Court Opinion

ID: 6731949
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:13:37.333936+00
Date Added: 2024-06-11T16:01:40.379014
License: Public Domain

HEDRICK, Judge.
G.S. 105-164.6 provides in pertinent part:
“An excise tax is hereby levied and imposed on the storage, use or consumption in this State of tangible personal property purchased within and without this State for storage, use or consumption in this State....”
When the material in question is withdrawn from inventory, cut, and made into swatch books, which are distributed to petitioner’s customers free of charge solely for the purpose' of promoting sales of the furniture manufactured by petitioner, it is “used or consumed” within the meaning of the statute, and is subject to the tax levied pursuant thereto unless exempted by G.S. 105-164.13(8) or excluded by G.S. 105-164.3(19).
“Sales of tangible personal property to a manufacturer which enters into or becomes an ingredient or component part of tangible personal property which is manufactured” are exempt from the tax imposed by G.S. 105-164.6. See, G.S. 105-164.13(8). The petitioner is engaged in the business of manufacturing furniture, not swatch books. Therefore, since the material (fabric) is used and consumed without being converted into tangible personal property (furniture in this case), which may be subject to a sales tax, it is not exempt from the tax.
G.S. 105-164.3(19) provides:
“ ‘Storage’ and ‘Use’; Exclusion — ‘Storage’ and ‘use’ do not include the keeping, retaining, or exercising any right or power over tangible personal property for the original purpose of subsequently transporting it outside the State for use thereafter solely outside the State and which purpose is consummated, or for the purpose of being processed, fabricated, or manufactured into, attached to or incorporated into, other tangible personal property to be transported outside the State and thereafter used solely outside the State.”
*10Our conclusion that the material in question is used and consumed within the meaning of G.S. 105-164.6 when it is withdrawn from inventory and made into swatch books and that swatch books are not manufactured within the meaning of G.S. 105-164.13(8), obviates the necessity of our discussion whether such material is excluded by G.S. 105-164.3 (19).
The judgment of the Superior Court is
Affirmed.
Judge Morris concurs.
Judge Baley dissents.