Concrete Indus. v. Nebraska Dept. of Rev.

C onCrete I ndustrIes , I nC., appellant, v. nebraska
department of revenue , a nebraska admInIstratIve
agenCy, and douglas ewald, In hIs CapaCIty as the
state tax C ommIssIoner for the state
of nebraska , appellees.
766 N.W.2d 103
Filed June 5, 2009. 	No. S-08-933.
1. Administrative Law: Judgments: Appeal and Error. A judgment or final order
rendered by a district court in a judicial review pursuant to the Administrative
Procedure Act may be reversed, vacated, or modified by an appellate court for
errors appearing on the record.
2. Statutes. Statutory interpretation presents a question of law.
3. Judgments: Appeal and Error. When reviewing a district court judgment for
errors appearing on the record, an appellate court nonetheless has an obliga-
tion to resolve questions of law independently of the conclusion reached by the
trial court.
4. Statutes: Taxation. Tax exemption provisions are strictly construed, and their
operation will not be extended by construction.
5. ____: ____. Property which is claimed to be exempt must clearly come within the
provision granting exemption from taxation.
6. Statutes: Legislature: Intent. In discerning the meaning of a statute, a court
must determine and give effect to the purpose and intent of the Legislature as
ascertained from the entire language of the statute considered in its plain, ordi-
nary, and popular sense.
7. Statutes. A court must place on a statute a reasonable construction which best
achieves the statute’s purpose, rather than a construction which would defeat
that purpose.
8. Statutes: Presumptions: Legislature: Intent. In interpreting a statute, a court
is guided by the presumption that the Legislature intended a sensible rather than
absurd result in enacting the statute.
9. Taxation. The general theory behind the sales and use taxes is to impose a tax on
each item of property, unless specifically excluded, at some point in the chain of
commerce. If the item is purchased in Nebraska, the sales tax applies. If the item
is purchased outside of Nebraska, the use tax applies.
10. Statutes. A court must attempt to give effect to all parts of a statute, and if it
can be avoided, no word, clause, or sentence will be rejected as superfluous
or meaningless.
11. Taxation: Proof. The burden of establishing a tax exemption is placed upon the
party claiming the exemption.
12. Statutes: Sales: Taxation. Under Neb. Rev. Stat. §§ 77-2704.22(1) and
77-2701.47 (Cum. Supp. 2006), the sale of manufacturing machinery and equip-
ment includes the sale of items that are assembled to make manufacturing
machinery and equipment.
CoNCReTe INdUS. v. NebRASkA dePT. oF Rev. 	897
Cite as 277 Neb. 897
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:50 AM CST

13. Appeal and Error. An appellate court is not obligated to engage in an analysis
which is not needed to adjudicate the controversy before it.
Appeal 	from 	the 	district 	Court 	for 	Lancaster 	County:
John a. C olborn, Judge. Reversed and remanded for further
proceedings.
Shannon L. doering for appellant.
Jon 	bruning, Attorney 	General, 	and 	L. 	Jay 	bartel 	for
appellees.
heavICan, C.J., C onnolly, gerrard, stephan, mCC ormaCk,
and mIller-lerman, JJ.
gerrard, J.
Under the Nebraska Revenue Act of 1967,1 the purchase of
manufacturing machinery and equipment is exempt from sales
tax. Concrete Industries, Inc., the appellant, purchased parts
that it used to build its own manufacturing machinery and
equipment. The question presented in this appeal is whether the
Nebraska department of Revenue correctly found that Concrete
Industries’ purchases were not exempt from sales tax. We con-
clude that Concrete Industries’ purchases of parts assembled
into manufacturing machinery and equipment qualified as the
purchases of manufacturing machinery and equipment, and
were exempt from sales tax.
bACkGRoUNd
Under Nebraska law, sales and use taxes shall not be imposed
on the gross receipts from the sale, lease, or rental in this state
of manufacturing machinery and equipment.2 Manufacturing
machinery and equipment include several categories of machin-
ery and equipment that are purchased, leased, or rented by
a person engaged in the business of manufacturing for use
in manufacturing.3
1 Neb. Rev. Stat. §§ 77-2701 to 77-27,135.01 and 77-27,228 to 77-27,236
(Reissue 2003 & Cum. Supp. 2006).
2 See § 77-2704.22.
3 See § 77-2701.47.
898 	277 NebRASkA RePoRTS

