January 25, 2002
FOR IMMEDIATE RELEASE
Ryan & Company Obtains Proposed Decision in Texas Exempting a Tire Recycling System at a Cement Plant.
Ryan & Company's Dispute Resolution Group recently obtained a proposed
decision in Comptroller's Hearing No. 40,243 holding that
prior to October 1, 1997, a tire recycling system that fed waste tires
as fuel into the kilns at a cement-making plant qualified for exemption
as manufacturing equipment.
The taxpayer manufactures portland cement in three rotary kilns which
measure 450 feet in length by 12 feet in diameter. Until 1996 the taxpayer
burned coal powder almost exclusively as its fuel source to process slurry
into cement clinker. In 1996 the taxpayer constructed a waste tire recycling
system, the purpose of which was to inject whole waste or scrap tires
into the kilns as a fuel source that is less expensive than coal. Much
of the system is made up of various types of conveyors and sensing devices.
The tires burned in the kilns now provide 20%-22% of the energy used to
produce heat in the kilns. The steel belts in the tires also provide a
portion of the iron needed in cement production.
The agency argued that the tire recycling system was one step removed
from the actual manufacture of the cement, that it was not necessary and
essential because the kilns would still operate with natural gas or coal,
and that it was merely intraplant transportation.
The DRG successfully argued that the tire recycling system is a single,
integrated unit, without which the proper size tires could not be fed
as fuel into the kilns, thereby making the tire recycling system necessary
and essential to the manufacturing process. The Administrative Law Judge
was not persuaded by the agency's argument that the taxpayer could have
used other fuel sources because there is no statute or rule that limits
the exemption to one fuel source.
The Administrative Law Judge is now considering the exceptions filed by
the agency. If you have any questions regarding the above information,
please contact a Ryan & Company Dispute Resolution Group professional
by calling 512.476.0022.
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