Ezel / Tax Rulings / TX
TX 9004L0997G09 Sales and/or Use Tax (State,Local,MTA) 1990-04-16

Was electricity exempt when it powered pumps, crushers, and conveyors at a Texas crushed-stone plant?

Short answer: Yes. Electricity for the pumps, crushers, and conveyors was exempt. Conveyor power qualified because it transported material extracted from the earth, even though the conveyors themselves were intraplant transportation equipment, provided no nonnaturally occurring material had been added.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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) is the authoritative source for any reliance.

Plain-English summary

Electricity powering water pumps, crushers, and conveyors at a crushed-stone plant was exempt from Texas sales and use tax.

The conveyors themselves were intraplant transportation equipment and did not qualify as machinery directly used in manufacturing. But the electricity they consumed was exempt because it transported material extracted from the earth.

That transportation-use exemption applied only while the material had not been processed by adding substances that do not occur in nature.

Common questions

Was power for the conveyors exempt? Yes.

Did that mean the conveyors themselves qualified as manufacturing equipment? No. The letter expressly distinguished the equipment from the electricity it used.

What limitation applied? The extracted material could not have been processed by adding nonnaturally occurring materials.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

April 16, 1990

Dear *****:

Thank you for waiting so patiently for a ruling in writing on the
taxability of electricity used at the **** crushed stone
plant.

As I informed you by telephone, the electricity that powers the
water pumps, crushers, and conveyors is exempt from the sales and
use tax. Even though the conveyors are intra-plant transportation
equipment and don't qualify as machinery and equipment directly
used in manufacturing, the electricity used by the conveyors is
exempted because it is used in transporting a material extracted
from the earth.

Electricity used to transport a material extracted from the earth
is exempted so long as the material is not processed by adding
other materials that do not occur in nature.

If you have any questions or need more information please call our
toll-free number 1-800-531-5441; the regular number is (512) 463-
4861. You may write me at the Taxability Section of Legal Services
Division.

Sincerely,
Tom Soto
Taxability Section
Legal Service Division

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