Perma, Inc. v. Board of Assessors of the Town of Billerica (October 25, 2001)

COMMONWEALTH OF MASSACHUSETTS
APPELLATE TAX BOARD

PERMA, INC.			  v.    	BOARD OF ASSESSORS OF
						   	THE TOWN OF BILLERICA

Docket Nos. F249189			 	Promulgated: 
		  F257001				October 25, 2001 


These are appeals under the formal procedure pursuant to G.L. c. 59, §§ 64 and 65 from the refusal of the appellee to abate taxes assessed on certain property, located in the Town of Billerica, owned by and assessed to the appellant under G.L. c. 59, § 38, for fiscal years 1998 and 2000.  
Commissioner Scharaffa heard the appeal and was joined in the decision for the appellant by Chairman Burns and Commissioners Gorton, Egan and Rose.
These findings of fact and report are made at the request of the appellee pursuant to G.L. c. 58A, § 13 and 831 CMR 1.32.

	Stephen A. Nelson, Esq. for the appellant.
	Patrick J. Costello, Esq. for the appellee.





FINDINGS OF FACT AND REPORT


The issue in this appeal is whether the Assessors of the Town of Billerica (the "Assessors") properly assessed real estate taxes for fiscal years 1998 and 2000 on certain underground storage tanks owned by the appellant, Perma, Inc. ("Perma").  On the basis of a stipulation of facts and testimony and exhibits introduced at the hearing of this appeal, and reasonable inferences drawn therefrom, the Appellate Tax Board ("Board") made the following findings of fact.
	 Perma timely filed an application for abatement for both fiscal year 1998 and fiscal year 2000 (the "tax years at issue") and timely paid the real estate taxes due.  The Assessors denied both applications.  The appellant then seasonably filed an appeal with the Board for each tax year at issue.  Accordingly, the Board found that it had jurisdiction over both appeals.  
Perma is a Massachusetts corporation that manufactures specialty chemicals, such as floor polishes, all-purpose cleaners, disinfectants and soaps.  For all times relevant to these appeals, the Department of Revenue ("DOR") classified Perma as a domestic manufacturing corporation.  Perma owns and occupies real property at 605 Spring Road in Billerica, which consists of a main chemical manufacturing and distribution plant, a warehouse, a building containing an office and a laboratory, and a building containing administrative offices.  The property that is the subject of these appeals consists of eight underground storage tanks located approximately fifteen feet from the site of the main plant.    
	The subject tanks range in capacity from 2000 gallons to 8000 gallons.  Each tank currently located at the so-called "tank farm" is double-walled and steel-coated or glass-coated.  Previously, state and federal law required the use of single-walled tanks, which were to be removed every twenty years as a precautionary measure to prevent leakage of the contents into the surrounding environment.  During that time, Perma removed and replaced each tank at regular intervals.  However, Perma later replaced those tanks, replacing four in 1988 and the other four in 1997, with newer double-walled tanks.  In 1997, when Perma replaced the second set of four tanks, it removed all four tanks in one day.  	
	Each underground tank is used to store a chemical needed for Perma's manufacturing process.  On average, Perma fills the tanks with chemicals about once every sixty days.  When they are needed for use in the manufacturing process, the chemicals flow from the tanks to the main manufacturing building through color-coded pipes.  These color-coded pipes begin inside the tanks and travel upwards to blue cylindrical reservoirs located above ground.  These blue cylindrical reservoirs are exposed at all times.  The pipes then travel above ground to tanks inside the main manufacturing building.  By activating pumps, the appellant draws chemicals from the underground tanks through the color-coded pipes and into the tanks inside this main manufacturing building, where the chemicals are blended according to specific formulas for the creation of the various products that Perma sells.  The tanks include electronic monitoring equipment to provide readings, from a location outside the tanks, of the temperature and volume of the chemicals stored inside the tanks.  They are also connected to shut-off valves, which Perma chemists can activate to halt the flow of chemicals in the event of a fire or other emergency.  
	Each tank rests on a concrete pad located about twelve feet underground, to which it is joined by removable straps.  The tops of the tanks are located about three feet from the surface.  

