                                               R-950




Honorable Ceo. H. Sheppard
Comptroller of Public Accounts
Austin, Texas                    Opinion MO. V-459
                                 Re: Applicability of
                                     occupation tax
                                     levied by Art.
                                    7047, Sec. 46,
                                    V.C.S. to carbon
                                    black manufactured
                                    from crude oil.
Dear Hr. Sheppard z
           You state that carbon black is now being pro-
duced by “a aethod where there Is used (a) part natural
gas and part crude oil, (b) all crude oil, (c) reflner-
ies ’ residue.’ Your question Is whether carbon black
manufactured by the use of substances other than gas is
subject to the carbon black occupation tax levied bg
Section 46 of Article 7047, V. C. 5.
          The mauufaaturing or occu ation tax on carbon
black was initiated by Acts 19 6 4$ th Leg., 3rd C. 3.,
p. 2040, being Article 7047 ( 5 ; but this was repealed
and superseded by Article '70479 ( 61, (V.C.S.), being
Acts, 1941, 47th Leg., p. 269, Ch. 184. Article XI read-
ing in part as follows:
          “There is hereby levied an occupation
     tax on every person, agent, receiver, trustee,
     firm, association, or co-partnership mamfac-
     turing or producing carbon black in this State,
     such tax to be as follows:
          “1. On ‘Class A’ carbon black said tax to
     be one hundred twent -two twelve hundredths
     (122/1200) of one (17 cent per pound on all such
     carbon black produced or manufactured where the
     market value Is four (4) cents per pound or less,
     and shall be four and one tenth (4.1) per cent
     of the value of all such carbon black produced
     or manufactured where the market value Is in ex-
     cess of four (4) cents per pound.
Honorable   Gee. Ii.Sheppard, Page 2 (V-459)


                OR 'Class B’ oarban black aaid tut
     t0 be%irtpio~e    two hundred fortieths (3l/2&)
     of one (1) cent per pound on 811 such carbon
     blrck produced oP n8nuf8ctured where the m8r-
     ket v8lue i6 four (4) cents per pound or leea,
     end eh8ll'be five 8nd two tenth6 (5.2) per cent
     of the vrlue of all rush crrbon black produced
     or nmpf8ctured where the market value Is In
     excess~o?  four (4) cents per pound.
           "'Cl886 A' carbon blrck 86 wed In thin
     Article me8ns carbon bl8ck mum?8ctured    or pro-
     duced by the use o? less than two hundred (200)
     cubic feet of grs per pound of c8rbonbl8ck.

,         "'Cl866 B' crrbon black a6 ured In thlr
     Article aours carbon black manufactured or
     produced by the use of more th8n two hundred
     if::! cubic feet of gas per pound of carbon
          .
           "Should one (1) or more b? the cl866lfl-
     cation8 herein be declared for 8ny realon to
     be discrWln8tory or uncon6tltutloMl or for
     8ny re8uon lnv8lld, then there Is hereby levied
     on all crrbon black nmufoctured or produced In
     thlr State 8 tu of one hundred twenty-two twelve
     hundredth6 (122/1200) of one,(l) cent per pound
     on all crrbon blrck produced or m8nuf8ctured
     where the rrmrket vrlue Is four (4) cent8 per
     pound or loso, and 8 t8x of four 8nd one tenth
     (4.1) per cent of the v8lue of 811 crrbon bl8ck
     produced or aunuf8ctured wheFc the market value%
     Is in excem of four (4) cent6 per pound.
          "(?) The tew 'crrbon bl8ck' 86 herein
     used Includes all bl8ck pigment produoed In
     whole or in port from natur@l gas, C88i4-
     herd gar or residue 086 by the Impinging of
     a flame upon a ch8nnel dirk or pl8te, 8nd the
     tax herein tipO8ed shall rerch all products
     produoed in such m8nner.n @mph8816 OUrS)
          'Itwill be noted thrt SubdivIsiOn (S) Just
quoted definer carbon black 86 Including "811 blrck pig-
ment produced. . . by the impln~ing of 8 fl8me upon 8
cherle81 rh8nnel disk or plate.   In the c88e o? Peer-
lo66 C8rbon Black Co. v. SheppaM, 113 S. W. (2) 996
SC. C . A., err. ret .), the tucp8yer employed the
 cylinder method" and contended that It did not f811
Honorable Gee. R. Sheppard, Page 3 (V-459)


