Court Opinion

ID: 9581524
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:15:45.917165+00
Date Added: 2024-06-11T13:37:02.085608
License: Public Domain

Pannell, Judge,
dissenting. I agree with Division 1 of the opinion. I dissent from Division 2 of the opinion holding that the carbon electrodes are industrial materials within the meaning of Section 3 (c) 2 of the Georgia Retailers and Consumers Sales and Use Tax Act, Ga. L. 1951, p. 360 (Code Ann. § 92-3403aC (2)). As I view it, the majority opinion leaves out essential facts, includes in the statement of the written stipulation of fact matters not stipulated, and considers as a "stipulation” statements of counsel for both parties made during arguments, which I construe were nothing but statements of a factual or legal opinion, not binding on the courts. This is what apparently led to what I consider the erroneous conclusion in Division 2 of the majority opinion.
The parties entered into a written stipulation submitting the case to be tried by the court sitting without a jury, which stipulation recited: "It is further stipulated that the following facts shall be taken as true on the trial of this case, subject to the right of either party to introduce other and further evidence not inconsistent with the facts herein stipulated.” Stipulation No. 12 *499reads as follows with material portions thereof underscored which are not included in the majority’s statement of the contents of the written stipulation: "Consumption of the electrodes results partly from breakage as noted above, partly from dipping in the bath as noted above, and, except for such breakage and dipping, wholly from oxidation (combining with oxygen) or from volatilization (changing from solid carbon to carbon gas) occurring while the electrode is employed in conducting electricity. Appellant estimates that 42% of the carbon in the electrodes, after volatilizing into carbon gas, enters temporarily into the bath before re-emerging and becoming dissipated into the atmosphere. The entry of carbon gas into the bath is caused by the force of the flow of electricity drawing such carbon gas into the bath. The entry of such carbon gas is not a source of carbon in the steel making process. ” The underscored portions to this stipulation, which were not included in the majority opinion, are essential to a proper decision of this case, and call for an entirely different result as to the electrodes, and is directly contrary to statements of the majority in Division 2 of the opinion, such as "we have two differences as far as the electrodes are concerned, (a) Carbon gas, created by the intense heat of the electric arc, goes into the molten metal, leaving some carbon in it, but is largely dissipated or oxidized, (b) For supplying the proper carbon content of the steel the electrodes are dipped into the molten mass. Sometimes they break off, falling into it, and if tests should indicate that the content is insufficient, broken and used electrodes are added to increase it. If the content is too high, it is removed by oxidation. The electrodes are totally consumed in the process, and are the principal source from which the required carbon content is supplied.”
The underscored words in this statement in the majority opinion, indicating some of the carbon gas remained in the metal bath as a part of the manufactured product, is contrary to the written stipulations, as well as the statement the entire electrode was consumed by dipping the electrode to put carbon in the metal bath and by using broken pieces of electrodes to add carbon to the metal bath. The written stipulation of facts shows that 6% of the electrode is consumed by intentional dipping, 9% to 10% from the addition of broken pieces of the electrode to the metal bath, 42% of the electrode is converted into carbon gas, and 42% of the electrode is dissipated directly into the air by oxidation, neither of the last two (a total of 84% of the electrode) supply any carbon content to *500the metal.
Immediately after this failure to state all of the contents of stipulation No. 12, the majority opinion gives the following as a part of the written stipulations: "The impregnation of carbon into the molten metal is an integral part of the electro-chemical process that takes place in the electric furnaces and is indispensable to the steel making operation.” I can find no such statement or stipulation in the written stipulation of facts. There is a similar statement in appellee’s brief filed in this court, but it is not supported by the record. While a witness for the taxpayer testified that the entry of the 42% of the carbon into the molten metal by arc transfer [carbon gas] is an integral part of the electro-chemical process that takes place in the electric furnaces and is indispensable to the steel making operation, this testimony was based upon his concept that tiny particles of carbon gas are impregnated into and remained in the molten metal. This concept is in conflict with the written stipulation that the carbon gas was not a source of carbon in the steel making process. The stipulation clearly shows that the remaining carbon in the electrodes not impregnated into the bath by dipping 6% and putting broken pieces of electrodes therein (9 - 10%) is lost directly into the atmosphere through oxidation (42%), and by dissipation of the carbon gas (42%).
The majority opinion further states that the attorneys for both parties stipulated the electrodes were not a fuel within the meaning of the statute. This so-called stipulation occurred after the evidence was closed and upon arguments to the trial judge to whom the case had been submitted on written stipulations of fact and testimony of witnesses. The trial judge read the statute to the attorneys, which defined industrial materials exempt from tax and also the exceptions to third definition, and posed the question whether the electrodes under the evidence and the statute were within the exception terms of the statute. They both stated views to the negative, the attorney for appellee stating "we don’t think it’s a fuel.” This constituted no stipulation of fact but was a mere expression of a legal opinion or a factual opinion as to what the evidence showed. To permit the parties to determine whether the electrodes are taxable or not taxable, either by an expression of an opinion of law, or the expression of an opinion as to the facts contrary to the uncontradicted proof in the record, is not controlling on this court in applying the law to the facts as they actually exist by written stipulation and uncontradicted testimony *501of witnesses.
My views of a proper decision on the facts as thus corrected differ sharply from those of the majority, and after adopting the first two sentences of Division 2 of the majority opinion, are as follows: We have two differences as far as the electrodes are concerned, (a) Carbon gas goes into the molten metal but is dissipated and does not increase the carbon content of the metal in the bath, this carbon gas being created by the intense heat of the electric arc between the electrode and the metal. Since this carbon gas diffusion in the metal, which does not remain, is not a necessary part of the process of manufacturing the steel but is something that occurs incidental to that process, the ruling in Hawes v. Bibb Manufacturing Co., 224 Ga. 141 (160 SE2d 355) that an oil impregnated in a fibre as a necessary part of the manufacturing process and then removed is not taxable has no application to the present case. The carbon gas, while an event in, is not a necessary part of, the manufacturing process, (b) The next element is the simultaneous use of the electrode as a heating element (which use is taxable), (State of Ga. v. Cherokee Brick &c. Co., 89 Ga. App. 235, supra) and for impregnating carbon in the product by the dipping of the electrode into the metal bath, which melts the carbon in the electrode. Under these circumstances, I might be inclined to hold that the electrodes, by being simultaneously used for producing heat, a taxable use, and at the same time for impregnating carbon into the product, would be exempt as an industrial material from the sales tax, inasmuch as no provision is made in the Act as to a partial exemption or partial tax, except for the fact that, in my opinion, the Act expressly provides that the use of the electrodes for heating purposes prevents the electrode from being an "industrial material,” as heretofore defined and exempted from tax in the Act. The undisputed testimony of one of the taxpayer’s witnesses showed that the electricity created an electric arc between the electrode and the scrap metal, and the electrode produced carbon gas, which, when produced, stabilized and made more effective the heat thus created and used to melt the scrap metal. The taxing statute, after defining the exempted "industrial materials” then reads: "Provided, however, the term 'industrial materials’ shall not include natural or artificial fuel, ice or other materials used for heat, light, power or refrigeration in any phase of the manufacturing, processing or converting process.”
The trial court erred in ruling the electrodes were exempt from tax. While there are indications that a prior Commissioner of *502Revenue, through administrative ruling, exempted these items from tax as to a particular taxpayer and until this present assessment was issued, did not enforce the tax, it is our opinion that the facts of this case clearly show that the tax is applicable and the prior administrative ruling should not be followed.
I am authorized to state that Judge Stolz concurs in this dissent.