Concrete Industries is a Nebraska corporation engaged in
the business of manufacturing. In 2007, Concrete Industries
purchased a number of items used in the construction of
a new Ready Mixed concrete plant in Auburn, Nebraska.
The items ranged from specialized machinery and electrical
parts to things as simple as pipes, nuts, bolts, and wire. The
items were apparently purchased separately, then assembled
and configured into a “production line or other process” to
“install and make operational” the new plant. In other words,
instead of purchasing its manufacturing machinery and equip-
ment preassembled, Concrete Industries bought the necessary
parts and built the machinery and equipment itself. It does
not appear to be disputed, for purposes of this appeal, that
the machinery and equipment Concrete Industries built are
of a kind that would have been exempt from sales tax had it
been preassembled.
Concrete Industries filed a claim for overpayment of sales
and use tax, requesting a refund of $1,279.05 that it alleged had
been paid in sales tax on the items it bought to build its manu-
facturing machinery and equipment. The Nebraska department
of Revenue (department) denied the claim, relying on revenue
rulings in which the State Tax Commissioner opined that “pur-
chases of raw materials or individual parts which will be used
in the fabrication of manufacturing machinery and equipment
where the fabricator is considered the final consumer of the
machinery and equipment are taxable.”4
Concrete Industries sought judicial review in the district court
under the Administrative Procedure Act.5 Concrete Industries
argued, generally, that the department had erred in its interpre-
tation of the relevant statutes. Concrete Industries also alleged
that the department had violated the separation of powers
principles of the state Constitution6 and the equal Protection
Clauses of the state and federal Constitutions7 in refusing to
4 Nebraska department of Revenue Ruling 1-05-1 (oct. 12, 2005). Accord
Nebraska department of Revenue Ruling 1-06-6 (Aug. 8, 2006).
5 Neb. Rev. Stat. §§ 84-901 to 84-920 (Reissue 1999 & Cum. Supp. 2006).
6 See Neb. Const. art. II, § 1.
7 See, U.S. Const. amend XIv, § 1; Neb. Const. art. I.
CoNCReTe INdUS. v. NebRASkA dePT. oF Rev. 	899
Cite as 277 Neb. 897

refund taxes paid on property the Legislature intended to be
tax exempt. And Concrete Industries argued that the revenue
rulings relied upon by the department should be declared null
and void because they exceeded the authority granted to the
department by the Legislature.
The district court rejected all of those arguments. The court
concluded that the parts purchased by Concrete Industries
were not “machinery or equipment” within the meaning of
the relevant statutes. The court concluded that the revenue
rulings relied upon by the department, while they did not
have the force of promulgated rules or regulations, nonethe-
less correctly stated the applicable law. And the court found
a rational basis for the department to exempt preassembled
manufacturing machinery and equipment from sales tax and
not extend that exemption to parts used to make machinery
and equipment.
The court affirmed the department’s denial of Concrete
Industries’ refund claim. Concrete Industries appealed and filed
a petition to bypass the Court of Appeals, which we granted.
ASSIGNMeNTS oF eRRoR
Concrete Industries assigns that the district court erred in
concluding as follows:
(1) Machinery and equipment purchased as component parts
and used to construct another piece of manufacturing machin-
ery and equipment are not exempt from taxation pursuant to
§§ 77-2701.47(1) and 77-2704.22(1);
(2) The department could appropriately rely upon revenue
rulings 1-05-1 and 1-06-6 without violating the Administrative
Procedure Act and the separation of powers principles of the
Nebraska Constitution; and
(3) The department’s arbitrary construction of §§ 77-2704.22
and 77-2701.47 did not result in a violation of Concrete
Industries’ right to equal protection under the U.S. and Nebraska
Constitutions.
STANdARd oF RevIeW
[1-3] A judgment or final order rendered by a district court
in a judicial review pursuant to the Administrative Procedure
Act may be reversed, vacated, or modified by an appellate court
900 	277 NebRASkA RePoRTS

