Internal Revenue Service
Revenue Ruling
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smRev. Rul. 63-92
1963-1 C.B. 212
IRS Headnote
Oil and grease seals designed for a variety of uses and not primarily used in connection with taxable motor vehicles are not automobile `parts or accessories' as defined by section 40.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations. Therefore, these oil and grease seals are not subject to the manufacturers excise tax on automobile `parts or accessories,' imposed by section 4061(b) of the Internal Revenue Code of 1954, when sold by the manufacturer.
Full Text
Rev. Rul. 63-92
Advice has been requested whether the articles described below are automobile `parts or accessories' for purposes of the manufacturers excise tax.
A company manufactures and sells certain metal-encased oil and grease seals which are designed for the retention of a lubricant within a unit and for the exclusion of dirt and other extraneous matter. Each seal has either a synthetic rubber or a felt sealing element. Some of the seals have a tension spring contained in the metal case. These oil and grease seals are manufactured in a large number of standard engineering sizes, with variations in outside diameter, bore, and width. The seals are used in various articles including machine tools, industrial and marine engines, home appliances, farm equipment, aircraft, and automobiles.
Section 4061(b) of the Internal Revenue Code of 1954 impose a tax on the sale by the manufacturer, producer, or importer of parts or accessories (other than tires and inner tubes and other than automobile radio and television receiving sets) for any of the articles enumerated in section 4061(a) of the Code.
Section 40.4061(b)-2 of the Manufacturers and Retailers Excise Tax Regulations defines `parts or accessories,' in pertinent part, as follows:
(a) In general . The term `parts or accessories' includes (1) any article, the primary use of which is to improve, repair, replace, or serve as a component part of an automobile truck or bus chassis or body, or other automobile chassis or body, or taxable tractor, (2) any article designed to be attached to or used in connection with such chassis, body, or tractor to add to its utility or ornamentation, and (3) any article, the primary use of which is in connection with such chassis, body, or tractor, whether or not essential to its operation or use. * * * The term `parts or accessories' includes all articles which have reached such a stage of manufacture as to be commonly known as parts or accessories whether or not fitting operations are required in connection with their installation.
(b) Articles of a general use . The term `parts or accessories' does not include articles which are not used primarily in the manufacture of automobile trucks, other automobiles, or tractors, but have a general use in the manufacture of various articles. For example, commodities such as ball and roller bearings, bolts, nuts, washers, screws, nails, tacks, rivets, pins, studs, cotters, pipe fittings such as plugs, tees, ells, and elbows, drain cocks, grease cups, oilers, and similar articles are not of themselves parts or accessories. On the other hand, parts for automobile parts or accessories are in themselves taxable unless they are articles of a type not specifically designed for use primarily in the automobile field. For example, the tax applies to the sale of gears, flexible shafts, and flexible housings designed as replacement parts for automotive speedometers, as well as replacement parts for automobile engines, transmissions, differentials, steering mechanisms, timers, windshield wiper motors, and other automobile parts or accessories.
The oil and grease seals in the instant case are designed for a variety of uses and are so used. Under these circumstances, they are considered to come within the scope of the term `articles of a general use' as defined by section 40.4061(b)-2(b) of the regulations.
Accordingly, it is held that these oil and grease seals are not subject to the manufacturers excise tax on automobile `parts or accessories' when sold by the manufacturer.
It should be noted, however, that the fact that a manufacturer produces articles of a certain category which have a variety of uses does not of itself serve to bring all of the articles in this category within the meaning of the term `articles of a general use' as set forth in the regulations. The different articles within the category must be considered separately upon the basis of the identity established for them. Articles designed for use in connection with motor vehicle articles to add to their utility or ornamentation, or articles primarily used in connection with any of the motor vehicle articles enumerated in section 4061(a) of the Code are automobile `parts or accessories' within the meaning of section 4061(b) of the Code. See Revenue Ruling 61-139, C.B. 1961-2, 171, which relates to the taxability of certain gaskets, some of which are produced and sold for automotive use, whereas others are produced and sold for nonautomotive use.
The foregoing conclusion also applies under the provisions of section 48.4061(b)-2 of the Manufacturers and Retailers Excise Tax Regulations (Part 48), which is effective with respect to sales made on or after January 1, 1964./1/
/1/ The effective date of section 48.4061(b)-2 of the Manufacturers and Retailers Excise Tax Regulations (Part 48), relating to the definition of automobile parts or accessories, was postponed from June 1, 1963, to January 1, 1964, by Treasury Decision 6655, above.