McDonnell Douglas Corp. v. State Board of Equalization
Opinion
Opinion
Ortega, J.
Introduction
Plaintiff McDonnell Douglas Corporation (MDC) sold aircraft parts to Aeromexico, the Mexican national airline, to service Aeromexico’s airplanes. Aeromexico received the parts at MDC’s Long Beach plant and shipped them by United States (U.S.) common carriers to the U.S.-Mexican border at San Ysidro, California, where AM MEX International, a forwarding agent, processed them through U.S. and Mexican customs. After a 48-hour customs delay, the parts were loaded onto Mexican common carriers and shipped to Aeromexico’s Mexico City maintenance facility.
Although the U.S. Constitution and the Revenue and Taxation Code exempt exports from state sales taxes, defendant California State Board of Equalization (the Board) assessed MDC sales tax on the parts. The Board claimed that the parts were not in the “export stream” until they left the border and thus were subject to sales tax. MDC paid the tax under protest and sued the Board for a refund. After a court trial, the trial court entered judgment for the Board. MDC appeals. We agree with MDC that the parts were in the “export stream” and thus were sales-tax-exempt exports. We reverse the judgment.