Sand or peastone is placed around the tanks so that they can be removed quickly in case of an emergency.  
To remove a tank, a small backhoe is used to dig out the sand or peastone, the removable straps are unfastened, and a crane with an attached hook then draws the tank to the surface.  The Billerica Fire Department issues permits for the tanks and inspects them and the entire facility at least once a year.  While the double-walled tanks do not have to be removed at regular intervals, the design of the tanks, with exposed cylindrical reservoirs, surrounding monitoring equipment, a foundation of peastone, and attachment by removable straps, further insures that the tanks can be easily removed in case of an emergency.   
The tanks inside the main manufacturing building are not taxed by the Town of Billerica, because the Assessors consider them to be personal property and therefore exempt from taxation under G.L. c. 59, § 5, cl. 16(3).  However, for both tax years at issue, the appellees valued the eight underground tanks collectively at $11,600, and assessed a real estate tax thereon at the rate of $34.48 per thousand in fiscal year 1998 and $30.00 per thousand in fiscal year 2000.  

Perma has paid a corporate excise on these tanks since 1952, when it first began to maintain the tank farm.  The Assessors began to assess the tanks as taxable real estate in fiscal year 1994.  The Assessors submitted as evidence in these appeals a letter from the DOR's Division of Local Services, which determined that the tanks should be taxable as real estate.
The Board found that the tanks were not affixed to Perma's property with any real permanence.  They were, in fact, designed to be easily removed from the property and did not cause any material damage to Perma's property when so removed.  Moreover, their true nature was more like personalty than realty.  The Board further found that the tanks play an integral role in Perma's manufacturing process and are, therefore, machinery of a domestic manufacturing corporation.  
For the reasons stated in the Opinion which follows, the Board found that the eight tanks at issue in these appeals were not properly subject to real estate taxation, because they are the personal property of Perma, a manufacturing corporation, and therefore are exempt pursuant to G.L. c. 59, § 5, cl. 16(3).  Moreover, the tanks are machinery owned and used by a domestic manufacturing corporation, and thus are considered personal property for purposes of G.L. c. 59, § 5, cl. 16(3).  Therefore, the Board found that the tanks are exempt from real estate taxation.  Accordingly, the Board issued a decision for the appellant in these appeals and granted abatements in the amount of $399.97 for fiscal year 1998 and $348.00 for fiscal year 2000.
 
OPINION
	Real estate and personal property are distinct classes of property for purposes of taxation and ordinarily must be separately assessed.  G.L. c. 59, §§ 11 and 18.  See Hamilton Manufacturing Co. v. Lowell, 185 Mass. 114, 117 (1904).  In the case of certain corporations, most particularly domestic manufacturing corporations, the distinction between real and personal property is important, because all property other than "real estate, poles and underground conduits, wires and pipes" is exempt from real estate taxation.  G.L. c. 59, § 5, cl. 16(3).  See also Board of Assessors of Swampscott v. Lynn Sand & Stone Co., 360 Mass. 595, 599 (1971).  Moreover, even if it would be characterized as real estate for some purposes, machinery of a domestic manufacturing corporation is characterized as personal property for purposes of G.L. c. 59, § 5, cl. 16(3), and therefore, is exempt from real estate taxation.  See Id.

