Metal processor entitled to equipment, consumption exemptions

The Indiana Tax Court found Wednesday that an Illinois corporation that processes scrap steel is entitled to two exemptions under Indiana Code related to its sales and use taxes owed.

Brandenburg Industrial Service Co. is seeking a refund of the sales and use tax remitted in 2006 and 2007 as well as its assessments of sales and use tax for the same period. The company has an Indiana facility inside the United States Steel Corp.’s Gary Works steel mill. The Indiana Department of State Revenue denied the refund requests, leading to an appeal to the Indiana Tax Court in 2012.

The only issue before the court in Brandenburg Industrial Service Company, an Illinois corporation v. Indiana Department of State Revenue,
49T10-1206-TA-37, is whether Brandenburg was the producer of scrap steel eligible for exemption under I.C. 6-2.5-3-3, the equipment exemption, and I.C. 6-2.5-5-5.1, the consumption exemption. The revenue department had moved for partial summary judgment on that matter.

Brandenburg goes through a seven-step process to prepare metal it has obtained through building demolition or environmental remediation for resale. Those steps include decontamination and cutting oversized pieces.

The Tax Court found that during the period at issue, Brandenburg was a producer of steel. Judge Martha Wentworth rejected the revenue department’s claim that it is entitled to summary judgment because Brandenburg’s demolition process is not an activity that is expressly stated in either the equipment or consumption exemption statutes.

Wentworth also found that there is no genuine issue of material fact that Brandenburg’s process substantially transforms the metal from obsolete, valueless and unmarketable debris into newly marketable scrap steel. Accordingly, she granted partial summary judgment in favor of the company. The court will direct the parties regarding all other remaining matters separately.