ATTORNEY FOR PETITIONER: CRAIG M. McKEE, WILKINSON, GOELLER, MODESITT, WILKINSON & DRUMMY, LLP, Terre Haute, IN.
ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER, ATTORNEY GENERAL OF INDIANA, JOHN P. LOWREY, DEPUTY ATTORNEY GENERAL, Indianapolis, IN.
ORDER ON PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT
Thomas G. Fisher, Senior Judge.
Alloy Custom Products, Inc. has challenged the Indiana Department of State Revenue's (Department) final determination denying it a refund of the Indiana sales tax it paid on utilities it consumed while " rehabilitating" cryogenic tanker trailers between September 2006 and March 2010 (the period at issue). The matter is currently before the Court on the parties' cross-motions for summary judgment.
Alloy is in the business of manufacturing new cryogenic tanker trailers as well as what it calls " rehabilitating" used cryogenic tanker trailers. (Resp't Des'g Evid. Supp. Mot. Summ. J. (" Resp't Des'g Evid." ), Ex. 1 ¶ 1, Ex. 4 at 1; Pet'r Resp. Opp'n Resp't Mot. Summ. J. & Supp. Cross-Mot. Summ. J. (" Pet'r Br." ) at 2.) A cryogenic tanker trailer is used to transport atmospheric gases in a liquid state. (Pet'r Des'g Evid. Supp. Mot. Summ. J. (hereinafter, " Boatman Aff." ) ¶ ¶ 3, 5.) A cryogenic tanker trailer
consists of the bottle (the two layered cylinder storage tank for the gas) and several sub-assemblies which are pumping, air[,] and vacuum systems powered by a resident engine. These sub-assemblies are the means to provide the temperature protection by vacuum to the stored and transported gas in addition to efficient loading and unloading systems.
Resp't Des'g Evid., Ex. 4 at 1.)
Alloy's facility, located near Delphi, Indiana, consists of three separate buildings. (Resp't Des'g Evid., Ex. 1 ¶ 1, Ex. 3 at 1, 3, Ex. 7 at 8-10.) One building is used solely for the manufacture of new tanker trailers. (Resp't Des'g Evid., Ex. 1 ¶ 1, Ex. 7 at 8-10.) The second building is used solely for the rehabilitation of used tanker trailers. (Resp't Des'g Evid., Ex. 1 ¶ 1, Ex. 7 at 8-10.) The third building is used for the sandblasting and repainting of rehabilitated tanker trailers. (Resp't Des'g Evid., Ex. 1 ¶ 1, Ex. 7 at 8-10.) While each building has its own electric meter, all three buildings share a single natural gas meter. (Resp't Des'g Evid., Ex. 1 ¶ 2, Ex. 7 at 10-11.)
Alloy's Rehabilitation Process
The typical life span of a cryogenic tanker trailer is six to ten years. (See Resp't Des'g Evid., Ex. 4 at 1, Ex. 7 at 5.) " As [it] wear[s] out, an owner can take [it] out of service or have [it] . . . rehabbed into 'like new' to extend [its] useful life." (Boatman Aff. ¶ 5.) (See also Resp't Des'g Evid., Ex. 4 at 3-4 (claiming that " [w]hen the rehab is finished, it is the equivalent of a new tanker" ).) A tanker trailer is " worn out" when the bottle no longer holds a vacuum. (Boatman Aff. ¶ 5; Hr'g Tr. at 44.) Indeed,
[w]hen the void space between the inner and outer vessel [of the bottle] is compromised by the introduction of atmosphere, the integrity and the benefit of the vacuum technology degrades and causes product loss. Rehabbing the outer vessel is essential to maintaining the vacuum and using the trailer for its intended purpose when manufactured. A trailer that cannot maintain the proper temperature or no longer maintains a reliable vacuum is essentially worthless for its intended purpose.
Boatman Aff. ¶ 3.)
Alloy states that through its rehabilitation process, it not only refurbishes the bottle's vacuum, but it also might upgrade the tanker trailer to current industry standards. (See Resp't Des'g Evid., Ex. 1 ¶ 1, Ex. 4 at 1-2 (explaining that rehabilitation " is an ideal time to upgrade the tanker to new and current improvements and requirements such as air suspension, ABS braking systems, fire valves, improved emissions, upgraded electrical and air systems" ), Ex. 6 at 5 (stating " the rehab process may include upgrades such as new standards and technologies for emissions, suspensions, engines and valves that were not part of the original manufactured trailer" ).) A rehabilitation can extend a trailer's useful life by approximately four to six years. (See Resp't Des'g Evid., Ex. 7 at 5.)
When a trailer is brought in for rehabilitation, Alloy first purges it with nitrogen gas, ensuring that it contains no hazardous gases and that it poses no threat of explosion. (See Resp't Des'g Evid., Ex. 7 at 16.) Alloy then inspects the trailer's various systems (e.g., vacuum, piping, engine drive, exterior chassis, and inner vessel). (See Resp't Des'g Evid., Ex. 7 at 16-18.) Once it completes its inspection, Alloy presents the owner with an estimate of the recommended work necessary (and cost) to rehabilitate the trailer. (See Resp't Des'g Evid., Ex. 7 at 19.) If the owner accepts the estimate, Alloy orders the necessary parts and materials needed to complete the work and schedules each rehabilitation task within its computer system. (See Resp't Des'g Evid., Ex. 7 at 20.)
After stripping the trailer down to its bottle and removing all sub-assemblies and several other components, Alloy sandblasts everything to remove paint, rust, and mill scale. (See Resp't Des'g Evid., Ex. 4 at 1-3, Ex. 7 at 22-23.) Next, Alloy repairs the leaks within the bottle and the vacuum system and completes any replacement of, or repair work on, the sub-assemblies. (See Resp't Des'g Evid., Ex. 7 at ...