ATTORNEY FOR PETITIONER:    ATTORNEYS FOR RESPONDENT:
PAUL M. PITTMAN    STEVE CARTER
BAKER SIEGEL & PAGE    ATTORNEY GENERAL OF INDIANA
Indianapolis, IN    Indianapolis, IN
    
     TED J. HOLADAY
    DEPUTY ATTORNEY GENERAL
    Indianapolis, IN
    
_____________________________________________________________________

    IN THE
INDIANA TAX COURT _____________________________________________________________________

STANDARD PLASTIC CORPORATION,                                             )
                                                                               )
    Petitioner,                                                                )
                                                                               )
    v.                                                                         )   Cause No. 49T10-9606-TA-72
                                                                               )
DEPARTMENT OF LOCAL                                                            )
GOVERNMENT FINANCE,
                                                           
                                                 

Whether Standard Plastic’s barrel and screw assemblies and platens should have been classified as special tools; See footnote

Whether the value of Standard Plastic’s application software was sufficiently reflected on its books and records, thus entitling it to a deduction; and

Whether the State Board arbitrarily and capriciously assessed a 20% undervaluation penalty against Standard Plastic.

    For the reasons stated below, the Court AFFIRMS the State Board’s final determination on Issues II and III and REMANDS Issues I and IV to the Indiana Board for further proceedings.

50 IAC 4.2-6-2(d)(2).
    Although Standard Plastic originally failed to report its possession of not-owned special tool molds on its Form 103, it did later provide evidence of the estimated original cost for these not-owned special tools to the State Board. When the field auditor realized that Standard Plastic had not reported possession of the special tool molds, she requested the names of the owners and the cost of each mold. Standard Plastic initially provided the auditor with a list showing the replacement cost of the molds as $2,725,703. The State Board field auditor originally rejected Standard Plastic’s replacement cost list as too high and instructed Standard Plastic that it could use an estimate of the original cost. Standard Plastic submitted a second list estimating the original cost at $355,950. Standard Plastic presented both of these lists to the State Board. (Pet’r Exs. 3 & 4.) Standard Plastic also submitted evidence to show that the difference between the two lists was because of the replacement versus original cost and because of the relative age of the molds. (Pet’r Ex. 5.) Specifically, many of the molds were fifty years old, while others were twenty to thirty-five years old. Because Standard Plastic did not know the original cost to the owners, it instead provided a list with the estimated original cost. Thus, Standard Plastic provided the State Board with the best information available regarding the original cost. Therefore, the evidence Standard Plastic submitted was sufficient to meet its initial burden of proof.
    The Court agrees with Standard Plastic that the State Board did not support its valuation of Standard Plastic’s not-owned special tools with substantial evidence. “The State Board’s determination is supported with substantial evidence if a reasonable person could view the record in its entirety and find enough relevant evidence to support the State Board’s determination.” Amax Inc. Through Amax Coal Co. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850, 852 (Ind. Tax Ct. 1990). “Substantial evidence is more than a scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Dav-Con, 644 N.E.2d at 196 (citing South Shore Marina, Inc. v. State Bd. of Tax Comm’rs, 527 N.E.2d 738, 742 (Ind. Tax Ct. 1988), aff’d 543 N.E.2d 644 (Ind. 1989) (internal quotation marks omitted)).
    The State Board rejected Standard Plastic’s estimated original cost list and instead used Standard Plastic’s replacement cost list after finding that this list was “not unreasonable” and was the “most credible” evidence. (Pet’r Ex. 1 at 6.) However, the State Board’s regulation requires that it use information regarding the original cost or the best information thereof when assessing not-owned special tools.
    The State Board’s regulation is clear. The State Board must assess not-owned special tools by using the original cost to the owner. 50 IAC 4.2-6-2(d)(2). If that original cost to the owner is not available, then the best information available must be used. Id. The plain language of the regulation shows that the “best information available” is in reference to the original cost. Id. Additionally, the regulation is unambiguous in that it does not make any reference to using replacement costs in determining the assessed value of the not-owned special tools. See Id. See also Ispat Inland, Inc. v. State Bd. of Tax Comm’rs, 757 N.E.2d 1078, 1085 (Ind. Tax Ct. 2001) (discussing statutory construction maxim expressio unius est exclusio alterius, which means the enumeration of certain things in a statute implies the exclusion of all others). The record, however, shows that the State Board determined the assessed value of the not-owned special tools by relying on replacement cost. Because the State Board’s use of Standard Plastic’s replacement cost list is contrary to its regulation, its final determination regarding the assessed value of Standard Plastic’s not-owned special tools is not supported by substantial evidence and is arbitrary and capricious. See Damico v. State Bd. of Tax Comm’rs, 769 N.E.2d 715, 2002 WL 1171026, *3 (Ind. Tax Ct. 2002) (State Board is required to follow its own regulations). Accordingly, this Court REMANDS this issue to the Indiana Board with instructions to use the estimated original cost list provided by Standard Plastic.

