Rev. Rul. 65-119

A company restores unserviceable automobile starting motors to serviceable condition and sells them for use as replacement parts. Some of these motors are restored by one process, and others are restored by an entirely different process. The first process consists of (1) complete dismantling of the starting motor, (2) cleaning of the armature or, where unusable, replacing it with another used aramature in satisfactory operating condition or with a taxpaid new armature, (3) fitting the srarting motor with new taxpaid bushings, brushes, and field coils where necessary, and (4) reassembling the entire unit. The second process consists of rewinding the armature or replacing a broken or otherwise defective armature shaft by the use of a hydraulic press.

Held , the first process described above is not `rebuilding' within the meaning of section 48.4061(b)-3(a) of the Manufacturers and Retailers Excise Tax Regulations, but the second process is `rebuilding' within the meaning of those regulations. Accordingly, the manufacturers excise tax on automobile `parts or accessories,' imposed by section 4061(b) of the Internal Revenue Code of 1954, applies with respect to those starting motors restored by the second process which were sold by the `rebuilder' prior to January 1, 1965, the effective date of the exemption provided by section 4063(c) of the Code.