Rev. Rul. 58-81

Advice has been requested whether the manufacturers excise tax on lubricating oil applies to sales of oil by the manufacturer thereof for use in cooling saws. The oil permits the saw teeth to pass through lumber with less difficulty.

Section 4091 of the Internal Revenue Code of 1954 imposes a tax on lubricating oils sold by the manufacturer or producer. Section 314.40 of Regulations 44, made applicable to the 1954 Code by Treasury Decision 6091, C.B. 1954-2, 47, provides that the term `lubricating oils' includes all oils, regardless of their origin, which are sold as lubricating oils and all oils which are suitable for use as a lubricant . Section 314.43(a) of the regulations provides that no tax attaches where oil is sold by the manufacturer direct to a purchaser who uses it for nonlubricating purposes.

In permitting the saw teeth to pass through lumber with less difficulty, the oil is used, in part, for lubricating purposes. Accordingly, it is held that the manufacturers excise tax imposed by section 4091 of the Code applies to sales of oil by the manufacturer or producer thereof for use in cooling saws.