Alabama Attorney General Opinion 1979-0024

# THE ATTORNEY GENERAL STATE OF ALABAMA · MONTGOMERY, ALABAMA 36130 CHARLES A. GRADDICK ATTORNEY GENERAL January 31, 1979 79-00024 File # 23 Honorable Ken Malone Mobile County Tax Assessor P. O. Box 2925 Mobile, Alabama 36601 TAXATION Section 40-9-1(13) construed. Dear Mr. Malone: Your request for an opinion dated November 6, 1978, is as follows: "As Tax Assessor of Mobile County, I request your opinion as to the proper construction of the exemption from ad valorem taxation as set forth in Section 40-9-1 of the 1975 Code of Alabama which provides an exemption as follows: '...(13) All material, including without limitation coke, to be compounded or further manufactured, when stocked at any plant or furnace for manufacturing purposes in Alabama.' "The above provision is a modification of prior law and was enacted by Act No. 1048 of the Regular Session of the 1975 Session of the Legislature. "Teledyne Continental Motors, Aircraft Products Division, a division of Teledyne Industries, Inc., (Teledyne) operates a factory in Mobile, Alabama, for the purpose of manufacturing aircraft engines. Teledyne has assessed inventory for 1978 under the provisions of the Tax Return List of Personal Property marked '11. Supplies, raw materials and manufactured articles of manufacturers, not including products manufactured within Honorable Ken Malone January 31, 1979 Page 2 "twelve months and stored at the point of manufacture.' The Teledyne inventory so assessed consists entirely of forgings, machined parts, components, nuts, bolts and subassemblies to be assembled into engines. Teledyne has requested that I abate the 1978 assessment for inventory on the ground that it is exempt from ad valorem taxation under the above stated provision. "Your opinion is requested as to the applicability of the exemption contained in Section 40-9-1 (13) as to the inventory of Teledyne. If further information is required, please do not hesitate to call on me." In order for a material to qualify for the exemption contained in §40-9-1(13), it must be held for the purpose of being "compounded or further manufactured" and it must be stocked at the manufacturing plant. Since the present materials clearly are stocked at the plant, the question to be decided is whether the subject materials which are to be used as component parts in manufacturing a finished product, but which themselves are not physically altered in the manufacturing process, constitute materials to be compounded or further manufactured under §40-9-1(13). Webster's New International Dictionary, Second Edition, defines "compound" as: "To put together, as elements, ingredients, or parts, to form a whole; to combine; unite." Based on this definition it is my opinion that the inventory of Teledyne constitutes materials "to be compounded or further manufactured" so as to come under the exemption from ad valorem taxation contained in §40-9-1(13). Yours very truly, CHARLES A. GRADDICK Attorney General RON BOWDEN Assistant Attorney General RB:mlw