Ezel / Tax Rulings / CA

Was heating and crushing welding-flux slag back into reusable form taxable when each customer's material stayed separate?

Short answer No. It was nontaxable reconditioning when no material was added and each customer's slag remained separate; commingling made the full charge taxable.
State
CA
Ruling
Annotation 315.0920
Tax type
Sales and Use Tax
Issued
1954-11-17
Issued by
California State Board of Equalization
Requested by
A business restoring welding-flux slag for reuse
Topics
reconditioning commingling customer property heating
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1954. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1954
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This 1954 opinion applied historical Ruling 26 to customer-owned welding-flux slag restored by heating and crushing without added material. The result depended on keeping each customer's lot separate. Current welding, processing, reconditioning, customer-property, commingling, exchange, and material-addition rules control today.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Electric-welding flux became waste slag during pipe manufacturing. A processor heated and crushed that slag back into its original reusable form without adding material.

California treated the charge as nontaxable reconditioning when each manufacturer's lot remained separate and the same customer's material was returned. If different customers' slag was commingled, tax applied to the entire charge.

Common questions

Was separately processed slag restoration taxable?

No.

Did adding no new material matter?

Yes, it was one of the stated facts.

What changed the answer?

Commingling different customers' lots.

Citations and references

  • Historical Ruling 26 (predecessor to California Code of Regulations, title 18, Regulation 1546)

Source

Original ruling text

315.0920

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 17, 1954
Your letter of October 19

Mr. C. E. T--XXXX XXth Street
--- ---, California

Dear Mr. T---:
In the manufacture of large dimension pipe by electric welding, a flux is used on the weld which becomes a waste slag. A process has been developed to return this slag to its original ofrm by heating and crushing. Each manufacturer’s lot of slag will be kept as a separate unit without mixing it with any other lot. No material is added. It is our opinion that the charge made for this work would be regarded as a charge for reconditioning and would not be subject to sales tax. See Ruling 26 (copy enclosed). Note, however, that, if different customer’s lots of slag were commingled, tax would apply on the entire charge pursuant to the last paragraph of Ruling 26. Yours very truly,

Bill Holden
Assistant Counsel

BH:ja

cc:

San Francisco - Auditing

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