…
The audit found that the rental – and subsequent purchase –
of a crusher was not entirely exempt. The audit described the function of the
crusher as follows:
The crusher was used to crush concrete waste from road
construction and building demolition into smaller pieces of rock. Primarily,
the [T]axpayer moved this equipment to the construction site, where the
[T]axpayer crushed the piles of concrete waste supplied by the contractor
performing the construction or demolition.... The [T]axpayer also used the
crusher in the same capacity at their [Indiana] location on occasion, crushing
concrete brought to their facility by the customer.
…
The issue is whether Taxpayer falls within the definition of
an "industrial processor," "manufacturer," or
"miner" because it crushes concrete.
…
Taxpayer, in the case at hand, in effect argues that its
products are substantially changed from the raw materials (viz., waste
concrete) that it receives, while the Department's audit found that Taxpayer
was engaged in providing a service for its customers.
…
In reviewing the various authorities cited above, it is not
possible to conclude that the crushed concrete has undergone a
"substantial change" (See 45 IAC
2.2-5-10(k)) or to refute the audit's conclusion that the "concrete is
essentially crushed into small pieces." Keeping in mind that Taxpayer
bears the burden of demonstrating the proposed assessment is wrong, that the
exemption statutes are "strictly construed" against exemption, and
that a weighing of the factors above does not support Taxpayer's argument, the
Department is unable to agree that the crushed concrete meets the requirements
necessary to sustain Taxpayer's protest.
Taxpayer purchased a Volvo Loader. The Department's audit
found that the Volvo Loader was subject to sales/use tax. As described in the
audit report: The loader is not performing any exempt operations; it is
simply loading the concrete into the crusher.
Taxpayer maintains that the Volvo Loader is an
"integral part of the process" and that "[w]ithout the loader,
the crusher is useless and cannot perform the process."
…
Taxpayer's argument depends on whether or not Taxpayer is
occupationally engaged as an industrial processor producing a product which has
undergone a "substantial change." See IC § 6-2.5-5-3(b); 45 IAC
2.2-5-10(k). Since the Department has concluded that Taxpayer's crushing
waste concrete from highways and bridges does not fall within the statutory
exemption, Taxpayer's argument must necessarily fail. In addition, the audit
pointed out that loading the waste concrete into the crusher is best
categorized as a "pre-production activity" described in 45 IAC
2.2-5-10(f)(1). ("Tangible personal property used for moving raw
materials to the plant prior to entrance into the production process is taxable.").
…
Taxpayer purchased diesel fuel without paying Indiana sales
or use tax. Taxpayer maintains that "the fuel is used to operate the
crusher and the loader which is an integral part of the process, be it
manufacturing, industrial processing, or extraction."
…
As discussed in Part I above, the Department is unable to
agree that Taxpayer is either "manufacturing, processing, refining, or
mining." As such, Taxpayer has not met its burden under IC § 6-8.1-5-1(c)
of establishing that the original assessment was incorrect. The audit correctly
concluded that the purchase of the diesel fuel was subject to sales/use tax.
http://www.in.gov/legislative/iac/20120530-IR-045120226NRA.xml.html
