This matter is decided based upon the written submissions of the parties. Unless otherwise indicated, Section references are to Title 2 of the Texas Tax Code, and Rule references are to sections of Title 34, Texas Administrative Code. Notice has been taken of all Comptroller's records pertinent to Petitioner or the issues raised in this case. Petitioner contends that items purchased for use in its filling operations are exempt from tax because they are part of a manufacturing process.
Petitioner is primarily a manufacturer of storage drums.
Petitioner is also in the business of selling new and reconditioned storage drums. In addition, Petitioner has a filling operation in which it fills storage drums with it's customers' products, at the direction of the customers. Petitioner's timely filed request for redetermination resulted in this proceeding. The auditor made adjustments in the audit for purchases of expense items relating to Petitioner's filling operations on which no tax was paid or accrued. With respect to Petitioner's filling operations, a customer's product is brought to Petitioner's facility in bulk either by railcar or tank truck.