Rev. Rul. 83-40

1983-1 C.B. 273, 1983-10 I.R.B. 15.

                       Internal Revenue Service
                                 Revenue Ruling

               IMPORTED TRUCK CHASSIS;  MADE FROM EXPORTED PARTS

                            Published: March 7, 1983

SECTION 4061. - -IMPOSITION OF TAX, 26 CFR 48.4061(a)-1: Imposition of tax; exclusion for light-duty trucks, etc

(Also Sections 4218, 4221; 48.4218-1, 48.4221-3.)

  Imported truck chassis;  made from exported parts.  The manufacturers tax on motor vehicles applies to the importer's sale or use in the U.S. of a truck chassis manufactured outside the U.S. from parts manufactured in the U.S.

ISSUE

  Does the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code apply to truck chassis manufactured outside the United States from parts manufactured in the United States when the chassis are imported into the United States and sold or used?

FACTS

  The parts and accessories for complete truck chassis are sold by a United States manufacturer and its domestic parts suppliers to a foreign subsidiary of the manufacturer.  No excise tax is paid on the sales of the parts and accessories because each of the sales is for export.  The foreign subsidiary fabricates truck chassis from the parts and accessories and sells the completed chassis to foreign purchasers.  The foreign purchasers use the truck chassis in their trades or businesses and after using them offer the chassis for sale.

  A purchases the used truck chassis, imports them into the United States and either resells or uses them.

LAW AND ANALYSIS

  Under section 4061(a)(1) of the Code a tax is imposed on the sale by the manufacturer, producer, or importer of truck chassis.  Section 4061(b) imposes a similar tax on the sale of truck parts and accessories.

  In general, under section 4218(a) of the Code the use by a person of an article manufactured, produced or imported by that person is taxable in the same manner as if the article were sold by that person.

  Under section 4221(a)(2) of the Code no tax is imposed on the sale by the manufacturer of an article for export.  The truck parts and accessories described above were properly exported tax-free under this provision.

  The assembly of the parts and accessories by the foreign subsidiary constitutes the manufacture of a truck chassis under section 48.0-2(a)(4)(i) of the Manufacturers and Retailers Excise Tax Regulations which defines a "manufacturer" as any person who produces a taxable article by, among other acts, combining or assembling two or more articles.

  In U.S. Truck Sales Co. v. United States, 229 F.2d 693 (6th Cir. 1956), trucks manufactured in the United States, sold tax-free and exported, used in a foreign country, and subsequently returned to the United States and resold were held not subject to manufacturers excise tax.  The court reasoned that the first sale of an article in the United States was the only sale that can be taxed, thus no tax could be imposed on the resale of the used trucks.  Accord, Example 2 in section 48.4221-3(a)(2) of the regulations;  Rev. Rul. 81-97, 1981-1 C.B. 498; Rev. Rul. 63-162, 1963-2 C.B. 525.

  The truck chassis manufactured by the subsidiary are not, however, the same articles as the parts and accessories originally exported.  For manufacturers excise tax purposes the parts and accessories are viewed as losing their identity as separate articles when they are used in the manufacture of the truck chassis.  The article being imported into the United States is a truck chassis, a different article than the component parts and accessories originally exported.

  A truck chassis manufactured outside the United States, imported into the United States, and sold or used is subject to the manufacturers excise tax whether or not it was used outside the United States prior to importation.  See Rev. Rul. 58-297, 1958-1 C.B. 401, concerning used automobiles of foreign manufacture that are imported into the United States.

HOLDING

  The truck chassis are subject to the manufacturers excise tax upon their sale or use in the United States by the importer.

Rev. Rul. 83-40, 1983-1 C.B. 273, 1983-10 I.R.B. 15.