Fritz, Lynch and Trautwein. The opinion of the court was delivered by Lynch, J.A.D.
This is an appeal by the Director of the Division of Taxation from a judgment of the Division of Tax Appeals holding that sales of dynamite to stone quarries are exempted from the New Jersey Sales and Use Tax Act (N.J.S.A. 54:32B-1 et seq.) pursuant to the exemption set forth in N.J.S.A. 54:32B-8(t).
Respondent Ramac Explosives, Inc. was assessed by the Director for the amount of sales taxes it failed to collect upon its sales of dynamite to certain stone quarries. Ramac filed a petition with the Division of Tax Appeals which reversed the Director's determination and held that the sales of dynamite by Ramac were exempted from the sales tax. A judgment was entered in favor of Ramac.
Meanwhile, intervenor-respondent New Jersey Crushed Stone Association, Inc., an organization comprised of stone quarries in New Jersey, had instituted a declaratory judgment action in the Chancery Division to determine whether
explosives used in quarrying operations were exempted from the sales tax. The decision of the Division of Tax Appeals in favor of Ramac was rendered before the Association's case proceeded to trial. Accordingly, the Association and the Director jointly moved that the Association be permitted to intervene in the pending appeal involving Ramac. The court granted the motion permitting the Association to intervene and, retaining jurisdiction, remanded the case to the Division of Tax Appeals in order that the Association could present additional evidence. Following the remand hearing, supplemental findings of fact and conclusions of law were rendered and filed. The holding that sales of dynamite to stone quarries were exempt was sustained. This appeal followed.
N.J.S.A. 54:32B-8(t) allows exemption from retail sales taxation as to:
(t) Sales of materials, such as chemicals and catalysts, used to induce or cause a refining or chemical process, where such materials are an integral or essential part of the processing operation, but do not become a component part of the finished product; * * *.
Concededly, within the meaning of that section, dynamite is a "material" and a "chemical." As such it is an "integral or essential part" of blasting which is a "processing operation." And dynamite does "not become a component part of the finished product." There remains for determination the issue as to whether dynamite, in a quarry-blasting operation, is "used to induce or cause a refining or chemical process."
The evidence is undisputed that dynamite does not produce a chemical effect upon the ledge rock which it dislodges in blasting. It follows, therefore, that dynamite does not induce or cause a "chemical process." The finding of the judge of the Division of Tax Appeals to that effect, supported by credible evidence, must therefore stand.
There is left only the issue as to whether dynamite is used to induce or cause a "refining * * * process." This, in
turn, reduces the relevant question as to whether blasting in a stone quarry is ...