Appeal by defendant from order and judgment entered 9 August
2000 by Judge Marvin K. Gray in Mecklenburg County Superior Court.
Heard in the Court of Appeals 18 September 2001.
Newitt & Bruny, by John G. Newitt, Jr., and Roger H. Bruny,
for plaintiff-appellee.
Attorney General Michael F. Easley, by Associate Attorney
General David J. Adinolfi, II, for the State.
MARTIN, Judge.
Defendant Secretary of Revenue of the State of North Carolina
appeals from a summary judgment granted in favor of plaintiff
American Ripener Company, Inc., requiring defendant to refund
plaintiff certain taxes assessed for the period 1 January 1990
through 30 November 1995. Plaintiff is in the business of manufacturing and selling
ethylene concentrate, a plant growth regulator or stimulator which
controls the speed of the ripening of fruit and vegetables.
Plaintiff also manufactures, sells, and leases generators that are
utilized to control the release of the ethylene gas. For the
period from 1 January 1990 through 30 November 1995, defendant
assessed plaintiff $10,821.54 in sales tax for the sale of
ethylene, $8,020.31 in use tax for its generators, $810.81 in use
tax for the replacement parts for its generators, less a credit of
$259.44, plus $8,442.41 in interest, for a total of $27,835.63.
Plaintiff appealed the assessment in writing and received a
hearing before the Assistant Secretary for Legal and Financial
Services for the North Carolina Department of Revenue who affirmed
defendant's assessment. Subsequently, plaintiff petitioned the
North Carolina Tax Review Board to review the Assistant Secretary's
decision. By decision rendered 3 March 1998, the Tax Review Board
affirmed. Pursuant to G.S. §§ 105-241.4 and 105-267, plaintiff
paid the $27,835.63 tax and interest on 1 April 1998 under protest
and, by letter of the same date, demanded a refund of the tax from
defendant. Upon defendant's failure to refund the tax within 90
days after 1 April 1998, plaintiff instituted this action pursuant
to G.S. §§ 105-241.4 and 105-267 to recover the tax.
Defendant moved for summary judgment without supporting
affidavits. Plaintiff filed a response to the motion for summary
judgment and a cross motion for summary judgment with supporting
affidavits. By judgment dated 9 August 2000, the trial court
concluded that there was no genuine issue as to any material fact, granted plaintiff's motion for summary judgment, and ordered
defendant to refund to plaintiff the sum of $27,835.63 with
interest at the rate of 8% per annum from 1 April 1998 until paid
and the costs of the action. Defendant appeals.
Defendant Secretary of Revenue assigns error to the denial of
her motion for summary judgment and to the granting of plaintiff's
cross motion for summary judgment. We affirm.
Summary judgment is appropriate where “the pleadings
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that any party is entitled to a
judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c)
(2000). According to Rule 56(e) of the North Carolina Rules of
Civil Procedure:
. . .[w]hen a motion for summary judgment is
made and supported as provided in this rule,
an adverse party may not rest upon the mere
allegations or denials of his pleading, but
his response, by affidavits or as otherwise
provided in this rule, must set forth specific
facts showing that there is a genuine issue
for trial. If he does not so respond, summary
judgment, if appropriate, shall be entered
against him.
N.C. Gen. Stat. § 1A-1, Rule 56(e) (2000). However, if the adverse
party fails to respond, that does not automatically mean that
summary judgment is appropriate.
Perry v. Aycock, 68 N.C. App.
705, 315 S.E.2d 791 (1984). “The moving party must still succeed
on the strength of its evidence, and when that evidence contains
material contradictions or leaves questions of credibility
unanswered, the movant has failed to satisfy its burden.”
Id. at707, 315 S.E.2d at 793-94. Additionally, the evidence must be
viewed in the light most favorable to the non-movant.
Murray v.
Nationwide Mut. Ins. Co., 123 N.C. App. 1, 472 S.E.2d 358 (1996),
disc. review denied, 345 N.C. 344, 483 S.E.2d 172-73 (1997).
Two statutes are applicable to the audit period at issue in
this case, 1 January 1990 through 30 November 1995. G.S. § 105-
164.13(2) was in effect from 1 January 1990 through 31 July 1995
and G.S. § 105-164.13(2a)d was in effect from 1 August 1995 through
30 November 1995. Until 1 August 1995, G.S. § 105-164.13(2)
provided:
The sale at retail, the use, storage or
consumption in this State of the following
tangible personal property is specifically
exempted from the tax imposed by this Article:
(2). . . plant growth inhibitors,
regulators, or stimulators for
agriculture including systemic and
contact or other sucker control
agents for tobacco and other crops.
