340.

McAfee, Grossman, Taplin, Hanning, Newcomer & Hazlett, Russell C. Grahame and H. V. E. Mitchell, Cleveland, for appellant in case No. 35346.

William Saxbe, atty. Gen., and Gerald A. Donahue, Columbus, for appellee in case No. 35346.

BELL, Judge.

A batching plant, as the term is used in the ready-mix concrete business, is a semiportable steel structure, mounted on a concrete base embedded in the ground, and containing separate compartments or bins where the various ingredients used in the processing of concrete--aggregates, cement and water--are separately stored, weighed and blended into ready-mix concrete.

The upper part of a batching plant contains the bins where the various aggregates and cement are kept in separate compartments.At the base of these bins, an automatic mechanism weighs and allows the right amounts of the dry ingredients to drop, by gravity, into a so-called common weigh hopper.From the common weigh hopper the commingled dry ingredients drop into a compartment, known to the trade as a batcher or mixer, where the proper amount of water is added and all the ingredients are thoroughly mixed.The wet ready-mix, ready for use, is then dropped into trucks below.Such a plant is known as a 'wet plant.'

A 'dry plant' differs from a 'wet plant' only in that the former has no batcher or mixer, the dry ingredients being dropped from the common weigh hopper into a mixer truck, simultaneously with water, and the mixing process occurs while the truck is en route to its destination.

Generally speaking, the procedure involves the unloading of sand, gravel, cement and certain other materials from railroad cars or other means of conveyance at the plant site and the placing of such materials either into storage bins or pits at or below ground level or directly into the bins at the top of the batching plant.Belt and screw conveyors (items 3 and 12) are used to convey the various materials from these storage bins to storage compartments or bins at or near the top of the plant, and a bucket conveyor (item 10) is used to convey such materials from railroad cars to either the ground or plant storage bins.

All the property involved in these cases is used prior to the commingling of the ingredients in the common weigh hopper.The single question for determination here is whether the property is used or consumed 'directly in the production of tangible personal property for sale by manufacturing, processing.'Subdivision (E)(2) of Section 5739.01, and subdivision (C)(2) of Section 5741.01, Revised Code.

The taxpayers in these cases make a strong contention that the property involved is part of an 'integrated plant' and, therefore, that each item is indispensable to the processing of concrete.They gain a measure of support for their position from the decision of the Court of Appeals of the Seventh Appellate District in Boardman...