Detroit Edison Co. v. Department of Treasury
303 Mich. App. 612
| Mich. Ct. App. | 2014Background
- DTE seeks use tax exemption under MCL 205.94o for outside-plant machinery used in electricity transmission.
- Key issue is whether industrial processing continues once electricity leaves the generation plants.
- Voltage/current are altered by outside-plant equipment, and electricity is not usable by customers until near the meter.
- Court of Claims granted summary disposition in DTE’s favor, enforcing the exemption.
- Department argued outside-plant machinery is solely for distribution, not processing.
- Court held concurrent use in a unified process yields full exemption and invalidates conflicting Department rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the industrial processing exemption apply to outside-plant equipment? | DTE contends processing continues outside the plant. | Department argues equipment only distributes, not processes. | Exemption applies in full; processing occurs outside plant. |
| Is electricity still industrially processed until it reaches the customer meter? | DTE evidence shows ongoing processing of electricity. | Department disputes ongoing processing beyond plant. | Yes, processing continues up to customer meter. |
Key Cases Cited
- Guardian Indus Corp v Dep’t of Treasury, 243 Mich App 244 (2000) (agency interpretations are not binding when conflicting with statute)
- Menard, Inc v Dep’t of Treasury, 302 Mich App 467 (2013) (exemptions strictly construed against taxpayer; burden on claimant)
- Mich Allied Dairy Ass’n v State Bd of Tax Admin, 302 Mich 643 (1942) (full exemption for mixed-use equipment under industrial processing)
- Mich Milk Producers Ass’n v Dep’t of Treasury, 242 Mich App 486 (2000) (concurrent exempt and nonexempt uses permitted; no apportionment in unified process)
- Tyler v Livonia Pub Sch, 459 Mich 382 (1999) (in pari materia interpretation of related statutory provisions)
- In re Complaint of Rovas Against SBC Mich, 482 Mich 90 (2008) (agency interpretations reviewed under Boyer-Campbell standard)
- Whitman v City of Burton, 493 Mich 303 (2013) (statutory interpretation starts with clear language; ambiguity allows external aids)