TOMRA of N. Am., Inc. v. Dep't of Treasury

TOMRA of N. Am., Inc. v. Dep't of Treasury

Opinion

 [**385]   [*336]  BEFORE THE ENTIRE BENCH

Viviano, J.

At issue is whether plaintiff TOMRA of North America, Inc.'s container-recycling machines and repair parts are excluded as a matter of law from qualifying  [**386]  for the industrial-processing-activity exemptions under MCL 205.54t of the General Sales Tax Act (GSTA), MCL 205.51 et seq., and MCL 205.94o of the Use Tax Act (UTA), MCL 205.91 et seq. Specifically, we must determine whether the temporal limitation specified in the general statutory definition of "industrial processing," MCL 205.54t(7)(a); MCL 205.94o(7)(a), applies to the enumerated list of "industrial processing" activities in MCL 205.54t(3) and MCL 205.94o(3), respectively. To answer this question, we first clarify that because the statutes are unambiguous, the interpretive principle that tax exemptions are strictly construed is inapplicable to this case. ] Under the proper interpretive standards, we hold that the temporal [***2]  limitation in  [*337]  MCL 205.54t(7)(a) and MCL 205.94o(7)(a) does not apply to the activities listed in MCL 205.54t(3) and MCL 205.94o(3), respectively.

I. FACTS AND PROCEDURAL HISTORY

TOMRA sells and leases reverse-vending machines, the bottle-and can-recycling machines commonly found in grocery stores used to help retailers comply with Michigan's bottle-deposit law, MCL 445.571 et seq. The company also sells repair parts for the machines. The machines sort the bottles and cans, which are then placed in bins and brought to a recycling facility. The facility then sells the bottles and cans to manufacturers who use the materials in other products.

TOMRA claimed that its machines were exempt from both the GSTA and the UTA under each act's industrial-processing exemption.¹ After an audit by defendant, the Department of Treasury, TOMRA sought a determination from the Court of Claims that its machines fall within the industrial-processing exemptions. In granting summary disposition to the department, the Court of Claims found that the tasks that TOMRA's machines perform occur before the industrial process begins; therefore, TOMRA could not avail itself of the industrial-processing exemptions. The Court of Claims reasoned that the activities listed in MCL 205.54t(3) (establishing that industrial [***3]  processing includes 11 enumerated activities) and MCL 205.94o(3) (same) are only industrial-processing activities when they occur between the start and end of the industrial process as defined by MCL 205.54t(7)(a) and MCL 205.94o(7)(a), respectively.

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