Opinion
No. 76-141
Decided October 6, 1976.
Taxation — Sales and use taxes — Unloading equipment — Not excepted from taxation, when.
APPEAL from the Board of Tax Appeals.
Taxpayer, Semac Industries, Inc., operates sawmills in Millersburg, where it processes or manufactures for sale, pallets, sawdust, bark mulch and graded lumber.
The Tax Commissioner issued a sales and use tax assessment on a 920 Caterpillar fork-lift tractor and parts therefor purchased by taxpayer and used in its business, and the Board of Tax Appeals affirmed the assessment.
The cause is now before this court pursuant to taxpayer's appeal as of right.
Messrs. Schuler, Schuler, Waltman Miller and Mr. John R. Waltman, for appellant.
Mr. William J. Brown, attorney general, and Mr. John C. Duffy, Jr., for appellee.
The Board of Tax Appeals found that the equipment in issue is utilized by taxpayer to unload logs from incoming trucks, to sort and store the logs by grade and length and to convey selected logs to the mill machinery which debarks the logs. Thereafter, the logs are sawed and processed further.
Appellant (taxpayer) contends that the "direct-use" exception of R.C. 5739.01(E)(2) applies, since the equipment is primarily used in processing the logs from standing timber, which appellant fells and delivers to its plant. Appellant submits further that the fork lift constitutes handling and transportation equipment used to transport partially processed material between stages of manufacturing, and is excepted from taxation under R.C. 5739.02(B)(16).
This court, however, is in agreement with the determination of the Board of Tax Appeals that the manufacturing process herein commences at the debarking stage, and that there is no transformation or conversion of the raw material prior to that time. See Interlake v. Kosydar (1975), 42 Ohio St.2d 457, 459. The fork-lift equipment is involved in "`* * * operations preliminary and preparatory to manufacturing or processing, and * * * [is] not used or consumed directly in producing tangible personal property for sale by manufacturing or processing within the contemplation of the applicable statutes, and hence * * * [its] purchase or use * * * [is] not excepted from taxation' * * *." Ohio Ferro-Alloys Corp. v. Kosydar (1973), 34 Ohio St.2d 113, 117.
The decision of the Board of Tax Appeals is neither unreasonable nor unlawful, and is, therefore, affirmed.
Decision affirmed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.