Rev. Rul. 70-212

Advice has been requested whether the articles described below are within the scope of excludable refrigeration equipment for purposes of the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code of 1954.

Revenue Ruling 69-392, C.B. 1969-2, 194, describes four types of refrigeration equipment designed for refrigerating truck or truck trailer bodies and holds that such equipment is not subject to the manufacturers excise taxes imposed by sections 4061(a) and 4061(b) of the Code. That Revenue Ruling further holds that the sale price of a refrigeration unit, for purposes of an exclusion from the total sale price of a body, includes that portion of the total sale price of an automotive body that represents a charge for installing the unit and for any additional parts added to complete the installation.

The question presented is whether the articles described below may be classified as additional parts added to complete the installation of a refrigeration unit within the meaning of section 4061(a)(1) of the Code and Revenue Ruling 69-392.

Each of the articles listed below is an item normally installed by a truck or truck trailer body manufacturer as standard or optional equipment.

Item 1. Outside indicating thermometer.--This item enables a person outside a temperature-controlled truck or truck trailer body to determine the temperature inside the body. Item 2. Cargo heater or heat lamp.--This item may be portable or it may be permanently mounted in a body. It may also be connected to a refrigeration unit in a truck or truck trailer body. Through manual or thermostatic temperature controls this item keeps perishables from freezing in cold climates.

Item 3. Circulating fan.--This item blows or circulates the air inside a temperature-controlled truck or truck trailer body.

Item 4. Protective metal screen or wooden slats.--This item is used in a temperature-controlled truck or truck trailer body to protect "holdover plates" in a refrigeration unit from being damaged during transit by the shifting of cargo.

Item 5. Insulation.--This item is a component of the top, sides, and bottom of a truck or truck trailer body for the purpose of controlling the inside temperature.

Item 6. Insulating curtain.--This item is mounted inside the doors of an insulated truck or truck trailer body to prevent temperature-controlled air from escaping while loading or unloading cargo.

Item 7. Platform and steps.--The platform is mounted on top of a truck cab to provide a working area for a refrigeration unit repairman. The steps are mounted on the front of the body for easy access to the unit.

Item 8. Dash pilot indicating light.--This item, connected by wiring to a refrigeration unit, is mounted on the dashboard in the cab of a refrigerated truck. Its purpose is to indicate to the truck operator whether the refrigeration unit is operating.

Item 9. Compressor cradle or compartment.--This item is a container for a refrigeration unit designed for mounting to the underside of a refrigerated truck or trailer body. The cradle or compartment serves as a housing for the compressor and includes a door and a roll-out tray base for easy compressor servicing.

Item 10. Coiled cord and storage receptacle.--The coiled cord provides electric power from stationary storage plant facilities to activate truck refrigeration units of the type with "holdover plates." When a refrigerated vehicle is in operation the storage receptacle mounted on the refrigerated body serves as a container for the cord.

Item 11. Drip pan.--This item is provided with a certain type of refrigeration unit to collect condensation and prevent it from dripping onto the floor in a refrigerated truck or truck trailer body.

Item 12. Pre-installation wiring.--This item is designed to facilitate installation of a refrigeration unit at a later date, if desired. Section 4061(a)(1) of the Code imposes a tax upon various motor vehicle articles, including truck and truck trailer bodies, sold by the manufacturer, producer, or importer thereof (including in each case parts or accessories sold on or in connection therewith or with the sale thereof).

Although the items described above are installed for use in refrigerated trucks or trailers, it does not necessarily follow that such items constitute parts added to complete the installation of a mechanical refrigeration unit of the type excluded from tax in Revenue Ruling 69-392. For purposes of the manufacturers excise tax imposed by section 4061(a)(1) of the Code the test applied for exclusion is whether the item constitutes equipment exclusively essential to the operation of a mechanical refrigeration unit. Any additional parts other than equipment exclusively essential to the operation of a mechanical refrigeration unit are parts or accessories for the body or chassis, as the case may be, when sold on or in connection with the sale of a refrigerated truck or truck trailer.

In applying the test prescribed above, it is concluded that items 1 through 8 do not qualify as equipment exclusively essential to the operation of a mechanical refrigeration unit. Accordingly, it is held that items 1 through 8 described above are parts or accessories sold on or in connection with or with the sale of a taxable refrigerated truck or truck trailer within the meaning of section 4061(a)(1) of the Code and are includible in the total sale price.

With respect to items 9 through 12 it is concluded that such items are equipment exclusively essential to the operation of a mechanical refrigreation unit. Accordingly, it is further held that items 9 through 12 described above are excludable from the total sale price of a taxable refrigerated truck or truck trailer.

The conclusions expressed above apply only to parts sold on or in connection with the sale by a manufacturer of refrigerated trucks or truck trailers. No opinion is expressed in this Revenue Ruling with respect to separate sales by manufacturers of the above-described items under section 4061(b)(1) of the Code.

Revenue Ruling 69-392 is hereby amplified.