Rev. Rul. 58-440

Advice has been requested whether the manufacturers excise tax applies to the sale of oil by the manufacturer thereof for use in broaching, blanking, drilling, milling, and turning operations, and in the die cutting of threads.

Section 4091 of the Internal Revenue Code of 1954 imposes a tax on cutting oils and other lubricating oils sold by the manufacturer or producer. Section 4092(b) of the Code provides that the term `cutting oils' means oils sold for use in cutting and machining operation (including forgoing, drawing, rolling, shearing, punching, and stamping) on metals.

It is held that oils used on metals in broaching, blanking, drilling, milling, and turning operations, as well as in the die cutting of threads, are used for lubricating purposes in maching operations. Accordingly, the sale of oil by the manufacturer thereof for such use is subject to the manufacturers excise tax on cutting oils imposed by section 4091 of the Code.