Rev. Rul. 55-588

Advice has been requested concerning the amounts subject to the retailers' excise tax, imposed by section 2400 of the Internal Revenue Code of 1939, on sales of wooden gavels and sterling silver bands to be fitted thereon.

A retailer who sells plain wooden gavels also sells different styles of sterling silver bands which may be affixed to the gavels. A customer may purchase a gavel and select a silver band which he desires to have attached and engraved in a specified manner. The retailer's sales invoice lists separately the selling price of the gavel, the selling price of the silver band, and the charge for the engraving.

The tax imposed by section 2400 of the Code is applicable, among other things, to the sales at retail of articles ornamented, mounted or fitted with, precious metals or imitations thereof. The term `precious metals' includes platinum, gold, silver, and other metals of similar or greater value. The term `imitations thereof' includes platings and alloys of such metals.

A wooden gavel, as such, is not subject to the tax. But a wooden gavel having one or more bands of silver attached, whether for ornamentation or for a utilitarian purpose, is considered to be taxable as an article ornamented, mounted, or fitted with a precious metal. The tax attaches to the full price for which a gavel so ornamented is sold at retail.

A silver band is, of course, taxable as an article made of a precious metal. Where a retailer sells a wooden gavel and at the same time makes a separate sale to the same customer of a silver band to be attached to the gavel, the tax applies only to the sale of the silver band, even though the attachment of the band to the gavel may be made by the retailer. Charges for engraving any taxable article may be excluded from the tax base provided they are shown separately on the invoice furnished the customer or otherwise established by the records of the retailer