Opinion
No. 89-1987
Submitted May 30, 1990 —
Decided August 29, 1990.
Taxation — Franchise tax — Equipment used in the mining and crushing of clay and shale used to manufacture face brick qualifies for R.C. 5733.061 investment tax credit, when — Equipment is used to convert material into a new form, quality, property or combination and into a more valuable commodity for sale.
APPEAL from the Board of Tax Appeals, Nos. 86-B-247 and 86-F-248.
Belden Brick Co., appellee, manufactures face brick for the construction industry. Face brick is mortared onto the facades of buildings. Belden combines clay and shale to make these bricks.
Belden obtains the clay and shale from mines that it owns. It strips off overburden and shovels out the clay and shale. The clay at the top of a vein tends to be softer than the clay at the bottom. Since clays of different hardnesses fire differently, Belden stirs the clay at the mine site with bulldozers and shovels to ensure the clay's uniformity. Belden also removes undesireable limestone and iron deposits from the clay and shale at the excavation site.
After removing the clay and shale, Belden trucks these materials to crushing machines at the factory. There it crushes the clay and shale to a workable size for manufacturing. Belden then introduces the clay and shale into its brick processing.
Belden blends clay, shale and water to form the brick batch, molds the batch into brick shapes, and fires them in the kilns. Since Belden's customers require a consistently colored brick wall, Belden attempts to maintain consistent colors in the bricks of an order.
Belden applied for franchise tax refunds, for the tax years 1980 and 1981, for erroneously paying tax on equipment used in the mining and crushing of the clay and shale which, it claimed, qualified for the investment tax credit. At issue are the bulldozers, shovels, scrapers, and trucks used to remove the overburden, to dig and transport the clay and shale, and to reclaim the excavation site. Also at issue are a crusher and assorted equipment used in crushing.
The Tax Commissioner, appellant, found that Belden did not use the contested equipment in manufacturing and denied the applications. On appeal, the Board of Tax Appeals ("BTA"), found that Belden began manufacturing at the mining site. Consequently, the BTA reversed the commissioner's order as to the contested items.
This cause is now before this court upon an appeal as of right.
Black, McCuskey, Souers Arbaugh and Charles J. Tyburski, for appellee.
Anthony J. Celebrezze, Jr., attorney general, and James C. Sauer, for appellant.
R.C. 5733.061 provides for the contested credit. On authority of Stoneco, Inc. v. Limbach (1990), 53 Ohio St.3d 170,
560 N.E.2d 578, decided today, we affirm the BTA's decision.
Decision affirmed.
MOYER, C.J., SWEENEY, HOLMES, WRIGHT, H. BROWN and RESNICK, JJ., concur.
DOUGLAS, J., dissents.