Rev. Rul. 56-189

The Internal Revenue Service has reconsidered Revenue Ruling 54-329, C.B. 1954-2, 405, and Revenue Ruling 55-98, C.B. 1955-1, 524, particularly with reference to the taxability of reassembled generators containing armatures rewound by the reassembler and rebuilt clutch assemblies. As a consequence of such reconsideration, the Service has now concluded that the positions taken in these rulings as applied to reassembled generators and rebuilt clutch assemblies are not sound.

Therefore, it is held that the manufacturers excise tax applies to the rebuilder's sale of a reassembled generator containing an armature rewound by the reassembler, and to a rebuilt clutch assembly. Revenue Ruling 55-98 is revoked and Revenue Ruling 54-329 is modified accordingly.

Because of the reliance which may have been placed on these Revenue Rulings by generator and clutch rebuilders, the instant ruling will not be applied to sales occurring prior to June 1, 1956, except that any tax which may have been paid by generator rebuilders on generators containing armatures rewound by them or by clutch rebuilders will not be refunded.