Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 65-51

1965-1 C.B. 458

IRS Headnote

Articles known in the industry as `special' oil seals, which are so constructed as to be used primarily in connection with taxable motor vehicle articles, are automobile `parts or accessories' within the meaning of section 48.4061(b)(2) of the Manufacturers and Retailers Excise Tax Regulations. Accordingly, these oil seals are subject to the manufacturers excise tax, imposed by section 4061(b) of the Internal Revenue Code of 1954, when sold by the manufacturer.

Full Text

Rev. Rul. 65-51

Advice has been requested concerning the applicability of the manufacturers excise tax on automobile `parts or accessories' to the oil seals described below, in view of the provisions of section 48.4061(b)-2(b) of the Manufacturers and Retailers Excise Tax Regulations, effective January 1, 1964.

Various companies manufacture and sell radial or shaft type oil seals which are designed to retain lubricants and to exclude dirt and other extraneous matter. Based upon information furnished by the industry, these seals may be categorized as `standard' seals and `special' seals.

The standard seals are plain round seals having no projections extending outward beyond the press fit diameter either in an axial or radial direction. They also incorporate no other characteristics of construction or material indicative of a specific purpose or use. They are `articles of a general use' of the type held not subject to tax in Revenue Ruling 63-92, C.B. 1963-1, 212. However, the special seals have such projections or other specific characteristics, and each seal is specifically designed for a particular application. One such application is on taxable motor vehicle articles.

Section 4061(b) of the Internal Revenue Code of 1954 imposes 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 48.4061(b)-2(a) of the regulations provides that, 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 turck 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.

Under the provisions of section 48.4061(b)-2(b) of the regulations, `articles of a general use' are not of themselves parts or accessories unless so constructed as to be used primarily in the manufacture, repair, etc., of automobile trucks, other automobiles, or tractors.

By reason of their configuration, construction, etc., certain of the special oil seals are identifiable as being designed to be used primarily as original equipment or replacement parts for taxable automotive articles. Therefore, they are automobile `parts or accessories' within the meaning of section 48.4061(b)-2 of the regulations.

Accordingly, it is held that the special oil seals specifically designed for application on taxable motor vehicles are subject to the manufacturers excise tax on automobile `parts or accessories,' imposed by section 4061(b) of the Code, where sold on or after January 1, 1964, by the manufacturer.