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Revenue Ruling 70-10

Rev. Rul. 70-10 1970-1 C.B. 227

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Headnote

Sales of signal pistols, rocket signals, miniflares, and cartridges for use in such devices, are not subject to the manufacturers tax.

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ISSUE

Advice has been requested regarding the applicability of the manufacturers excise tax imposed by section 4181 of the Internal Revenue Code of 1954 to sales of the articles described below.

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FACTS

Article 1. Signal pistols and cartridges. The signal pistols have short barrels and are designed to fire 1 or 1 1/2-inch signal cartridges. The 1-inch cartridges have aluminum cases and project single stars in various colors. The 1 1/2-inch cartridges have either aluminum or millboard cases and project single or double stars in various colors or variously colored smoke puffs. Article 2. Rocket signals. These are hand-held warning and alerting signal devices in the shape of a cylinder measuring 1 3/4 by 10 1/2 inches, and weighing 12 1/2 ounces. They have a lever-firing trigger that gives instantaneous ignition and allows the device to be fired with one hand only. The device is powered by a rocket motor to a height of 1,200 feet. At this point a cartridge is ejected and exploded with a report that is audible over a wide area. The signal that follows may consist of variously colored stars, illuminating flares, or radar reflective material. Article 3. Miniflares. A miniflare signal consists of a small, pen-sized spring-loaded projector to which a waterproof, metal cartridge is screwed. To fire, the projector is held upright, with one hand if desired. The striker is then withdrawn to its full extent by the thumb and released. The flare, of various colors, is ejected instantaneously from the cartridge to a height of about 250 feet.

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LAW AND ANALYSIS

Section 4181 of the Code imposes a tax upon the sale by the manufacturer, producer, or importer of pistols, revolvers, firearms (other than pistols and revolvers), shells, and cartridges. For purposes of the tax imposed by section 4181 of the Code, section 48.4181-2 of the Manufacturers and Retailers Excise Tax Regulations defines the term “pistols” to mean small projectile firearms which have a short one-hand stock or butt at an angle to the line of bore and a short barrel, and which are designed, made, and intended to be aimed and fired from one hand. The term “firearms” means any portable weapons from which a shot, bullet, or other projectile may be discharged by an explosive. “Shells” and “cartridges” include any combination of projectile, explosive, and container which is designed, assembled, and ready for use without further manufacture in firearms, including pistols and revolvers. The signal pistols have as their primary purpose the discharging of signal flares or smoke puffs and are not designed or sold as weapons. Thus, they are not firearms as defined in the regulations. The cartridges designed to be fired in them are not shells or cartridges within the meaning of section 4181 of the Code since they are not designed, assembled, and ready for use in firearms. By the same rationale, the hand-held rocket signals and miniflares, being designed for signalling purposes, are neither weapons nor shells and cartridges for firearms.

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HOLDING

Therefore, it is held that none of the articles described above is subject to the tax imposed by section 4181 of the Code when sold by the manufacturer, producer, or importer.