The tanks are personal property.
The Board in these appeals first addressed whether the Assessors should have classified Perma's eight underground storage tanks as personal property rather than taxable real estate.  General Laws c. 59, § 2A provides, in pertinent part, that "[r]eal property for the purpose of taxation shall include all land within the commonwealth and all buildings and other things thereon or affixed thereto, unless otherwise exempted from taxation under other provisions of the law."  Items that can be removed from their surroundings may in some circumstances be considered to be real estate rather than personal property.  See, e.g., Franklin v. Metcalf, 307 Mass. 386, 389 (1940)(deciding that a moveable lunch cart, standing on its own wheels and resting "up against" but not attached to the wall of an adjacent building and which "may be removed at any time by the lessees" was nonetheless classified as real property); Ellis v. Board of Assessors of Acushnet, 358 Mass. 473, 478 (1970)(holding that a mobile home was properly classified as real property despite its mobility).  
	However, the Supreme Judicial Court has considered the degree of attachment to real estate, when weighed with the totality of factors, to be significant in determining whether an item is properly classified as real estate.  For example, in City of Chelsea v. Richard T. Green Co., 319 Mass. 162 (1946), the Court focused on the degree of attachment to real property when it analyzed a hoisting apparatus, which was "contained in a building," was "set on bolts" that "range[d] in length from five to six feet," was further "secured by nuts" and then "fastened to a wood foundation."  Id. at 163.  The hoisting apparatus itself weighed approximately forty to fifty tons.  Id. at 164.  The Court found the hoisting apparatus to be real estate, observing that it was "obviously installed with a view to permanence, and fastened to substantial foundations."  Id. at 165.  In another opinion, Callahan v. Broadway National Bank, 286 Mass. 473 (1934), the Court found that an installed bank vault had become part of the surrounding real property.  Id. at 475.  The Court emphasized that the vault was incapable of removal "without destroying the vault or some part of the structure of the building."  Id.; see also Board of Assessors of Wilmington v. Avco Corp., 357 Mass. 704 (1970)(holding that towers bolted or otherwise attached to concrete foundations, which were "braced by guy wires" and "attached to concrete anchors buried in the ground," were properly taxable as part of the real estate); cf. Hall v. Carney, 140 Mass. 131, 132 (1885)(finding that a railroad car was the personal property  of a railroad company, where the car was merely resting, and could no longer be run, on a track).
Consistent with these cases, the Board also has found the degree of attachment and permanence of a structure to be significant in determining whether an item is properly classified as real estate.  For example, in Whitten v. Assessors of Norwood, 4 Mass. App. Tax Bd. Rep. 76 (1976), the Board addressed the taxability of underground water pipes, located on the taxpayers' premises, which were connected to the taxpayers' warehouse.  In finding that the water pipes constituted real estate for purposes of taxation under G.L. c. 59, § 2A, the Board emphasized how permanently attached they were to the taxpayers' surrounding property:  "[t]hese pipes could not be removed from the real estate without great expense and waste."  Id. at 77.  By contrast, the Board found that the tanks located on Perma's property could be removed from the real estate with little expense and no waste.  Accordingly, the Board found and ruled that the subject property in Whitten, a case relied upon by the Assessors, was sufficiently distinct from the tanks at issue in the instant appeals and, therefore, the case is not persuasive authority. 
The tanks at issue are also significantly less attached to their surroundings than were the silos in New England Milling Co. v. Board of Assessors of the Town of Ayer, 24 Mass. App. Tax Bd. Rep. 80 (1998), aff'd, 49 Mass. App. Ct. 1116 (2000).  In New England Milling, the silos were about 128 feet in height and from thirty to sixty-five feet in diameter, with underground foundations at least five feet below ground, walls about one to two-feet thick, and constructed of concrete reinforced with rebar.  Id. at 81-2.  They were mounted on underground concrete "footings which were 13 feet wide, 2-plus feet thick and the bottoms of which were five and one-half feet below ground."  Id. at 85.  The Board found that the silos were permanent structures intended to be firmly affixed to their surrounding real estate:  
As a result of the method and materials used in the silos' construction, it would be impossible to lift, move, disassemble, or relocate the silos.  In order to remove them, they would have to be demolished in place, most probably through the use of explosives.
  
