dissenting. I fail to see the basis for the majority’s decision. The opinion states the standard rules regarding tax exemptions which require strict construction of the exemption and proof of the exemption beyond a reasonable doubt. Yet the majority seems to entirely ignore not only those rules but also the plain language of the statute and simply finds the die manufacturing equipment to be but one step in the manufacture of the hand tools. The statute and facts here, however, clearly do not allow this conclusion.
I would first note that Ragland v. Deltic Farm & Timber Co., 288 Ark. 604, 708 S.W.2d 90 (1986), which the majority appears to rely on, is easily and definitively distinguishable from the case before us. In Deltic we dealt with the taxation of a crane which lifted logs from logging trucks to a sawmill where certain types of logs were minimally prepared for the primary manufacturing operation which was located in a separate facility. This system was described as no more than raw wood arriving at the mill and moving through “a continuous process that produces an end result of finished timber and high-quality chips.” We stated that “with regard to what is essentially an issue of fact, we cannot say that the chancellor’s finding is clearly wrong,” the implication being that there is a gray area at the beginning of the manufacturing process, and we could not say the trial court was clearly wrong in where it decided to draw that line.
Deltic, however, was dealing with the machinery involved in a step of preparing the raw material for manufacture into the finished product-the “articles of commerce.” [Ark. Code Ann. § 26-53-114(a)(1)(A) (Supp. 1989).] Our case involves machin-; ery used to manufacture an item that is not the article of commerce this company produces at all. Rather the machinery is only used to manufacture dies for the company’s own use, an operation completely aside from the manufacture of its commercial products, the hand tools. This is not analogous to the Deltic circumstances.
I would also note under Deltic, that to the extent the majority is reading the exemption statute to require a “but for” test, that holding is limited to the circumstances of that case, and the plain language of the statute, which simply makes no such allowance. Furthermore if the state were to exempt all machines, whose absence would cause operations to cease, no matter how tangential to the production, there would be almost no limit to the exempted class. Had the legislature intended such a broad exemption they have twice had the opportunity to make that point clearer in two sessions since the Deltic opinion. They have not moved in that direction at all, but have provided changes which if anything, have narrowed and limited the scope of the exemption. See Ark. Code Ann. § 26-53-114 (Supp. 1989).
As to the language of the exemption statute, it is true as the majority points out that as regards the requirement in the statute that exempted machinery be “used directly” in the manufacturing process, “molds and dies” are expressly stated as being considered as being “used directly.” However, that section is referring to molds and dies used in making the finished product. Here we are not talking about the molds and dies used to make the hand tools, we are talking about the machines that make the molds and dies. If the company sold molds and dies, it would be another question. But they do not. They manufacture these dies for their own use and do not distribute them as articles of commerce.
Of greatest importance here, the language in the exemption does not approach the expansiveness given to it by the majority. To the contrary, the legislature had done all it could to define and limit the effect of this exemption, e.g.:
(c)(1) It is the intent of this section to exempt only such machinery and equipment as shall be utilized directly in the actual manufacturing or processing operation at any time from the initial stage where actual manufacturing or processing begins through the completion of the finished article of commerce and the packaging of the finished end product.
(2) The term “directly” as used in this section is to limit the exemption to only the machinery and equipment used in actual production during processing, fabricating, or assembling raw materials or semifinished materials into the form in which such personal property is to be sold in the commercial market.
(A). . .Machinery and equipment which handle raw, semifinished, or finished materials or property before the manufacturing process begins are not utilized directly in the manufacturing process. [My emphasis.]
The equipment in question here is clearly not involved in the “actual production” of the end product, as is required by the statute, but is a secondary and separate operation. The computers and terminals used to manufacture the die machines are not part of the actual production of the hand tools. Thqy do not work with the raw or semifinished materials that become the final product.
I also find that the die block materials do not come within this exemption. It might be said that the die block material is used in both the secondary operation as well as the actual production of the hand tools. However, it is not purchased in the form of equipment, but as raw material, and as such, does not come at all within the exemption’s definition of “machinery and equipment,” and only machinery and equipment are exempt. See Ark. Code Ann. § 26-53-114(c)(3)(A) (1989) and Ark. Code Ann. § 26-53-114(a)(1)(A) (1989).