Opinion ID: 1837112
Heading Depth: 1
Heading Rank: 6

Heading: Box Car Crating Material

Text: Determining whether this classification of materials is taxable or exempt presents a problem more difficult of solution than the others. However, it is our view that the evidence sufficiently establishes these materials as having entered into and become an ingredient or component part of furnished containers, within the meaning of that term as used in § 752(1) (i), Tit. 51, supra, in defining wholesale sale. It is to be noted that the definition of wholesale sale, as included in § 752(1) (i), contains the following: The term `wholesale sale' shall include a sale of tangible personal property or products (including iron ore) to a manufacturer or compounder which enters into and becomes an ingredient or component part of the tangible personal property or products which he manufactures or compounds for sale, and the furnished container and label thereof. The insistence on behalf of the state is that box car crating material is bracing material, and, as such, cannot be said to be property which enters into and becomes an ingredient or component part of   the furnished container; that furnished container, as used in § 752(1) (i), supra, could mean only what the word imports in its ordinary meaninga box, wrapping, or crate in which a product is packed for shipment; that it was not the intent of the legislature to exempt materials as here used by the manufacturers in shipping their manufactured products. The position taken by the Lumber Company is thus stated in its brief: There were two types of crating or enclosures under which the manufacturer shipped the products. One was to crate each individual stove in a separate and individual crate. The other was to partially crate a small stove and, as partially crated, these stoves would be lined up in the box car and thereupon a collective crate, composed of the crating material and the lumber purchased exclusively on order for that purpose, and kept entirely separate, would then be built around these stoves and they would thus be collectively crated. The purpose of this crating was identical with that of the individual crating and was done for the purpose of securely packaging the product for shipment to the purchaser. It was not included as a separate element of cost but was included in the total cost of the articles so shipped.    [T]his container material or closure material, as it is called, should be no more subject to the tax than would be the crating material used in making an individual crate. The purpose, use, object, the whole situation is identical.    That it was the legislature's intent to relieve manufacturers of the cost of the enclosure of manufactured products shipped to the purchaser. That the construction of the clause in accordance with the state's contention would give it an impracticable effect. That is, one manufacturer would individually crate his products, another would crate them collectively. The one who crated them individually would not pay the tax while the one who crated them collectively would be subject to the tax. That is neither rational, sensible, nor liberal in view of the relief which the legislature evidently intended to give to the manufacturer. We make it clear that we are not here dealing with material used simply for bracing, that is, to keep the stoves and furnaces in place and from shifting about in the box cars. It is shown by the evidence that such bracing material is used whether the stoves and furnaces are individually crated or collectively crated. In the final analysis, for us to hold with the state we must say, in effect, that the legislature intended to include within the term furnished container an individual container only, that is, a container furnished for and accompanying each separate article intended for sale at retail and normally remaining with such article until the article is sold to the ultimate consumer at retail. A very strict construction might lend support to such a holding. However, we think a fair interpretation of the legislative intent leads to a different construction. We hold that the so-called collective crating, under the facts of this case, comes within the meaning of furnished container as that term is used in the definition of wholesale sale in § 752 (1) (i), Tit. 51, supra. Is not the use of a collective container, as here involved, analagous to use by a watch manufacturer, for instance, of a large box or carton for shipping a number of individually packaged watches? Could it be said that the legislature intended to exempt the boxes containing the individual watches and, at the same time, to tax the larger container? Are not both furnished containers of the property or products manufactured? To hold that one is exempt and the other taxable would, indeed, be placing a strained and unnatural construction on the statute. As we interpret the statute, it provides that a furnished container of tangible personal property or products manufactured for sale is a wholesale sale. We perceive no basis for saying that this means only containers which normally remain with each separate article until sold at retail, but means, instead, just what it says, the furnished container of the property or products manufactured. A non-returnable container furnished by the manufacturer in shipping his products to a wholesaler or retailer is nonetheless a furnished container whether it contains one article or several articles in separate containers. As stated in Alabama-Georgia Syrup Co. v. State, 253 Ala. 49, 53, 42 So. 2d 796, 800: Nor does the statute say that when there is more than one container of the product, only the inner container is to be excluded from the tax. The fact that the containers are built around the stoves and furnaces in the box car does not destroy their characteristics as furnished containers. The time, place and manner of packaging is not a determining factor. It is the furnishing by the manufacturer of a container for his manufactured property or products which is the basis for exemption. It follows, from what we have said, that the decree appealed from is due to be affirmed. It is so ordered. Affirmed. LIVINGSTON, C. J., and SIMPSON and CLAYTON, JJ., concur.