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IN THE COURT OF APPEALS OF MARYLAND No. 46 September Term, 1995 _____________________________________

COMPTROLLER OF THE TREASURY

v.

DISCLOSURE, INC.

____________________________________ Murphy, C.J. Eldridge Rodowsky Chasanow Karwacki Bell Raker, JJ. ____________________________________ OPINION BY MURPHY, C.J. ____________________________________ Filed: December 4, 1995

This case involves the scope of Maryland's exemption from sales and use taxes for equipment used in manufacturing. determine whether activities which would be We must

considered

"manufacturing" when the entire manufacturing process is performed by one company are to be denied the status of "manufacturing" when the final stage of the manufacturing process is performed under contract by an outside supplier. We hold that work performed by

the outside supplier cannot be considered when determining whether the principal company's activities are substantial enough to be described as "manufacturing." We also hold, however, that when the

principal company performs a substantial step in the process of manufacturing a product that it sells, the equipment used in that substantial step is entitled to the manufacturing exemption

regardless of who performs the final stage of the manufacturing process. I A Disclosure, Inc. (Disclosure) is a company located in Maryland that sells compilations of financial information. In creating

these compilations, it obtains financial information from a variety of public sources. Disclosure then collates and organizes this The compiled information is

information into a specific format.

then copied onto various media in which it is sold to Disclosure's customers. Disclosure makes the compiled information available on

paper, in main-frame computer resident databases, and on CD-ROMs.1. In State Department v. Consumer Programs, 331 Md. 68, 72, 626 A.2d 360 (1993), we noted that [i]n an action for judicial review, the Tax Court's factual conclusions will be upheld if supported by substantial evidence in light of the record as a whole . . . . A reviewing court will reverse a decision of the Tax Court, however, if the agency erroneously determines or erroneously applies the law . . . ." (citations omitted). The Comptroller does not dispute the facts as Instead, the Comptroller argues that it To

found by the tax court.

misapplied the statutory exemption for manufacturing equipment.

the extent that the tax court's decision involves an interpretation of law, we shall fully review that interpretation. See Ramsay,

Scarlett & Co. v. Comptroller, 302 Md. 825, 834, 490 A.2d 1296 (1985). To the extent that the tax court's application of the

statute relies on underlying factual determinations, however, its order will not be reversed if substantial evidence supports it. In reviewing the tax court's construction of the exemptions provided in

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Maryland Law