of Claims LC Nos. 16-000118-MT, 14-000091-MT
Before: Gadola, P.J., and K. F. Kelly and Riordan, JJ.
these consolidated cases, plaintiff, Tomra of North America,
appeals as of right the orders of the Court of Claims
granting summary disposition to defendant, the Department of
Treasury. In its opinion, the Court of Claims concluded that
plaintiff's beverage container recycling machines did not
qualify for the industrial processing exemption to tax
liability as set forth in the General Sales Tax Act (GSTA),
MCL 205.51 et seq., and the Use Tax Act (UTA), MCL
205.91 et seq. We reverse and remand.
facts relevant to this appeal are largely undisputed.
Plaintiff sells and leases the container recycling machines
commonly found in grocery stores, and also sells repair parts
for those machines. These machines accept aluminum cans,
glass bottles, and plastic bottles for recycling. When a can
or bottle is placed in the machine, the machine reads the
universal product code (UPC), and then sorts the accepted
cans and bottles. Aluminum cans are crushed, plastic bottles
are sorted by color, punctured, and compacted, while glass
bottles are sorted by color. All containers are then moved to
collection bins and thereafter transported to a recycling
facility. At the recycling facility, the containers are
dumped onto conveyor belts. Glass bottles are stored, while
aluminum cans and plastic bottles are compacted into bales.
The recycling facility sells the cans and bottles to
manufacturers who remanufacture the materials into other
case, the parties dispute plaintiff's obligation to pay
sales and use tax with respect to the container recycling
machines for the period of March 1, 2011, through December
31, 2011. During that tax period, plaintiff collected sales
tax from customers to whom they sold or leased container
recycling machines, and paid the sales tax collected to
defendant. Similarly, during that tax period, plaintiff paid
use tax to defendant related to parts used in repairing the
container recycling machines sold or leased by
thereafter sought a refund of these amounts on the basis that
its sales of recycling machines and repair parts were exempt
from taxation under the GSTA and UTA. After defendant failed
to respond to the refund request, plaintiff filed this action
before the Court of Claims. Plaintiff thereafter moved for
summary disposition pursuant to MCR 2.116(C)(10), seeking a
ruling on the question whether plaintiff's container
recycling machines and repair parts perform, or are used in,
an industrial processing activity under the GSTA and UTA. The
Court of Claims denied plaintiff's motion, and pursuant
to MCR 2.116(I)(2), instead granted defendant summary
disposition, holding that plaintiff's container recycling
machines and repair parts are not used in an industrial
processing activity under the GSTA and the UTA, and that
plaintiff therefore is not entitled to exemption from sales
and use tax for the sale and lease of the machines and their
repair parts. Plaintiff now appeals.
contends that the Court of Claims erred in holding that
plaintiff's container recycling machines and repair parts
are not used in an industrial processing activity under the
GSTA and the UTA, and therefore erred in granting summary
disposition to defendant. We agree.
review de novo a trial court's grant or denial of summary
disposition. Hoffner v Lanctoe, 492 Mich. 450, 459;
821 N.W.2d 88 (2012). In reviewing a decision on a motion for
summary disposition under MCR 2.116(C)(10), we review the
record in the same manner as the trial court, considering the
pleadings, affidavits, depositions, admissions, and any other
evidence in favor of the party opposing the motion.
Maiden v Rozwood, 461 Mich. 109, 120; 597 N.W.2d 817
(1999). A motion for summary disposition under MCR
2.116(C)(10) tests the factual sufficiency of a claim, and is
appropriately granted when, except as to the amount of
damages, there is no genuine issue as to any material fact,
and the moving party is entitled to judgment as a matter of
law. Joseph v Auto Club Ins Ass'n, 491 Mich.
200, 206; 815 N.W.2d 412 (2012). We also review de novo the
proper interpretation of statutes such as the GSTA and the
UTA. See Fradco, Inc v Dep't of Treasury, 495
Mich. 104, 112; 845 N.W.2d 81 (2014); see also Granger
Land Dev Co v Dep't of Treasury, 286 Mich.App. 601,
608; 780 N.W.2d 611 (2009).
4t of the GSTA, MCL 205.54t, sets forth the industrial
processing exemption from the sales tax. The statute
provides, in relevant part:
(1) The sale of tangible personal property to the following .
. . is exempt from the tax under this act:
(a) An industrial processor for use or consumption in
(b) A person, whether or not the person is an industrial
processor, if the tangible personal property is intended for
ultimate use in and is used in industrial processing by an
(c) A person, whether or not the person is an industrial
processor, if the tangible personal property is used by that
person to perform an industrial processing activity for or on
behalf of an industrial processor.
* * *
(3) Industrial processing includes the following activities:
* * *
(d) Inspection, quality control, or testing to determine
whether particular units of materials or products or
processes conform to specified parameters at any time before
materials or products first ...