This is an appeal from a determination of the Division of Taxation levying a sales tax of $2,073.26 on sales of plaintiff's products. Plaintiff paid the tax and now claims a refund plus interest from the date of payment, contending the taxes assessed were exempt under N.J.S.A. 54:32B-8(t).
Grinding Balls, Inc. is a foundry engaged in the manufacture and sale of metal grinding balls which are used primarily in such industries as the paint, cement and coal businesses. Their function is to reduce by a grinding process the size of certain materials into a powdery form.
The balls are described as Ni-Hard metal balls made of cast-iron, nickel, chromium, magnesium, silicon and carbon. The combination of these ingredients makes the resulting metal extremely hard and resistant to wear. They are manufactured in various sizes from one-half inch in diameter for the paint grinding industry to four inches for the cement grinding business.
The purchasers use the balls to grind certain materials such as limestone, magnasite, titanium-oxide, carborundum and paint pigments into a powder.
The balls are placed into a mill or tumbling machine, the materials to be produced are added, and a tumbling process is instituted.
The size of the particles involves are reduced by having two balls coming together in the revolving mill and crushing the particles. The mills turn only about 18 to 21 revolutions per minute which is below what is called the critical speed. The balls are lifted up by lifter bars located on the side of the mill, then they cascade and roll down on each other. The material that is enclosed also rolls; it is crushed; and, eventually, is reduced to its powdered size. If the mills spin above the critical speed, the ball sticks to the side of the surface by centrifugal force.
In the example of its use by the cement industry, the parties that go into the mill are granular, probably the size of a walnut or an acorn. They are first ground with large grinders, probably steel balls (not plaintiff's Ni-Hard) and the finished grinding is done with the use of plaintiff's Ni-Hard balls.
In the paint industry, bags of rough pigment (mined ore of different metals which has been crushed and reduced to the size of grapenuts-used to give color to the paint) are placed in a batch-type mill and mixed with oils and solvents. This mixture is then ground by the balls in the batch for a period of 18 to 24 hours reducing the particles to a very fine contained powder.
The balls are also used to grind soft coal in connection with steam generators. Lumps of soft coal are placed in a mill with balls mixed therein. The soft coal is then ground and the dust therefrom is blown into steam generators.
In all of the uses, the balls become a part, very minutely, of the product they are grinding. The balls used in a cement mill will last two to four years; the part that is worn very slowly wears itself off into the cement. The balls have a similar life span in the grinding of carbon and coal; however, in a paint mill the balls last for a substantially longer period of time.
Plaintiff relies upon N.J.S.A. 54:32B-8(t), which allows exemption from retail sales taxation and reads as follows:
Receipts from the following shall be exempt from the tax on sales imposed under subsection (a) of section 3 and the use tax imposed under section 6:
(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 ...