Ezel / Tax Rulings / CA

Was fuel oil exempt when a manufacturer burned it to generate steam used to cure products for resale?

Short answer No. The oil was bought to generate steam, not for resale, so its retail sale was taxable even though the steam helped cure products later sold.
State
CA
Ruling
Annotation 440.1160
Tax type
Sales and Use Tax
Issued
1953-01-27
Issued by
California State Board of Equalization
Requested by
A manufacturer asking about fuel oil used to generate steam for curing products
Topics
fuel oil steam manufacturing aid natural gas pipe sales tax
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1953. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1953
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 is a California State Board of Equalization tax-counsel letter dated January 27, 1953, published by CDTFA as support for a sales and use tax annotation. It applies then-current section 6353 to explain why piped natural gas could receive different treatment from fuel oil burned for the same curing purpose. Another taxpayer should not treat it as binding and should check current fuel, steam, curing, utility-delivery, exemption, manufacturing-aid, and sales-and-use-tax rules. This summary is informational only and is not legal or tax advice.
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

A manufacturer burned fuel oil to generate steam used in curing products that it later sold.

The fuel-oil purchase was taxable because the oil itself was consumed to make steam rather than bought for resale. The later resale of the cured products did not change that manufacturing use.

The manufacturer compared fuel oil with natural gas used interchangeably for the same purpose. Counsel explained that natural gas could be exempt under section 6353 when delivered through mains, lines, or pipes; without that delivery method, the letter identified no exemption.

Citations and references

  • California Revenue and Taxation Code section 6353 (as cited)

Source

Original ruling text

440.1160

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

January 27, 1953
--- --- ----- --- ----- --- --Gentlemen:
In answer to your letter of January 23, we advise that the sales tax applies to receipts from retail sales of fuel oil. The fact that you use the fuel oil to generate steam used in curing your product which is resold is immaterial. The sale of the fuel oil to you is a retail sale since the fuel oil itself is bought for some purpose other than resale, i.e., to generate steam. You state that the fuel oil is used interchangeably with natural gas for the same purpose and that no sales tax applies to the gas. This may be for the reason that the gas is delivered to you through mains, lines, or pipes, thus rendering the sale of the gas to you exempt under the provisions of Section 6353 of the Sales and Use Tax Law. For your convenient reference this section provides: “There are exempted from the taxes imposed by this part the gross receipts from the sales, furnishing, or service of and the storage, use, or other consumption in this State of gas, electricity, and water when delivered to consumers through mains, lines, or pipes.” Unless the natural gas is delivered to you in this manner, we are not aware of any basis for its exemption from the sales tax. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ph

cc:

Long Beach - Compliance

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