Id. at 86.  See also Boston Edison Co. v. Board of Assessors of the City of Boston, 7 Mass. App. Tax Bd. Rep. 93, 147 (1986), aff'd in part, 402 Mass. 1 (1988) (finding that because its generators were "physically and functionally incorporated into the real estate on which it is situated," they were properly classified as real estate subject to local property taxation); Five Cent Savings Bank v. Assessors of Woburn, 2 Mass. B.T.A. 361, 364 (1936)(finding that an item of personal property may be considered to be part of the real estate "where [it] has been so affixed that its identity is lost or so annexed that it could not be removed without material injury to the real estate").  
By contrast with the silos in New England Milling, however, the tanks at issue are designed to be removable.  They are set on foundations by means of removable straps.   Sand or peastone is placed around the tanks, enabling them to be removed quickly in an emergency with no destruction to the tanks or to their surroundings.  Because they are removable from their surroundings, the tanks resemble other 
items that the Board has previously found to be personal property for purposes of the exemption at G.L. c. 59, § 5, cl. 16.  See Boston Edison, 7 Mass. App. Tax Bd. Rep. at 141 (citing examples of "property not found by the board to have been sufficiently attached to the real estate" to constitute real estate for purposes of G.L. c. 59, § 2A; e.g. Yankee Network, Inc. v. Assessors of Holden, 1945 ATB Adv. Sh. 65 (finding that radio broadcast equipment was not sufficiently attached to its surroundings to be taxable as real estate) and Pilgrim Fish Corp. v. Assessors of Provincetown, 1958 ATB Adv. Sh. 5 (finding that refrigerating compressors mounted on platforms but not otherwise affixed to real estate were personal property)). See also Board of Assessors of Dartmouth v. B.A. Simeone, Inc., 359 Mass. 756, 756 (1971)(affirming the Board's finding that a "semiportable asphalt plant" was not real estate, where the plant was "portable, can be moved from place to place by removing a few nuts, and is not affixed to or erected on land").
The tanks in these appeals are also sufficiently distinct from the storage units in Hasco Associates v. Board of Assessors of the Town of Wareham, 2000 ATB Adv. Sh. 178, to merit a different result.
In Hasco, the Board emphasized the likeness of those structures to buildings: 
As rectangular eight-foot-by-forty-foot edifices with walls, floors and weather-proof roofs, weighing between six to eight thousand pounds and leased to customers as shelters for the storage of property, these Structures fit the Hemenway definition of "buildings."  

See also Ellis, 358 Mass. at 475 (affirming the Board's classification of a mobile home as real property, the Court reiterates the Board's finding that "in almost every practical respect concerning the design, architecture, size, accommodations, durability, permanence, character, and use, the structure looks like and serves the purpose of a conventional home . . . .").  By contrast, the Board in these appeals found that the tanks are shaped far less like buildings and more like thermoses, containers or other items that resemble pieces of equipment and are, therefore, more akin to personal property than to real estate.  See Five Cent Savings Bank, 2 Mass. B.T.A. at 365 (finding that safety deposit cabinets and safety deposit boxes were "peculiarly in the nature of bank furnishings or furniture" and therefore excludable as items of personal property).

Moreover, while the structures' portability and their lack of foundations or physical attachment to the real estate were not controlling in Hasco (Id. at 182), these same factors, when combined with the totality of other factors, including the tanks' shape and function, persuaded the Board in the instant appeals that the true nature of these tanks is personal property rather than real estate.  See Five Cent Savings Bank, 2 Mass. B.T.A. at 364 (affirming the "nature of the property" test, so long as it does not conflict with the statute as written, in determining whether items are properly assessed as realty or personalty).  
	In summary, the Board found and ruled that those factors commonly cited as key to a ruling that property is real estate are not present here.  The tanks are not so annexed to their surroundings that they could not be removed without material damage to Perma's real estate.  The Board further found and ruled that the tanks are not in the least akin to buildings.  Instead, the tanks are akin to large thermoses or other pieces of equipment that are utilized in manufacturing.  Accordingly, the Board found and ruled that the tanks are in the nature of personal property and are therefore not subject to real estate taxation pursuant to G.L. c. 59, § 2A.

