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Vol. 2008-2-a | February, 2008

Concrete, Manufactured When

Concrete manufacture may not appear to be a subject contested in the law, unless as the result of some defect or construction-related claim. Nevertheless, the Supreme Court of Ohio considered, for tax purposes, when the manufacture of concrete is actually performed as a salable product, i.e: “When does actual manufacturing or processing begin or end.” [Page 277]

The Board of Tax Appeals applied the test established by this court in the syllabus of Youngstown Building Material & Fuel Co. v. Bowers, Tax Commr., 167 Ohio St. 363, 149 N. E. (2d), 1, which is as follows:

“In determining whether tangible personal property is used or consumed directly in the production of tangible personal property for sale by manufacturing or processing, and, therefore, whether its sale or use is excepted from taxation under the provisions of subdivision (E) (2) of Section 5739.01, or subdivision (C) (2) of Section 5741.01, Revised Code, the test is not whether such property is essential to the operation of an ‘integrated plant,’ the test to be applied being, when does the actual manufacturing or processing activity begin and end, and is the property used or consumed during and in the manufacturing or processing period.”

The Board of Tax Appeals found “that the wetting of aggregates with water, prior to transportation by the crane and bucket to the weigh hopper or batching bin, does not constitute the beginning of the manufacturing or processing of concrete. The addition of the water to the aggregate does not transform or convert the aggregate into any different product nor into a different state or form from that in which it originally existed. We are of the opinion that the mere addition of water to gravel does not constitute the start of processing or manufacturing of concrete and that the processing or manufacturing of concrete did not start until after the various raw materials were commingled in the body of the truck and dumped in the concrete mixer. It is our further opinion that the processing or manufacturing engaged in by appellant did not end until after the concrete was scored with the saw blades here in issue, and that all the equipment used in the forming and spreading of the concrete was used directly in processing concrete for sale.” V. N. HOLDERMAN PAVING CO. v. BOWERS (1960), 171 Ohio St. 275, 277.

“The definition of insanity is doing the same thing over and over and expecting a different result.”

Albert Einstein

AUTHOR / EDITOR: J. NORMAN STARK is an Attorney-at-Law, a Registered Architect, (AIA, NCARB) Registered Landscape Architect, Interior Designer, Planner and Senior Appraiser (ASA), admitted to practice law before the Bar of Ohio, the US District Courts, Ohio and Illinois (Central Dist.), the US Court of Appeals, and the United States Supreme Court. He is a Mediator, Arbitrator and Litigator with experience in Business, Construction Law, and Public Works, and with additional experience in Real Estate, Construction Attorney (Legal Project and Crisis Management), and as an Expert Witness (Forensic Architect). His office is in Cleveland, Ohio.