for errors appearing on the record.8 but statutory interpretation
presents a question of law,9 and when reviewing a district court
judgment for errors appearing on the record, an appellate court
nonetheless has an obligation to resolve questions of law inde-
pendently of the conclusion reached by the trial court.10
ANALySIS
[4-8] Concrete Industries’ first assignment of error presents
an issue of statutory interpretation. We are mindful of the prop-
osition that tax exemption provisions are strictly construed, and
their operation will not be extended by construction.11 Property
which is claimed to be exempt must clearly come within the
provision granting exemption from taxation.12 but we are also
mindful that in discerning the meaning of a statute, we must
determine and give effect to the purpose and intent of the
Legislature as ascertained from the entire language of the stat-
ute considered in its plain, ordinary, and popular sense.13 This
court must place on a statute a reasonable construction which
best achieves the statute’s purpose, rather than a construction
which would defeat that purpose.14 And we are guided by the
presumption that the Legislature intended a sensible rather than
absurd result in enacting the statute.15
[9] The general theory behind the sales and use taxes is
to impose a tax on each item of property, unless specifically
8 Becton, Dickinson & Co. v. Nebraska Dept. of Rev., 276 Neb. 640, 756
N.W.2d 280 (2008).
9 Steffen v. Progressive Northern Ins. Co., 276 Neb. 378, 754 N.W.2d 730
(2008).
10 Vlasic Foods International v. Lecuona, 260 Neb. 397, 618 N.W.2d 403
(2000).
11 Goodyear Tire & Rubber Co. v. State, 275 Neb. 594, 748 N.W.2d 42
(2008).
12 Id.
13 See Vokal v. Nebraska Acct. & Disclosure Comm., 276 Neb. 988, 759
N.W.2d 75 (2009).
14 Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).
15 See Foster v. BryanLGH Med. Ctr. East, 272 Neb. 918, 725 N.W.2d 839
(2007).
CoNCReTe INdUS. v. NebRASkA dePT. oF Rev. 	901
Cite as 277 Neb. 897

excluded, at some point in the chain of commerce.16 If the item
is purchased in Nebraska, the sales tax applies. If the item is
purchased outside of Nebraska, the use tax applies.17 As rele-
vant, the Nebraska Revenue Act of 1967 (hereinafter the Act)
provides that “[s]ales and use taxes shall not be imposed on the
gross receipts from the sale, lease, or rental and on the stor-
age, use, or other consumption in this state of manufacturing
machinery and equipment.”18
“Manufacturing” means an action or series of actions per-
formed upon tangible personal property, either by hand or
machine, which results in that tangible personal property’s
being “reduced or transformed into a different state, quality,
form, property, or thing.”19 And “[m]anufacturing machinery
and equipment means any machinery or equipment purchased,
leased, or rented by a person engaged in the business of
manufacturing for use in manufacturing, including, but not
limited to” one of eight categories of machinery and equip-
ment articulated in § 77-2701.47(1). The term “manufacturing
machinery and equipment” expressly includes “[a] repair or
replacement part or accessory purchased for use in maintain-
ing, repairing, or refurbishing machinery and equipment used
in manufacturing.”20
This exemption was enacted by the Legislature in 2005 for
two primary reasons. The first reason was to try to provide
smaller businesses with some of the tax advantages that had
been conferred on larger businesses by the employment and
Investment Growth Act,21 commonly known as L.b. 775.22 The
second reason was to eliminate some of the “double taxation”
16 Lackawanna Leather Co. v. Nebraska Dept. of Rev., 259 Neb. 100, 608
N.W.2d 177 (2000).
17 See id.
18 § 77-2704.22(1).
19 § 77-2701.46.
20 § 77-2701.47(1)(h).
21 Neb. Rev. Stat. §§ 77-4101 to 77-4112 (Reissue 2003 & Supp. 2007).
22 See, Committee on Revenue, L.b. 695, 99th Leg., 1st Sess. 44-45 (Feb.
11, 2005); Floor debate, L.b. 312, 99th Leg., 1st Sess. 5329-32 (May 9,
2005).
902 	277 NebRASkA RePoRTS

