Rev. Rul. 64-320

Advice has been requested whether the manufacturers excise tax imposed by section 4191 of the Internal Revenue Code of 1954 applies to sales by the manufacturer of the articles described below.

The first article, which usually is maintained on the premises of an employer, is designed to print the date and time of day on individual time cards. It consists of a complete clock, with face and hands, and a printing mechanism. The insertion of a time card in a slot actuates the mechanism which prints on the card the date and time. This device is normally used for recording the `in' and `out' time of each employee. However, it also may be used for recording the beginning time and the completion time of particular jobs.

A second article is similar to the device described above in that it contains a complete clock and prints the date and time on cards inserted into the device. However, in addition to printing the beginning and finishing time, this device computes and prints on the cards the total or elapsed working time for particular operations. After the inserting of a card in the device, the printing of the times is actuated by the movement of a hand lever.

Section 4191 of the Code imposes a tax on the sale by the manufacturer, producer, or importer of certain enumerated articles (including in each case parts or accessories of such articles sold on or in connection therewith, or with the sale thereof). That enumeration includes `time recording devices.'

The applicability of the manufacturers excise tax imposed by section 4191 to a particular article depends upon the purpose and function of that article. The articles described in this case are designed to record the time of day or to measure and record elapsed time. Therefore, they are `time recording devices' within the meaning of section 4191 of the Code. Accordingly, it is held that the tax imposed by that section applies to sales by the manufacturer, producer, or importer of the articles described herein.

Although the applicability of the retailers excise tax imposed by section 4001 of the Code is not involved in this ruling, it should be noted that section 4003(c) of the Code provides that the retailers excise tax shall not apply to a clock or watch, or to a case or movement for a clock or watch, if a manufacturers exise tax was imposed by reason of its sale (1) as a part or accessory or (2) on or in connection with or with the sale of any article.