[Code of Federal Regulations]
[Title 27, Volume 1]
[Revised as of April 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 27CFR53.111]

[Page 1001-1002]
 
            TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS
 
 CHAPTER I--ALCOHOL AND TOBACCO TAX AND TRADE BUREAU, DEPARTMENT OF THE 
                                TREASURY
 
PART 53_MANUFACTURERS EXCISE TAXES_FIREARMS AND AMMUNITION--Table of 
Contents
 
     Subpart J_Special Provisions Applicable to Manufacturers Taxes
 
Sec. 53.111  Tax on use by manufacturer, producer, or importer.

    (a) In general. Section 4218 of the Code imposes tax in respect of 
certain uses of articles by the actual manufacturer, producer, or 
importer thereof. This section also applies in respect of the use of 
articles by any other person who, pursuant to a provision of chapter 32 
of the Code, is considered to be, or is treated as, the manufacturer or 
producer of the articles. See, for example, section 4223 of the Code 
relating to articles purchased tax free for use in further manufacture.
    (b) Taxable articles in general--(1) Application of tax. If the 
manufacturer, producer, or importer of an article taxable under chapter 
32 of the Code uses

[[Page 1002]]

the article for any purpose other than that indicated in paragraph (b) 
(3) of this section, he shall be liable for tax with respect to the use 
of such article in the same manner as if the article were sold by him.
    (2) Taxable use in manufacturer of nontaxable articles--(i) In 
general. In the case of an article to which paragraph (b)(1) of this 
section applies, tax attaches when the manufacturer, producer, or 
importer of the articles uses it as material in the manufacture or 
production of, or as a component part of, another article which is not 
taxable under chapter 32 of the Code, regardless of the disposition made 
of such other article. (See paragraph (c) of Sec. 53.115 for 
computation of tax on such use.)
    (ii) Types of use in manufacture of nontaxable articles. Taxable use 
may consist of the incorporation of a taxable article into a nontaxable 
article. Taxable use may also result from the combining of a taxable 
article (or the components thereof) with a nontaxable article (or the 
components of a nontaxable article) resulting in a combination end 
article which itself is not taxable. Although the taxable article may 
not be a completely separable unit, within the contemplation of the law 
a taxable article has been produced and incorporated in the combination 
end article.
    (3) Nontaxable use in manufacturer of taxable articles. The tax on 
the use of an article to which paragraph (b)(1) of this section has 
application shall not apply if the article is used by the manufacturer, 
producer, or importer thereof as material in the manufacturer or 
production of, or as a component part of, another article taxable under 
chapter 32 of the Code to be manfactured or produced by him. It is 
immaterial what disposition is made of such other article.
    (c) Use after lease. If the manufacturer, producer, or importer of a 
taxable article leases such article and thereafter uses the article, he 
incurs liability for tax on such use as provided in these regulations to 
the same extent as if the article were sold after being leased. See 
section 4217 of the Code and the regulations thereunder in this subpart 
for application and computation of tax in case of leased articles.
    (d) Time of application of tax. In the case of a taxable use of an 
article by the manufacturer, producer, or importer thereof, the tax 
attaches at the time such use begins. If tax applies by reason of the 
sale of an article by the manufacturer, producer, or importer thereof on 
or in connection with his sale of another article, the tax attaches at 
the time of the sale of such other article.
    (e) Exemptions because of other statutory provisions. Tax does not 
apply on the use of an article by the manufacturer, producer, or 
importer thereof if under the applicable provisions of the Code the sale 
of the article for a similar use would not be subject to tax. Also, tax 
need not be paid with respect to the use of an article by the 
manufacturer, producer, or importer thereof if such use would qualify, 
under the provisions of section 6416(b) of the Code, for credit or 
refund of the tax paid.

[T.D. ATF-308, 56 FR 303, Jan. 3, 1991]

    Editorial Note: At 56 FR 31084, July 9, 1991, Sec. 53.111 was 
amended by removing the word ``manufacturer'' and adding the word 
``manufacture'' in the heading of paragraph (a)(2), and removing the 
word ``manufacturer'' and adding the word ``manufacture'' in the first 
sentence of paragraph (a)(3), effective July 9, 1991; however, these 
sub-paragraph designations are not included in Sec. 53.111(a). The 
issuing agency will publish a correction in the Federal Register at a 
later date.