Opinion ID: 1799002
Heading Depth: 1
Heading Rank: 2

Heading: sales and use tax exemptions

Text: Courtaulds' position on appeal is that a portion of the fuel oil used during the relevant period to fire its boilers should be exempt from sales tax under Ala.Code 1975, § 40-23-4-(16), and from use tax pursuant to Ala.Code 1975, § 40-23-62(18), because a portion of the total steam produced from its boilers was used to operate its pollution control facilities. The Department of Revenue, through Eagerton, disagrees, and submits that the fuel oil purchases do not fall within the specified exemptions of § 40-23-4 (sales tax) and § 40-23-62 (use tax): § 40-23-4. Exemptions. There are exempted from the provision of this division and from the computation of the amount of the tax levied, assessed or payable under this division the following: . . . (16) The gross proceeds from the sale of all devices or facilities, and all identifiable components thereof or materials for use therein, acquired primarily for the control, reduction or elimination of air or water pollution and the gross proceeds from the sale of all identifiable components of or materials used or intended for use in structures built primarily for the control, reduction or elimination of air and water pollution. § 40-23-62. Exemptions. The storage, use or other consumption in this state of the following tangible personal property is hereby specifically exempted from the tax imposed by this article: . . . (18) The storage, use or consumption of all devices or facilities, and all identifiable components thereof or materials for use therein, used or placed in operation primarily for the control, reduction or elimination of air or water pollution, and the storage, use or consumption of all identifiable components of or materials used or intended for use in structures built primarily for the control, reduction or elimination of air or water pollution. Close analysis of §§ 40-23-4(16) and 40-23-62(18) evidences the qualifications for the stated exemptions. First, it must be a device or facility acquired primarily for pollution control purposes. Or second, it must be an identifiable component of a device or facility acquired primarily for pollution control purposes. Or third, it must be a material for use in a device or facility acquired primarily for pollution control purposes. Code 1975, § 11-54-88(c)(2), defines pollution control facility as follows: Any land, building, structure, machinery or equipment having to do with or designed for or the end purpose of which is the control, reduction, abatement or prevention of air, noise, water or general environmental pollution, including, but not limited to, any air pollution control facility, noise abatement or reduction facility, water management facility, water purification facility, waste water collecting system, waste water treatment works or solid waste disposal facility. Inherent in the trial court's judgment for Courtaulds was a determination that boilers No. 7 and 8 were devices or facilities acquired primarily for pollution control. These two boilers were purchased specifically to meet the additional steam requirements caused by installation of the pollution facilities. Eagerton argues that these two boilers operated in a manner similar to all the others at the Courtaulds plant, and because all steam generated was channeled into a central line for distribution, it cannot be said that boilers No. 7 and 8 were uniquely associated with pollution control. Despite the correctness of the basic premise of such assertions, the trial judge, supported by competent scientific data, found to the contrary. It is the policy of this Court to presume correct the findings of the trial court based upon competent evidence, when the evidence is presented ore tenus. Findings of fact will not be disturbed on appeal if supported by the evidence or any reasonable inference therefrom, unless they are plainly and palpably erroneous. First Alabama Bank of Montgomery, N.A. v. Coker, 408 So.2d 510 (Ala.1982); Hopper v. Curry, 408 So.2d 83 (Ala.1981). While certain historic, objective facts were submitted by stipulation, the evidence bearing upon the crucial issues was presented ore tenus. Moreover, our independent review of the entire record compels us to a conclusion totally consistent with that of the trial judge. We are unable to adopt the assertion of the commissioner that the fuel oil consumed by boilers No. 7 and 8 was nothing more than an aid to their function. Rather, we agree with the trial court's determination that the fuel oil was a material for use in a device or facility acquired primarily for pollution control purposes.