The tanks are exempt as machinery of a manufacturing corporation.

General Laws c. 59, § 2, subjects all real and personal property to local taxation, unless specifically exempt.  In the case of a domestic manufacturing corporation, G.L. c. 59, § 5, cl. 16(3), exempts "all property owned by such corporation other than the following: real estate, poles and underground conduits, wires and pipes."  It is well settled that this section confers a real estate tax exemption on all of the machinery of a domestic manufacturing corporation, even if the machinery has become part of the surrounding real estate:  
We now hold that, even if machinery by reason of its bulk (or its peculiar methods of affixation to buildings themselves constituting real estate) could be regarded as having become a part of real estate for some purposes, its predominant aspect for the purposes of s 5, Sixteenth (3), remains that of machinery rather than of real estate.  Any other conclusion would be directly contrary to the history and purpose of St. 1936, c. 362,  s 1. 
 
Lynn Sand and Stone, 360 Mass. at 599. See also Boston Edison Co. v. Bd. of Assessors of the City of Boston, 402 Mass. 1, 11 (1988)("[T]his court has held that exemption applicable to machinery that is part of the real estate under traditional principles.  We did so because, for the purposes of that statute, the property's dominant aspect is that of machinery rather than real estate.").  Therefore, even if they could be considered real estate for some purposes, the tanks at issue in these appeals are nonetheless exempt from real estate taxation pursuant to G.L. c. 59, § 5, cl. 16(3), if they qualify as machinery of a domestic corporation which has been classified by the DOR as a manufacturing corporation.  
In Massachusetts, a basic rule of statutory construction is that "an exception from the coverage of a statute is ordinarily to be construed narrowly so as to prevent the purposes of the statute from being rendered ineffective."  Martin v. Rent Control Bd. of Cambridge, 19 Mass. App. Ct. 745, 747 (1985), citing, inter alia, Loyal Protective Life Ins. Co. v.  Massachusetts Indem. & Life Ins. Co., 362 Mass. 484, 493 (1972).  However, the Court recognizes that the manufacturing exemption in clause Sixteenth reflects a policy "to encourage manufacturing in this Commonwealth."  
Commiss'r of Corp. and Tax'n v. Assessors of Boston, 321 Mass. 90, 95 (1947). 
Accordingly, the Supreme Judicial Court has adopted a broad definition of machinery as "any combination of mechanical means designed to work together so as to effect a given end."  Warner Amex Cable Communications v. Board of Assessors of Everett, 396 Mass. 239, 242 (1985), quoting Collector of Taxes v. Cigarette Serv. Co., 325 Mass. 162, 165 (1950).  Such combination, "in a broad, comprehensive and legitimate sense," necessarily includes "the entire apparatus by which [a product] is manufactured."  Commonwealth v. Lowell Gas Light Company, 12 Allen 75, 78 (1866).  Such a broad, comprehensive definition is necessary because classifications which exclude items that are fairly part of a manufacturing process can lead to divergent results: 
Speaking broadly, we are of opinion that a mechanical device which can fairly be said to be a machine must be treated as "machinery" under the statute.  To hold otherwise would render the statute unworkable.  Until a given machine had been passed on by the board or this court, no one could say with any certainty whether it was or was not "machinery."