within the statutory derlnltlon. The Court held that
the use of the wo+d~ "includ&s" in the statute was not
intended by the,Legislature '$0 exclude carbon black
manufactured bitmethods other than the,uae of "a channel
disk or plate. -The Court in the course of its ,oplnlon
ueed the following language:
          11. . . Obviously, the language, "the term
     "oarbon blaok" as herein used Includes all
     black pigment produced in whole or In part
     from natural gas, casing-head gas or residue
     gas by the lmplngtig of a flame upon a channel
     disk or plate,' was not ~lntendedto llmitthe
     language of paragraph (a) which imposed the
     tax upon 'every person . . . manufacturing or
     producing carbon black’;  but the word 1inc1ude6f
     was used ln Its generally acoepted sense, and
     a6 also including thornemanufacturing or pro-
     duclng carbon blaok by the methods named. Thle
     construction is further made manifest by the
     language of paragraph (f) providing, that 'the
     tax . . . imposed shall reach all products pro-
     duced In such manner.' It will be noted that
     this language did not limit the tax to 'all
     product6 produced in such manner,’ but pro-
     vlded that the tax 'ahall reach all products
     produced in such manner,' thus clearly lndl-
     eating that the tax wa6 also imposed on pro-
     ducts produced in other manners or by other
     methods. And when the entire act Is read it
     shows that the tax was not impoeed upon a
     method or menner used In manufacturing or
     producing carbon black, but upon the business
     or occupation of manufacturing or producing
     carbon black In its entirety, and that the
     methods of production referred to were ll-
     lustratlve of the carbon black industry and
     in aid of the officials chtrged with the duty
     of collecting the tax. . .
         #.
          The occupation tax levied by this Article Is
upon the occupation of msnufacturlng or producing carbon
black In this State, and it Is levied by Subdivision (a)
quoted above. Evidently the Legislature was aware of the
fact that carbon black could be manufactured by the use
of materials other than natural gas, ln that It used the
expression 'Includes all black pigment produced in whole
or ln art from natural gas" In Subdivision (f) quoted
2iEziKs t seems clear to us that had the Legislature ln-
tended to tax only the occupation of manufacturing carbon
                                                             ,,

Honorable Oeo. H. SheppRrd, PRge 4 (V-459)


,blacN when n8tUral 68s wa8 ured ln 8Uoh production, it
 would have employed approprlrte 18nguage to that end.
 Reading the Act 86 8 whole 8nd giving th8t lnterpretr-
 tlon to S1Bdlvlelon (f) whloh 106 given by the,Court in
 the Peerless case, we Rre Of the opinion thrt the,Leglr-
 lrture not only Intended to but did levy 8 tu upon the
 business or occupation of mzmf8cturing or producing
 or&bon bl8ck irrespective of the method employed or the
 raw m8terlalr used In the PlanUfRCtwe thereof.
          The Legi6lrtUre rfter levying the tu in Sub-
division (a) on the OCCUpRtiOn of IMnufRctUring carbon
blrck, without 8ny llmit&tlon upon the method employed
or the r8w naterlals UEIed,then proceeded to fir 8 rrte
b86ed upon whether more or less than 200 cubic feet of
g86 wa8 used In the manufacture of 8 pound of crrbon
bl8ck. In the ex6mple given, it is very probrble th8t
less than 200 cubic feet of go8 per pound of carbon bl8ok
Is being used, if any. Hence the carbon bl8ck would be
truble under Class A.
          To show the legl8l8tlve Intent, it Is pointed
out that the Act provide6 that if this rate Cl88sifiCR-
tlon be discriminator or unconstltutlonal, the rate will
be 122/1200 of one (13 cent per pound "on all carbon
black produced or manufactured," and lovie  such tax "on
marbon     black manufactured or produced in thla Ststc"
'mle provision was sdded for the sole purpose of provld-
lng a rate to be used in the event the rate Ci868l?lCR-
tion as provided In "Cl888 A" and "Cl888~"Wrs InvRlld.
Thle provision clearly rhow8 the LegirlRture Intended
that the occup8tion of manufacturing carbon blsck WRSto
be taxed Irrespective of the method employed or the kind
of r8w uteriale used.
                        Su?Q4ARY

           The occupation of producliigcardon blrck
     manufactured from (a) prrt natural gas and
     part crude 011, (b) all cmade oil, and (a) re-
     fineries' residue  is sub hot to the tax levled
     Under Sec. 46 of Art. 70d7, V.C.S. Peerle66
     Clrbon Bl8ck Co: v. Sheppard, 113 S.W. (2) 9%.
                                   Your8 very truly
                               ATTORB’EY OHHHRAL OF TEXAS.



ATTORNEXQFXXRAL
                                     W. V. Oeppert
WO/JCP                                 li88i8ta%It
