Was electricity for bottling conveyors and plating hoists exempt as manufacturing use?

Plain-English summary

A bottling conveyor built into the bottling machinery and powered by the same motor was treated as manufacturing or processing equipment.

A separately powered conveyor was instead intraplant transportation equipment because the facts did not show that the conveyor itself changed the product. The same was true for hoists moving items through electroplating or galvanizing tanks: although necessary to the process, the hoists performed no manufacturing or processing themselves.

Electricity used by those separately powered conveyors and hoists was therefore not exempt.

Common questions

When did a bottling conveyor qualify as manufacturing equipment? When built into a unit of bottling machinery and powered by the same motor.

Did necessity to production make a separate conveyor exempt? No.

Were plating hoists manufacturing equipment? No, they were intraplant transportation equipment.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8908L0951B12

Original ruling text

August 10, 1989

Dear ****:

Thank you for your letter regarding taxability of electricity used
by conveyors and hoists in the following examples:

1. Bottling plants - The bottles are placed on conveyors and
   systematically run through processors where they are filled,
   capped and some are labeled. The processing is not possible
   without the conveyor system. The conveyor is actually built
   into and is an integral part of the bottling machinery.

Response: If the conveyor system is actually built into a unit
of the bottling machinery and is powered by the same motor, the
bottling machinery with the built-in conveyor system would be
considered manufacturing/processing equipment. If the conveyor
system is separately powered, it would be considered intraplant
transportation. Although it may be necessary to the bottling,
there was no information presented to show that the conveyors
themselves perform manufacturing/processing on the item being
produced.

2. In processing like electro-plating or galvanizing. The item
   to be plated is carried on hoist and like in galvanizing it is
   dipped in 5 different tanks of various heat and chemicals- then
   is hoisted into the zinc tank. The hoists in question are not
   used for "interplant" transportation - fork lifts move all of
   the items to the plating tanks and away from the plating tanks -
   the hoists move them through the processing.

Response: The hoists are "intraplant" transportation and not
manufacturing equipment. Although hoists may be necessary to
the process, they perform no manufacturing/processing themselves
on the item being produced. The electricity to operate the con-
veyors and hoists is non-exempt use.

This opinion is based on the facts presented. If there are addi-
tional or different facts, the opinion may change.

If you have any questions or need more information, you may call
me toll free at 1-800-252-5555, extension 3-4666 or the regular
number 512/463-4666. You may write to me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence