Rev. Rul. 63-121

The Internal Revenue Service will follow adverse decisions of the courts and not hold taxpayers liable for the manufacturers excise tax on certain sales of automobile glass occurring prior to January 1, 1964.

The courts concluded in Earl Glass Co., Inc. v. United States , 197 Fed. Supp. 707 (1961); and Kingsport Glass Co. v. United States , United States District Court for the Eastern District of Tennessee, entered December 5, 1958, that the cutting and delivery of automobile glass pursuant to a customer's order did not constitute an act of manufacture. Accordingly, these decisions held that sales of the glass items were not subject to the tax imposed by section 4061(b) of the Internal Revenue Code of 1954.

Timely claims for refund based on these court decisions will be allowed if the claimant satisfies the conditions prescribed by section 48.6416(a)-1 of the Manufacturers and Retailers Excise Tax Regulations as set forth in Treasury Decision 6650, page 307, this Bulletin.

However, the provisions of sections 48.4061(b)-2(c)(2) and 48.4061(b)-2(d) of the Manufacturers and Retailers Excise Tax Regulations will apply to all such sales of automobile glass made on or after January 1, 1964. These provisions were promulgated by Treasury Decision 6648, page 197, this Bulletin, and read, in part, as follows:

* * * If in connection with an immediate installment in an automobile truck, other automobile, or tractor an article is produced through the use of special machinery or as a result of specialized skills from lengths or rolls of material, the person producing such article is considered to have manufactured an automobile part or accessory and the tax applies to his sale of such part or accessory. For example, tax applies to the sale of automobile glass cut to size to replace broken glass, * * *.

* * * Examples of articles which are taxable as parts or accessories are: * * * glass cut to size for installation in automobiles; * * *.

¹ Based on Technical Information Releases 473, dated May 14, 1963, and 478, dated May 24, 1963.