Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 68-90

1968-1 C.B. 463

IRS Headnote

The manufacturers excise tax on automotive `parts or accessories,' imposed by section 4061(b)(1) of the Internal Revenue Code of 1954, does not apply to sales by the manufacturer, producer, or importer of certain water pump bearing assemblies.

Full Text

Rev. Rul. 68-90

Advice has been requested whether the manufacturers excise tax on motor vehicle parts or accessories imposed by section 4061(b)(1) of the Internal Revenue Code of 1954 is applicable to sales of the article described below.

The article in question is commonly known as a `water pump bearing' and is used in automotive and nonautomotive applications. Although commonly referred to as a `bearing,' the article is actually an assembly containing a metal shaft, housing, and ball or roller bearings. In some models, both ball and roller bearings are used. The bearings are sealed inside the housing which is mounted on the shaft. In most cases, the housing interior is lubricated for the life of the assembly. The housing remains stationary on the shaft by grooves or raceway tracks cut in the shaft and the inside of the housing, in which tracks the bearings test. When the unit is in operation, the shaft turns smoothly inside the housing by means of the lubricated bearings.

Although it is used as a water pump bearing assembly, the article described above is also used wherever bearings are applied to a shaft. Some of the nonautomotive applications of such articles are in lawnmowers, wood working tools, floor polishers, and conveyors.

Section 4061(b)(1) of the Code imposes a tax upon sales by the manufacturer, producer, or importer of parts of accessories (other than tires and inner tubes) for any of the motor vehicle articles enumerated in section 4061(a)(1). Section 4061(a)(1) of the Code enumerates, in part, chassis and bodies for trucks, buses, and highway tractors.

Section 48.4061(b)-2(b) of the Manufacturers and Retailers Excise Tax Regulations provides that the term `parts or accessories' does not include articles which are not used primarily in the manufacture, repair, etc., of automobile trucks or tractors, but have a general use in the manufacture, repair, etc., of various articles. This section further provides, by way of example, that comodities such as ball and roller bearings and similar articles are not of themselves parts or accessories unless so constructed as to be used primarily in the manufacture, repair, etc., of automobile trucks or tractors.

The water pump bearing assembly in the instant case has many uses in nonautomotive, as well as automotive, applications. Furthermore the article is not so constructed as to be used primarily in the manufacture, repair, etc., of automobile trucks or tractors. Therefore, such articles are not `parts or accessories' within the meaning of section 4061(b)(1) of the Code, and sales of the articles by the manufacturer, producer, or importer are not subject to the manufacturers excise tax imposed by that section.