Tax Type
Retail Sales and Use Tax
Description
Manufacturing, processing, assembling, or refining; Radiography film
Topic
Taxability of Persons and Transactions
Date Issued
02-11-1993
February 11, 1993
Re: §58.1-1821 Application: Retail Sales & Use Tax
Dear***********:
This will reply to your letter of January 28, 1992 in which you seek a correction of a sales and use tax assessment to your company, **********(the "Taxpayer"), for the period October 1, 1987 through September 30, 1990.
FACTS
The Taxpayer, a manufacturer of solid rocket propulsion systems, contests the assessment of tax on radiography (x-ray) film purchased and used in inspecting rocket motors. The Taxpayer maintains that the x-ray film is a consumable supply that is used directly in a contractually required radiographic inspection as part of the quality assurance/testing phase of an integrated manufacturing process. Therefore, you feel that the film qualifies for exemption from the sales and tax under the manufacturing exemption in Va. Code § 58.1-608(A)(3)(b).
DETERMINATION
Virginia Regulation (VR) 630-10-63 which interprets the manufacturing exemption explains that "operating supplies which are actively and continually consumed in the operation of exempt machinery and equipment, are deemed used directly in the manufacturing or processing and are not subject to the tax."
Based on the information provided, I will agree to remove from the assessment x-ray film to the extent that it is used in exempt x-ray equipment, i.e., equipment used in production line quality control, However, any x-ray film not used in x-ray machinery which has been deemed to be exempt, and movie film used for other purposes, i.e., to view and analyze burn rates of various rocket fuels, or for progress or other reports will remain taxable.
Accordingly, the assessment will be revised as set forth above, and a refund will be issued to the Taxpayer as soon as practicable.
Sincerely,
W. H. Forst
Tax Commissioner
OTP/6387H
Rulings of the Tax Commissioner