Michigan Steel Manufacturer’s Conveyor System Exempt

A Michigan steel manufacturer’s material handling conveyor system qualified for the industrial processing exemption from Michigan use tax. The exemption applied to production material handling because once the transportation of raw materials was initialized by the preliminary movement of the pellets from storage on to the hopper conveyors, the process of moving the pellets to the blast furnaces was continuous and part of the industrial process. During the audit period, the industrial processing statute was ambiguous, but was later amended to clarify that production material handling falls within the definition of industrial processing. Furthermore, a Department of Treasury rule had specifically cited production material handling as an example of an industrial processing activity. (Rouge Steel Company v. Department of Treasury, Michigan Tax Tribunal, No. 315388, November 30, 2009, release April 2010)

Posted on May 4, 2010