Assessors of Haverhill v. J.J. Newberry Co., 330 Mass. 469, 472 (1953).
The Court has found that a receptacle that does not itself contain moving parts can nonetheless be considered machinery if it is part of a complete system "all connected and operating together, by means of which the initial, intermediate and final processes are carried on," which "constitutes one great integral machine."  Lowell Gas Light Company, 12 Allen at 78-9 (finding that gas-holders, when connected with meters, mains and pipes, constituted "one great integral machine," thereby satisfying the machinery exemption).  For example, the New Hampshire Board of Tax and Land Appeals in Weeks Dairy Food, Inc. v. City of Concord found that silo tanks that received and stored milk immediately after the pasteurization and homogenization processes but before packaging, and which were refrigerated and "contain[ed] agitators to keep the milk thoroughly mixed and stable,"  were part of "a seamless web of production" designed to maintain the perishable milk in accordance with health standards.  1998 WL 623224 at *1.
Moreover, the Supreme Judicial Court has determined that certain containers for the storage of a product to be manufactured are properly classified as machinery.  For example, the dispensers at issue in J.J. Newberry were simple receptacles that did not bring about the change to the item but were connected to, and worked in tandem with, other active devices: 
The . . . dispenser rests upon a counter and consists of a metal container in which there is a syrup compartment and a mechanical device by which the flow of syrup is controlled by opening and  closing  a  faucet  attached to the container . . . . [The] dispensers are connected to a carbonator located in the basement.

J.J. Newberry, 330 Mass. at 473, n. 1.  Likewise, the soda fountains in that case were nothing more complicated than simple receptacles "connected at the top" by tubes or pipes to other apparatus that were more active in their conversion of raw materials into the final product, and yet the court also found these to be machinery.  Id.  See also Crown Paper Co. v. City of Berlin, 703 A.2d 1387, 1390 (N.H. 1997)("At no time have we defined 'factory-machinery' as requiring moving parts, and we decline to do so now."). 
Based on these considerations, the Board determined that the tanks at issue should have been classified as exempt machinery of a domestic manufacturing corporation.  The Board found and ruled that the tanks at issue are receptacles for the storage of raw materials but, due to their connections to other mechanical devices, they play a necessary and essential role in Perma's manufacturing functions.  Accordingly, the Board found that the tanks are part of "one great integral machine" and thus properly exempt from real estate taxes.  Lowell Gas Light Co., 12 Allen at 78.  The tanks are strongly similar to those dispensers and soda fountains in J.J. Newberry which, in essence, were simple receptacles lacking moving parts, but because the Court recognized that strict construction of "machinery" would "render the statute unworkable," the Court nonetheless found them to be "a mechanical device which can fairly be said to be a machine."  330 Mass. at 469, 472.  Likewise, the Board in these instant appeals found and ruled that the tanks are within the broad definition of "machinery" that was intended by the Legislature, and therefore are properly exempt from real estate taxes.  See Lowell Gas Light Company, 12 Allen at 78.
Other jurisdictions have found that storage apparatus can be considered machinery.  Some jurisdictions apply an "integrated plant" test, and analyze whether the particular item contributes to the manufacturing process in some manner, rather than merely look to see if the item brought about a physical change on its own.  See Wisconsin Department of Revenue v. Cardox Corporation, 516 N.W.2d 789 (Wis. 1994)(unpublished disposition)(finding that tanks for the storage of liquefied gas fulfilled the "integrated plant" test and, therefore, qualified for  the machinery exemption), citing Manitowoc Company, Inc. v. City of Sturgeon Bay, 362 N.W.2d 432 (Wis. 1984)(rejecting the Wisconsin Department of Revenue's "physical change" test in favor of an "integrated plant" test to classify machinery for property tax exemption purposes). See also Eastalco Aluminum Co. v. Supervisor of Assessments of Baltimore City, 1982 WL 1784 (Md. Tax 1982)(defining storage facilities as "an integral and necessary part" of the manufacturing process, because they were "critical for the storage of the necessary supply of alumina required for a continuous operation of the aluminum plant").  Moreover, the Wisconsin Supreme Court, in G. Heileman Brewing Co., Inc. v. La Crosse, 381 N.W.2d 619 (Wis. 1985)(unpublished disposition), recognized that cellar enclosures, which encased beer tanks during fermentation, kraeusening, aging and finishing, were vital components of the manufacturing process, and therefore, were properly classified as machinery:  "The fact that the cellar structures are passive components in the plant must not be allowed to obscure the fact that they contain and stabilize the precise environments required for the mass production of beer." 
Furthermore, it need not matter whether the apparatus stored materials before or after their conversion in the manufacturing process.  As the Supreme Judicial Court has found, the one great integral machine, "in a broad, comprehensive and legitimate sense, [is] the entire apparatus by which [a final product] is manufactured and distributed for consumption," and includes the apparatus used during "the initial, intermediate and final processes."  Lowell Gas Light Co., 12 Allen at 78-9.
The Board's decision in the instant appeals is consistent with its decision in New England Milling, due to the significant distinction between machinery and buildings.  The appellant in New England Milling argued that its grain storage silos were machinery because they had mechanically operated gates, which allowed wheat stored inside the silos to flow onto external conveyor belts.  However, the Board is not willing to extend the machinery exemption to structures that are properly classified as buildings, simply because they have mechanical features installed within:  
To find that the silos were machinery because they had mechanically operated gates, external docimeters controlling those gates, and conveyor belts running along their exteriors would be akin to finding that an office tower was machinery rather than real estate because its doors were mechanically operated and it contained elevators.  Office towers with such devices are not machinery and neither are the silos at issue in these appeals. 
 
