The meaning of "taxable goods for manufacturing taxable goods" subject to tax exemption under Article 10 of the Goods Tax Act;

To be eligible for tax exemption under Article 10 of the Goods Tax Act, it shall be used for the creation of taxable goods and its physical or chemical composition must be achieved.

Article 10 of the Goods Tax Act, Article 2 subparagraph 5 of the Enforcement Decree of the Goods Tax Act

[Defendant-Appellee] Defendant 1 and 3 others

The head of Ulsan District Tax Office 2 others such as the litigation performer and the training of the litigation performer.

Daegu High Court Decision 76Gu109 delivered on December 9, 1976

The original judgment is reversed, and the case is remanded to the Daegu High Court.

The grounds of appeal by the defendant litigation performer are examined.

1. According to the provisions of Article 2 subparagraph 5 of the Enforcement Decree of the Goods Tax Act, the "taxable goods which are used for the manufacturing of taxable goods" means the raw materials physically or chemically required in the manufacturing of the taxable goods, and in light of the purport of the provision, the material physically and chemically required in the manufacturing of the taxable goods which are used for the manufacturing of the taxable goods refers to the materials which are used for the manufacturing of the taxable goods and physically or chemically generated in the manufacturing process of the taxable goods, and even if the taxable goods are consumed sufficiently or chemically as necessary in the manufacturing process of the taxable goods, it cannot be deemed to be the material directly owned in the manufacturing process of the taxable goods in any form unless they are physically or chemically composed of the taxable goods.

2. However, according to the judgment of the court below, the court below determined that since all materials used in the manufacture of polypropye and high density polysye, which the plaintiff manufactured and sold, are inflammable or naturally inflammable, all materials in the process of manufacture shall not be directly contacted with the air, and they shall not be treated completely in its entirety without deterioration, and it shall be treated completely and chemically in the manufacturing process, and it shall be physically or chemically necessary in the manufacturing process of the plaintiff's product, the prevention of stegrification and the prevention of human explosion, and without any delay, it shall be subject to exemption from customs duties pursuant to Article 10 of the Goods Tax Act, on the grounds that it is inevitable for the manufacturing process of the plaintiff's product.

3. However, although nitrogen functions as recognized by the court below in relation to the plaintiff's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's product's process

Therefore, in order to say that this case’s nitrogen falls under the subject of exemption from the customs duties on goods under Article 10 of the Customs Duties on Goods, it cannot be said that the nitrogen is not known as the raw materials of the above goods as seen above.

4. Therefore, in the original judgment, there is no error in the misunderstanding of Article 10 of the Goods Tax Act and Article 2 subparagraph 5 of the Enforcement Decree of the same Act, and the illegality has influenced the conclusion of the judgment, and the arguments pointing this out are with merit, so the original judgment shall be reversed pursuant to Articles 400 and 406 (1) of the Civil Procedure Act and the case shall be remanded to the Daegu High Court which is the original judgment. It is so decided as per Disposition by the assent of all participating Justices

Justices Min Jae-chul (Presiding Justice)