Was photoengraving a manufacturing production process that qualified its machinery for Connecticut's sales-tax exemption?

Note -- obsolete historical guidance. DRS marks this information "not current" and states that Announcement (AN) 94(4) obsoleted the ruling.

Plain-English summary

The taxpayer created engravings applied to copper-plated gravure base cylinders. Those engravings were later used to produce wall coverings, food packaging, and textiles.

DRS classified photoengraving as processing rather than manufacturing. The process did not substantially change personal property's form, composition, or character or transform it into a different product with a distinctive name, nature, and use. It therefore was not a manufacturing production process, and its machinery did not qualify for the manufacturing exemption.

What this means for you

Under the historical rule, production-related processing was not enough; the operation needed the substantial transformation described by the regulation. AN 94(4) later obsoleted the guidance.

Common questions

Was photoengraving manufacturing? No under the ruling.

How did DRS classify it? As processing.

Did the machinery qualify for the manufacturing exemption? No.

Why not? The process did not substantially transform personal property into a different product.

Citations and references

• Conn. Gen. Stat. § 12-412(34), as cited in the ruling.
• Conn. Agencies Regs. § 12-426-11b(10) and § 12-426-11b, as cited in the ruling.
• Announcement (AN) 94(4) -- identified by DRS as obsoleting this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-222

Original ruling text

Ruling 89-222, Manufacturing

This information is not current and is being provided for reference purposes only

Ruling 89-222

Manufacturing

This Ruling has been obsoleted by   AN 94(4)

You have requested a ruling as to whether the process of photoengraving is a manufacturing production process whereby the machinery involved in such process would be exempt from sales and use tax pursuant to Conn. Gen. Stat. Sec. §12-412(34).

FACTS

Your client creates engravings that are applied to copper-plated gravure base cylinders. These engravings are used in the subsequent production of wall coverings, food product packaging and textiles. Your client's principal function is to transfer a design to a plate which design is subsequently reproduced on wall coverings, food packages or textiles.

RULING

Photoengraving is defined as:

the process of reproducing graphic material by transferring the image photomechanically to a plate or other surface in etched relief for printing. (American Heritage Dictionary)

It is our opinion that the process of photoengraving does not come within the definition of manufacturing, as set forth in Conn Agencies Regs. Sec. § 12-426-11b(10). We consider photoengraving to be processing, not manufacturing, and as such, it does not qualify for the exemption relating to manufacturing.

In reviewing the various operations in photoengraving, it is our opinion that the operations do not come within the definition of manufacturing. Manufacturing is defined as:

an integrated series of operations which places personal property in a form, composition or character different from that in which it was acquired for sale in the regular course of business by the manufacturer. The change in form, composition or character must be a substantial change, and it must result in a transformation of property into a different product having a distinctive name, nature and use.

Conn. Agencies Regs. Sec. § 12-426-11b(10).

The process of photoengraving does not result in a substantial change in the form, composition or character of personal property.

It is hereby ruled that the process of photoengraving, as carried on by your client, is not a "manufacturing production process" as described in Conn. Agencies Regs. § 12-426-11b.

LEGAL DIVISION

November 15, 1989