that occurred when sales or use taxes were charged for items
that were then taxed again as tangible personal property subject
to property taxes.23
Those purposes are not served by the department’s construc-
tion of the Act. First, property purchased for the assembly of
manufacturing machinery and equipment would, at least poten-
tially, be “qualified property” for purposes of recovering sales
and use taxes under the employment and Investment Growth
Act.24 And second, manufacturing machinery and equipment
that is constructed from component parts would be double
taxed if the “sale of . . . manufacturing machinery and equip-
ment” within the meaning of § 77-2704.22 did not include the
sale of items used, by a manufacturer, to assemble machinery
and equipment that would then be subject to property taxes.
[10] We are not persuaded by the department’s argument that
the “mold and die” amendment set forth in § 77-2701.47(1)(c)
is pertinent to our analysis. That subsection provides that
manufacturing machinery and equipment include “[m]olds and
dies and the materials necessary to create molds and dies for
use in manufacturing . . . whether or not such molds or dies
are permanent or temporary in nature . . . .”25 The department
argues that specifically including the materials used to make
molds and dies would not have been necessary had component
parts used to make machinery and equipment generally been
included. And, as the department notes, a court must attempt
to give effect to all parts of a statute, and if it can be avoided,
no word, clause, or sentence will be rejected as superfluous
or meaningless.26
23 See id. See, generally, Neb. Rev. Stat. § 77-201(5) (Cum. Supp. 2008);
Pfizer v. Lancaster Cty. Bd. of Equal., 260 Neb. 265, 616 N.W.2d 326
(2000).
24 See, generally, I.R.C. § 167 (2006); §§ 77-4103(13) and 77-4105; First
Data Corp. v. State, 263 Neb. 344, 639 N.W.2d 898 (2002), overruled on
other grounds, Strong v. Omaha Constr. Indus. Pension Plan, 270 Neb. 1,
701 N.W.2d 320 (2005).
25 § 77-2701.47(1)(c).
26 See State ex rel. Lanman v. Board of Cty. Commissioners, ante p. 492, 763
N.W.2d 392 (2009).
CoNCReTe INdUS. v. NebRASkA dePT. oF Rev. 	903
Cite as 277 Neb. 897

but the text of the mold-and-die amendment, and the legisla-
tive history of the bill in which it was separately adopted, make
clear that its purpose did not relate to the issue presented here.27
The problem was that some molds and dies are permanent in
nature but that others are made from special raw ingredients
and are essentially disposable.28 The purpose of the mold-and-
die provision was to ensure that all molds and dies were being
treated the same, whether they were permanent or temporary.29
That is not the issue here, so the mold-and-die amendment
does not illuminate the Legislature’s intent in enacting the pro-
visions at issue in this case.
Nor are we persuaded by the department’s argument that
§ 	77-2701.47(1)(h), 	which 	exempts 	repair 	or 	replacement
parts or accessories, supports its interpretation of the Act. The
department contends that under Concrete Industries’ reading of
the Act, the repair or replacement part or accessory provision
would be superfluous.
but there is a relevant distinction between purchasing compo-
nents for the assembly of manufacturing machinery and equip-
ment and purchasing repair or replacement parts or accessories
for machinery and equipment that has already been assembled.
The category of items excepted by § 77-2701.47(1)(h) is
broader than the category of items used to construct machinery
and equipment in the first place, because items that are not
part of the construction of machinery or equipment may still
be purchased “for use in maintaining, repairing, or refurbish-
ing” it.
In other words, we are not persuaded that the department’s
construction of the Act is necessary to prevent § 77-2701.47(1)(h)
from being rendered meaningless. Instead, we agree with
Concrete Industries that § 77-2701.47(1)(h) supports its con-
struction of the Act. As previously noted, we must assume
the Legislature intended a sensible rather than absurd result
27 See Committee on Revenue, L.b. 1189, 99th Leg., 2d Sess. (Feb. 10,
2006).
28 See id.
29 See id.
904 	277 NebRASkA RePoRTS

in enacting a statute.30 And it would make very little sense to
exempt assembled machinery from sales and use taxes, and to
exempt each and every part of that machinery from sales and
use taxes if it is purchased to replace an original part, but to
impose a tax on the purchase of the same parts when they are
purchased to assemble the machinery in the first place.
The department also argues that its interpretation of the Act
is supported by administrative concerns. The department sug-
gests that an exemption for preassembled machinery and equip-
ment is easy to administer but that an exemption for parts used
to make machinery and equipment would be hard to administer,
because some of those parts could be very common, like some
of the items involved in this case.
[11] We are not persuaded by this argument. First of all, there
is no indication in the legislative history that this was actu-
ally among the Legislature’s concerns. It is the Legislature’s
intent, not the department’s, that is pertinent here.31 Second,
as Concrete Industries admits, the burden of establishing a tax
exemption is placed upon the party claiming the exemption.32
Thus, the duty of determining whether a manufacturer’s pur-
chase of a common part was tax exempt will fall more on the
manufacturer than on the department.
but most fundamentally, the department cannot escape the
asserted administrative inconvenience of dealing with com-
mon parts, because, as already discussed, repair and replace-
ment parts and accessories are tax exempt, even under the
department’s interpretation of the Act.33 Those repair and
replacement parts and accessories could include any of the
common items that are used to repair and maintain machinery
and equipment—from complicated machine parts to nuts, bolts,
wires, or machine oil. And, because almost any machinery
and equipment will require routine maintenance and repair,
30 See Foster, supra note 15.
31 See McClellan v. Board of Equal. of Douglas Cty., 275 Neb. 581, 748
N.W.2d 66 (2008).
32 See Intralot, Inc. v. Nebraska Dept. of Rev., 276 Neb. 708, 757 N.W.2d
182 (2008).
33 See § 77-2701.47(1)(h).
CoNCReTe INdUS. v. NebRASkA dePT. oF Rev. 	905
Cite as 277 Neb. 897

