Were continuous thickness gauges mounted on production lines exempt manufacturing or quality-control machinery?

Plain-English summary

X Continuous Thickness Gages were mounted on rolling mills or processing lines. Operators could not produce the finished product unless the gauges worked correctly, and the devices measured continuously rather than intermittently or randomly.

On those facts, DRS treated the gauges as machines used directly in manufacturing or quality-control machines used exclusively in the manufacturing production process. Their sales were exempt under the cited historical provisions.

DRS stressed the narrow scope. Gauges used for post-production measurement, random testing, off-line applications, or similar purposes would probably be taxable. Computer-operated control equipment sold with the gauges was also taxable.

What this means for you

The historical exemption depended on integration into the production line, necessity to the process, and continuous measurement. A similar device used after production or only for occasional testing did not share the stated result.

Common questions

Were all thickness gauges exempt? No. The opinion was limited to the stated production-line facts.

What uses would probably be taxable? Post-production, random-testing, and off-line applications.

Was computer control equipment exempt with the gauge? No.

Citations and references

• Conn. Gen. Stat. § 12-412(34).
• Conn. Agencies Regs. § 12-426-11b.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 89-265

Original ruling text

Ruling 89-265, Machinery

You have requested a determination as to the applicability of the sales and use tax to X Continuous Thickness Gages. In addition, we have discussed the issues with Audit Division personnel who had previously advised you of the possible taxability of the gages.

We have reached a conclusion regarding the specific types of gages to which you refer, assuming the following facts, stated in your letter:

the gages are mounted on the rolling mills or processing lines;

the operators cannot produce the finished product without the gages in operation and working correctly;

the gages measure the product on a continuous, and not an intermittent or random, basis.

Based on the above information, we conclude that these gages are machines used directly in the manufacturing process and/or quality control machines used exclusively in the manufacturing production process, and are therefore exempt from sales tax under Conn. Gen. Stat. § 12-412(34), Conn. Agencies. Regs. § 12-426-11b, and other relevant agency rulings.

We wish to emphasize the relatively narrow scope of this opinion. If X Gages are sold for applications or uses other than those specifically referred to in your letter, such as post-production measuring, random testing, off-line applications, and the like, such sales would probably be taxable. Any computer-operated control equipment sold with the gages would be deemed taxable, as well.

LEGAL DIVISION

December 7, 1989