24 Mass. App. Tax Bd. Rep. at 89.  
An inconsistency would arise if taxpayers were afforded the machinery exemption for the taxation of their buildings.  The massive and durable silos in New England Milling fit the Supreme Judicial Court's definition of a "building," as outlined in Hemenway v. Bartevian, 321 Mass. 226 (1947), as "an erection intended for use and occupation as a habitation or for some purpose of trade, manufacture, ornament or use, constituting a fabric or edifice, such as a house, a store, a church, a shed."  Id. at 229. See also Noyes v. Ambler, 296 Mass. 524 (1937)(finding that, even though they were not permanently affixed to their surrounding real estate, a barn, a small store, and two outhouses should be classified as "buildings" for purposes of real estate taxation).  Yet if the attachment of external docimeters could transform a building into machinery, then taxpayers would easily be able to skirt the taxation of their buildings.  The Board in New England Milling recognized that the machinery exemption, while intended to encourage the presence of manufacturing corporations in the Commonwealth, should not be stretched so far as to create such a loophole in corporations' duties to pay their fair share of the tax burden.  24 Mass. App. Tax Bd. Rep. at 89.  Accordingly, the Board found and ruled that the silos did not qualify for the machinery exemption.  Id. at 90. 
However, the Board in the instant appeals found that the tanks lack the fundamental characteristics of buildings, and therefore, application of the machinery exemption to these tanks would not be inconsistent with previous decisions.  Unlike the structures in Hasco, "rectangular eight-foot-by-forty-foot edifices with walls, floors and weather-proof roofs . . . leased to customers as shelters for the storage of property," the tanks at issue here are not "erection[s] intended for use and occupation."  2000 ATB Adv. Sh. at 186.  Rather, they are underground objects, large in size, but resembling thermoses or other like containers which reasonably constitute integral components of a manufacturing operation.  Accordingly, the Board found and ruled that the tanks at issue in these appeals should be exempt from taxation because they are machinery used in manufacturing at Perma's site.
Finally, the Board found the instant appeals to be distinguishable from those cases cited by DOR in its letter to the Assessors.  Three cases in particular, Standard Oil Co. v. Peck, 125 N.E.2d 342 (Ohio 1955), Hawes v. Custom Canners, Inc., 173 S.E.2d 400 (Ga. Ct. App. 1970), and Webster Brick Company, Inc. v. Department of Taxation, 245 S.E.2d 252 (Va. 1978), can easily be distinguished from the instant appeals.  In each of these cases, the transaction was addressed in terms of that jurisdiction's sales and use tax statutes.  Unlike the property tax statute at issue here, the sales and use tax statutes at issue in those cases required that an item of machinery be used "directly" in the process of manufacturing.  Based on the distinct requirements for each statute, particularly the critical difference between the use of "directly" in the sales and use tax context and the absence of that requirement in the real estate tax context, the Board found that these cases are inapposite to the appeals at bar.

