Rev. Rul. 54-330

Clarification of S.T. 944, C.B. 1952-2, 255, is requested with respect to the application of the tax imposed by section 3403(c) of the Internal Revenue Code, to the sale by a manufacturer of custom-made automobile seat covers where the manufacturer makes out an invoice or sales slip to his customer for the material and another invoice or sales slip for the labor involved in producing the covers.

S.T. 944, supra , holds that where a manufacturer furnishes the material and produces seat covers for the consumer thereof, according to individual design and measurements, the sale by the manufacturer of such seat covers is taxable under section 3403(c) of the Code, regardless of whether they are installed by the manufacturer or by other persons.

It is held that where a manufacturer, in connection with the production of seat covers for a customer, makes out an invoice or sales slip to his customer for material and another invoice or sales slip for the labor involved in producing the covers, the entire transaction is considered a sale of seat covers by the manufacturer and subject to the tax imposed by section 3403(c) of the Code on the basis of the total of the charges made for the material and labor, even though separately invoiced or billed.

Revenue Ruling 42, C.B. 1953-1, 463, sets forth the method of computing the tax in cases where manufacturers make sales of seat covers only at retail.