G.S. § 105-164.13(2a)d, applicable for the last four months of the
audit period provides:
The sale at retail, the use, storage or
consumption in this State of the following
tangible personal property is specifically
exempted from the tax imposed by this Article:
(2a) Any of the following when
purchased for use in the commercial
production of animals or plants, as
appropriate:
d. Plant growth
inhibitors, regulators,
stimulators, including
systemic and contact or
other sucker control
agents for tobacco and
other crops.
The determination of whether plaintiff's sales of ethylene
gas, use of generators, and use of replacement parts for itsgenerators falls under an exemption for the retail sales and use
tax depends solely on statutory interpretation which is a matter of
law.
See Taylor Home of Charlotte v. City of Charlotte, 116 N.C.
App. 188, 447 S.E.2d 438,
disc. review denied, 338 N.C. 524, 453
S.E.2d 170 (1994). Therefore, this issue was appropriately
resolved by the trial court.
In her answer, defendant admitted that plaintiff “is engaged
in the manufacture of ethylene concentrate and generators [and
that] [e]thylene is a plant growth regulator or stimulator which
controls the speed of the ripening of fruit and vegetables.”
Plaintiff's president provided evidence by affidavit in support of
plaintiff's motion for summary judgment, including the following:
5. That the Plaintiff, American Ripener
Company, Inc., is in the business of
manufacturing and selling ethylene concentrate
and manufacturing, selling and leasing
generators.
6. That ethylene is a plant growth regulator
or stimulator which controls the speed of the
ripening of fruit and vegetables.
7. That the generators are utilized to
control the release of the ethylene gas which
thus regulates the speed of the ripening of
the fruits and vegetables and are plant growth
regulators and stimulators.
Since “plant growth inhibitors, regulators, or stimulators” are
“specifically exempted” under G.S. §§ 105-164.13(2)and 105-
164.13(2a)d, plaintiff contends that the court was correct in
granting its motion for summary judgment.
Defendant argues, however, that plaintiff's sale of the
ethylene was not for a purpose falling under the exemption
statutes. In order for the sale of ethylene to be exempted underG.S. § 105-164.13(2), the ethylene must be sold “for agriculture
,”
and under G.S. § 105-164.13(2a)d, the ethylene must be sold “for
the commercial production of animals or plants.” The record,
however, contains no evidence as to whom and for what purpose the
ethylene was being sold by plaintiff and to rebut plaintiff's
showing that the sale of the gas and the use of the generators were
exempt. Thus, this Court is unable to consider defendant's
arguments concerning the purpose for which plaintiff sold the
ethylene gas as defendant produced no evidence to support her
argument.
See N.C.R. App. P. 9(a). We therefore conclude that
plaintiff has carried its burden by showing that there was no
genuine issue as to any material fact and that its sale of ethylene
gas fell under the exemption statutes.
Defendant also argues that plaintiff is not exempt from any
tax under G.S. §§ 105-164.13(2) and 105-164.13(2a)d with respect to
its purchase of generator parts. However, the affidavit of
plaintiff's president asserts that the generators were utilized to
control the release of ethylene gas and therefore they should be
considered plant growth regulators and stimulators under the sales
and use statutes. Thus, plaintiff argues that it is entitled to
recover the $8,020.31 in use tax for its generators and $810.81 in
use tax for the replacement parts for its generators.
Defendant relies on the definition of “plant regulator”
provided in G.S. § 143-460(32) which states:
The term “plant regulator” means any substance
or mixture of substances, intended through
physiological action, for accelerating or
retarding the rate of growth or rate of
maturation, or for otherwise altering the
behavior of ornamental or crop plants or theproduce thereof, but shall not include
substances to the extent that they are
intended as plant nutrients, trace elements,
nutritional chemicals, plant inoculants, and
soil amendments.
Defendant points out that this definition does not include hardware
or machinery such as generators but is limited to chemical
substances. Therefore, defendant argues that the generators at
issue are not exempted under the applicable statutes. However,
defendant's reliance on this definition is misplaced since that
definition is confined to Article 52, North Carolina Pesticide Law
of 1971, G.S. § 143-434
et seq.
Defendant additionally argues that plaintiff's specific use of
the generator parts in question is not exempted under the retail
sales and use statutes. However, in the absence of evidence in the
record as to the purpose for which plaintiff used the generator
parts, we are unable to consider defendant's arguments with respect
thereto.
See N.C.R. App. P. 9(a). Plaintiff provided
uncontradicted evidence that the generators are used to control the
release of the ethylene gas and to regulate the speed of the
ripening of fruits and vegetables and, therefore, are plant growth
regulators or stimulators. Since “plant growth inhibitors,
regulators, or stimulators” are specifically exempt from the North
Carolina Sales and Use Tax pursuant to G.S. §§ 105-164.13(2) and
105-164.13(2a)d, plaintiff's motion for summary judgment was
properly granted.
Affirmed.
Judges WALKER and TYSON concur.
*** Converted from WordPerfect ***