Conclusion
Based on the foregoing, the Board ruled that, at all relevant times, the tanks located at the tank farm on the premises of the appellant were exempt from real estate taxation, because they are personal property, and thus within the exemption in G.L. c. 59, § 5, cl. 16(3).  Moreover, even if they could be classified as real estate for some purposes, the tanks nonetheless are machinery of a domestic manufacturing corporation and thus are classified as personal property for purposes of G.L. c. 59, § 5, cl. 16(3).  Therefore, the tanks are exempt from real estate taxes.  Accordingly, the Board issued a decision for the appellant in these appeals.

					 	APPELLATE TAX BOARD	
							
By:____________________________
					    Abigail A. Burns, Chairman


A true copy:


Attest: _____________________
	    Clerk of the Board

 	The Massachusetts corporate excise for Massachusetts corporations at G.L. c. 63, § 32 consists in part of a property, or non-income, measure.  The non-income measure of the excise is based upon a corporation's tangible property, if the corporation is a tangible property corporation, or upon its net worth, if the corporation is an intangible property corporation.  Id.  The definitions of "tangible property corporation" and "intangible property corporation" are set forth in G.L. c. 63, § 30(10) and § 30(11), respectively.  The calculation of the excise on the tangible property of a Massachusetts tangible property corporation is set forth in G.L. c. 63, § 30(7).  The calculation of the excise on the net worth of a Massachusetts intangible property corporation is set forth in G.L. c. 63, § 30(8).
 	The Supreme Judicial Court "upheld the board's decision in major respects," but remanded for further hearing on three unrelated issues.  402 Mass. at 20.
 	Spaces inside the Structures were leased to customers pursuant to a "Month-to-Month Tenancy" agreement.  Id. at 181.
 	Hemenway v. Bartevian, 321 Mass. 226, 229 (1947).
 	However, such property is instead taxed under the non-income portion of the corporate excise tax at G.L. c. 63.  See note 1, supra.
 	St. 1936, c. 362, § 1, is the Act and Resolve by which the Legislature adopted the exemptions for manufacturing corporations in G.L. c. 59, § 5, cl. 16(3).
   	It was undisputed by the parties that Perma qualifies as a domestic manufacturing corporation pursuant to G.L. c. 63, § 38C.
 	"The object of St. 1936, c. 362, § 1, was to encourage manufacturing in this Commonwealth by removing the burden of local taxation upon the machinery, and by substituting therefor a tax at the rate of $5 per thousand in the assessment of the corporate franchise tax."  Id. 
  	However, the Supreme Judicial Court has declined to extend the concept of the "one great integral machine" beyond the manufacturing context.  In Warner Amex, the court denied the exemption to the poles and wires of a cable television system.   
   	While not controlling, the Board in Hasco cited the definition of "building" in G.L. c. 143, the chapter pertaining to the regulation of buildings, as relevant to the finding that a structure is a "building."  Pursuant to this definition, a "building" is "a combination of any materials, whether portable or fixed, having a roof, to form a structure for the shelter of persons, animals or property.  For the purpose of this definition, 'roof' shall include an awning or any similar covering, whether or not permanent in nature."  The silos used for the storage of grains fit this definition, as they were durable, covered structures which provided shelter for the storage of grains.
   	In Standard Oil, the relevant statutes required that machinery be used or consumed "directly in the production of tangible personal property for sale . . . ."  Oh. Stat. Sec. 5739.01 and Sec. 5741.01.  Emphasis added.  In Custom Canners, the relevant statute, GA Code Ann. S. 92-3403aC(2)(n)(2) similarly required that machinery be "used directly in the manufacture of tangible personal property . . . ."  Emphasis added.  Finally, the statute in Webster Brick similarly provided a sales tax exemption for sales of machinery "used directly in processing, manufacturing, refining, mining or conversion of products for sale or resale."  VA Code s. 58-441.6 (Emphasis added).

ATB 2001 - 805