Leonard, Seidman and Bischoff. The opinion of the court was delivered by Seidman, J.A.D.
[132 NJSuper Page 32] The issue involved in this appeal is whether and to what extent a municipality may assess and tax as real property under N.J.S.A. 54:4-1 et seq. machinery and equipment which are attached to land or buildings but used in manufacturing process. The Division of Tax Appeals made a preliminary determination in this case
that they were not so taxable regardless of the manner of attachment and we granted the aggrieved municipality leave to appeal.
National Lead Company operates a large industrial complex in the Borough of Sayreville for the production of titanium oxide. The borough tax assessor computed and determined the taxable value of the company's real property for 1969, 1970 and 1971 to be, with slight yearly variations, about $315,000 for the land and $8,271,000 for the improvements. The taxpayer appealed to the Middlesex County Board of Taxation, which reduced the assessments on the improvements by approximately 10% for each year. The land assessments were not changed. Both sides appealed to the Division of Tax Appeals, the company seeking a further reduction and the municipality the restoration of the original amounts.
At a pretrial hearing in the Division, a dispute arose between the parties over what portions of the property should be deemed realty and what personalty. The company contended that its machinery and equipment were an integral part of the manufacturing process and were thus taxable as personalty and not as realty regardless of how they were affixed or anchored. The borough claimed on the other hand that most of the facilities constituted real estate and should be taxable as such. The parties agreed that the question of valuation should be deferred pending the outcome of a hearing for the limited purpose of resolving this issue. Such hearing was conducted in the Division with a result adverse to the borough.
In his written opinion, the tax appeal judge described the machinery and equipment in question:
The main manufacturing complex is * * * just a shell around the process equipment; that the heating and lighting is for the equipment and for the people who operate it. The many large doors, the corridors and hoists on various levels are installed specifically for
easy removal and replacement of equipment. The items in dispute are all large, heavy and expensive. They require the construction and erection of specialized concrete foundations. The equipment is affixed to these foundations by the tightening of nuts located on the end of anchor bolts imbedded in the concrete. These nuts can be removed and the equipment can be moved by the use of various hoists. These items consist of ore and ball mills, rotary filters and calciners, settling tanks, elevators and conveyors, large chemical tanks, Shriver presses, settling tanks [ sic ] pumps and piping, Moore-type filters, dryers, pebble mills, treatment tanks and an acid plant. As an example of their size the No. 6 are [ sic ] mill is the largest individual mill weighing 20 tons. This mill together with the ball charge and ore charge weighs 80 tons. All of these with the No. 4 mill have been removed from their foundation, taken out of the buildings, put on a truck, sent to the manufacturer in York, Pennsylvania, have been repaired and returned. Petitioner's cranes which move the items used in the operation weigh 35 tons and are purchased so that they can be dismantled for maintenance purposes. A calciner is often removed in one piece, through the roof or the side walls. The calciner is, 150 feet long, is purchased in sections, through a catalog from St. Louis plant. I find as a fact that although this equipment is large in size, it can be removed, without extensive damage to the foundation and property, any damage that is done is minimal considering its size and expense.
The judge below held as follows:
I find as a fact, that all equipment in structures, no matter how large, that are movable in any respect and are directly related to the manufacturing process are to be deemed personal property. This determination would include all incidental piping, wiring, cat-walks, minor pumps, gauges, structural foundations that apply or pertain thereto. Machinery and equipment even though it is not movable and if it is permanently affixed to the realty, if it is an integral part of the work process, shall be deemed to be personal property. Machinery and equipment that is essentially attributable to the maintenance of real estate and not in (sic) integral part of the manufacturing process, is deemed to be real property. All immovable machinery and equipment that is affixed to the realty, which is used for some purpose other than the actual manufacturing process * * * is deemed to be real property, [Emphasis supplied.]
The Division's findings of fact are essentially not in controversy; therefore, we are not required to determine whether they were reasonably reached on sufficient credible evidence present in the ...