the department seems more likely to face those claims than
circumstances in which a manufacturer constructs its own
machinery and equipment from scratch.
In short, the department is going to have to resolve refund
claims for common parts in any event. We are not convinced
that the Legislature intended to spare the department that
duty, because the same duty is imposed by the exemption for
repair or replacement parts or accessories. The department’s
claim of administrative convenience is not consistent with the
Legislature’s intent, as expressed in the legislative history and
statutory language.
Most consumers are familiar with the ominous words “some
assembly required.” Those words do not mean that frustrated
parents trying to assemble a bicycle on Christmas eve have
not purchased a bicycle—they have, regardless whether the
bicycle’s parts are assembled by a bicycle manufacturer, a
toy store, or the final consumer. Similarly, a manufacturer has
purchased manufacturing machinery and equipment regardless
whether further assembly is required. Given the exemption’s
purpose, there is simply no relevant distinction between pur-
chasing preassembled machinery or equipment, purchasing
kits for assembling machinery or equipment, paying a vendor
to purchase and assemble the parts, and purchasing one’s own
list of components to assemble into machinery and equip-
ment. We decline to read such an irrelevant distinction into
the statutes.
[12,13] We hold that under §§ 77-2704.22(1) and 77-2701.47,
the “sale . . . of manufacturing machinery and equipment”
includes the sale of items that are assembled to make manu-
facturing machinery and equipment. Therefore, we find merit
to Concrete Industries’ first assignment of error. Having deter-
mined that the department’s construction of the Act was incor-
rect, we need not consider whether the department incorrectly
relied on its own revenue rulings or whether the department’s
interpretation of the Act was unconstitutional. An appellate
court is not obligated to engage in an analysis which is not
needed to adjudicate the controversy before it.34
34 McKenna v. Julian, ante p. 522, 763 N.W.2d 384 (2009).
906 	277 NebRASkA RePoRTS

We also note that because the department determined none of
Concrete Industries’ claims were valid, neither the department
nor the district court considered whether Concrete Industries
met its burden of proving that all the items for which it claimed
refunds were assembled into the manufacturing machinery
and equipment that it built. For that reason, this cause will be
remanded to the district court for further proceedings to deter-
mine the amount of Concrete Industries’ refund.
CoNCLUSIoN
The sale of manufacturing machinery and equipment includes
the sale of items that are assembled to make manufacturing
machinery and equipment, which is therefore exempt from
sales and use taxes under the Act. The department, and district
court, erred in concluding otherwise. The decision of the dis-
trict court is reversed, and the cause remanded to the district
court for further proceedings consistent with this opinion.
reversed and remanded for
further proCeedIngs.
wrIght, J., participating on briefs.
ANdeRSoN v. HoUSToN 	907
Cite as 277 Neb. 907
davId J. anderson, appellee , v. robert houston,
dIreCtor , nebraska department of C orreCtIonal
servICes , appellant.
766 N.W.2d 94
Filed June 5, 2009. 	No. S-08-954.
1. Habeas Corpus: Appeal and Error. on appeal of a habeas corpus petition, an
appellate court reviews the trial court’s factual findings for clear error and its
conclusions of law de novo.
2. Appeal and Error. The construction of a mandate issued by an appellate court
presents a question of law.
3. Judgments: Appeal and Error. An appellate court reviews questions of law
independently of the lower court’s conclusion.
4. Courts: Appeal and Error. Where an appellate court reverses and remands a
cause to the district court for a special purpose, on remand, the district court has
no power or jurisdiction to do anything except to proceed in accordance with
the mandate.
5. ____: ____. A trial court is without power to affect rights and duties outside the
scope of the remand from an appellate court.