Section 24 Manufacturing

• Library: Tax Law 2009

Many cases have examined the issue of what constitutes “manufacturing” within the context of the manufacturing exemptions. The landmark cases in this regard are:

• Heidelberg Cent., Inc. v. Dir. of Dep’t of Revenue
  476 S.W.2d 502 (Mo. 1972)

• W. Lake Quarry & Material Co. v. Shaffner, 451 S.W.2d 140 (Mo. 1970)

• House of Lloyd, Inc. v. Dir. of Revenue, 824 S.W.2d 914 (Mo. banc 1992)

In Heidelberg, the Court held that the business of using printing presses to produce business forms, stationery, printed advertising, postcards, and church bulletins was manufacturing because “[t]he printers . . . produce new and different articles from raw materials by the use of machinery, labor and skill, and they produced products for sale which had an intrinsic and merchantable value, and were in forms suitable for new uses.” Heidelberg, 476 S.W.2d at 506.

In West Lake, the Court held that the process of grinding, crushing, and sorting quarried rock into various sizes for different commercial uses was manufacturing. The Court, quoting City of Louisville v. Howard, 208 S.W.2d 522 (Ky. App. 1947), defined manufacturing as a process that “takes something practically unsuitable for any common use and changes it so as to adapt it to such common use.” W. Lake, 451 S.W.2d at 143.

In House of Lloyd, the Court summarized prior caselaw in this area as follows: “The common thread running throughout all the cases in which this court has defined ‘manufacturing’ is the production of an article with a new use different from its original use.” House of Lloyd, 824 S.W.2d at 921.

See also Utilicorp United, Inc. v. Dir. of Revenue, 75 S.W.3d 725 (Mo. banc 2001) (generating electricity was within the meaning of “manufacturing,” but the transmission and distribution of electricity is not “manufacturing”). But see Zip Mail Servs., Inc. v. Dir. of Revenue, 16 S.W.3d 588 (Mo. banc 2000) (machinery used to read addresses on envelopes and apply a scanable bar code containing the address information on the envelope fell outside the meaning of “equipment” used in the manufacturing machinery and equipment exemption). See also Galamet, Inc. v. Dir. of Revenue, 915 S.W.2d 331 (Mo. banc 1996) (scrap conversion operations constituted manufacturing within the meaning of the exemption). But see Walsworth Publ’g Co. v. Dir. of Revenue, 935 S.W.2d 39 (Mo. banc 1996) (photo typesetting paper fell outside the meaning of “equipment” used in the manufacturing machinery and equipment exemption).

Caselaw...