Rev. Rul. 63-160

Advice has been requested concerning the applicability of the manufacturers excise tax on automobile `parts or accessories' to sales by the manufacturer of the article described below.

A manufacturer produces and sells an electric-powered refrigeration system for use in an automobile truck, a trailer, or a semitrailer for the purpose of refrigerating perishable products while being transported. The major electrical components of the system are an alternating current generator, a rectifier, a compressor drive motor, and an evaporator fan motor.

The generator is to be mounted under the hood or in the engine compartment of a truck or a tractor. It is driven directly by a pulley at the radiator-end of the engine crankshaft. This pulley is mounted in front of or made integral with the pulley which drives the radiator fan, the water pump, and the standard battery-charging generator of the truck. The alternating current from the generator is fed through the rectifier, which converts this alternating current into direct current. The power from the rectifier is utilized to drive the compressor motor and the evaporator fan motor, as well as to provide excitation for the alternator.

The refrigeration components are to be located within the body of the vehicle and are connected to the power system by means of electric cables. The system also is equipped with a `stand-by' electrical connection in order to utilize standard commercial electric power to maintain refrigeration while the vehicle is not being operated.

Section 4061(b) of the Internal Revenue Code of 1954 imposes a tax on the sale by the manufacturer, producer, or importer of parts or accessories (other than tires and inner tubes and other than automobile radio and television receiving sets) for any of the articles enumerated in section 4061(a) of the Code.

Section 40.4061(b)-2(a) of the Manufacturers and Retailers Excise Tax Regulations provides that, in general, the term `parts or accessories' includes-

(1) any article, the primary use of which is to improve, repair, replace, or serve as a component part of an automobile truck or bus chassis or body, or other automobile chassis or body, or taxable tractor,

(2) any article designed to be attached to or used in connection with such chassis, body, or tractor to add to its utility or ornamentation, and

(3) any article, the primary use of which is in connection with such chassis, body, or tractor, whether or not essential to its operation or use.

The electric-powered refrigeration system described above is designed to be attached to and used in connection with a taxable motor vehicle to add to its utility. Therefore, the system is an automobile `part or accessory' within the meaning of section 4061(b) of the Code, as defined by section 40.4061(b)-2(a) of the regulations.

Accordingly, it is held that the system is subject to the manufacturers excise tax on automobile `parts or accessories' when sold by the manufacturer.

The conclusion expressed herein is equally applicable under the provisions of section 48.4061(b)-2 of the regulations, effective January 1, 1964.