Ind. Admin. Code tit. 50, r. 4.2-6-2(b) (1996). The owner of special tools is required to report any special tools on a Form 103-T as an attachment to his business personal property tax return. 50 IAC 4.2-6-2(c). To satisfy its burden, Standard Plastic needed to show that its barrel and screw assemblies and platens were of such specialized nature that their utility generally ceases with the modification or discontinuance of various molds. See 50 IAC 4.2-6-2(b).
    In its evidence presented to the State Board, Standard Plastic failed to show that the barrel and screw assemblies and platens meet the definition of special tools. Standard Plastic presented evidence that it was not necessary to use different barrel and screw assemblies and platens in its injection molding operation. (Pet’r Ex. 7.) Standard Plastic’s tax representative presented a list from NewCastle Industries of different barrel and screw assemblies with a description of potential applications for each. (Pet’r Ex. 7 at 2.) Standard Plastic, however, did not present any explanation of how that list applied to it. Standard Plastic did not provide any evidence that it even used these various barrel and screw assemblies contained on the list. Standard Plastic’s mere reference to a list of barrel and screw assemblies, without explanation, does not qualify as probative evidence. See Heart City Chrysler v. State Bd. of Tax Comm’rs, 714 N.E.2d 329, 333 (Ind. Tax Ct. 1999) (unexplained photographs do not qualify as probative evidence); North Park Cinemas v. State Bd. of Tax Comm’rs, 689 N.E.2d 765, 769 (Ind. Tax Ct. 1997) (a taxpayer has an “obvious responsibility to appear before the State Board and present evidence and argument in support of its position.”).
     Standard Plastic also submitted a copy of a fax that its tax representative sent to Mike Caudill at Cincinnati Milacron. See footnote (Pet’r Ex. 8.) The fax stated:
[W]e talked about the Cincinnati Milacron equipment owned by Standard Plastics Corporation. We talked about the stationary and moving platens, and the screw and barrel assembly. I would like clarification regarding the above described components. Would an owner of your equipment use a different platen, screw and/or barrel based on processing a different product. [sic] Specifically, if a different type of raw material (plastic) was used, could a different platen, screw and/or barrel be recommended to produce the best product. [sic]

(Pet’r Ex. 8.) The fax contained the initials “M.C.” handwritten on the bottom of the page. (Pet’r Ex. 8.)
    Standard Plastic’s tax representative simply concluded that this fax is evidence of Mike Caudill’s belief that Standard Plastic’s screw and barrel assemblies and platens qualify as special tools. Even assuming “M.C.” constituted an affirmation of the contents of the fax, the fax was merely conclusory. Conclusory statements do not constitute probative evidence. Kemp v. State Bd. of Tax Comm’rs, 726 N.E.2d 395, 400 (Ind. Tax Ct. 2000). Moreover, this fax does not even contain a definitive statement or opinion that the barrel and screw assemblies and platens are of such specialized nature that their utility generally ceases with the modification or discontinuance of various molds. Therefore, this Court does not find it to be probative evidence. CDI, Inc. v. State Bd. of Tax Comm’rs, 725 N.E.2d 1015, 1021 (Ind. Tax Ct. 2000) (the Court will not rely upon unsupported opinion).
    Where a taxpayer fails to provide the State Board with probative evidence supporting its position on special tools, the State Board’s duty to support its final determination with substantial evidence is not triggered. See Kemp, 726 N.E.2d at 400. Here, Standard Plastic did not come forward with probative evidence showing that its barrel and screw assemblies and platens qualified as special tools. Thus, the State Board had no duty to refute Standard Plastic’s arguments with substantial evidence. See CDI, 725 N.E.2d at 1021. Accordingly, this Court AFFIRMS the State Board’s final determination on this issue.

Ind. Admin. Code tit. 50, r. 4.2-4-3(g) (1996). Thus, to obtain the deduction for application software, Standard Plastic first needed to show that its application software was recorded on its books and records.
    Standard Plastic asserts that the value of the application software was recorded on its books and records “in the form of” its property tax return and on invoices (Pet’r Exs. 9 – 11) submitted to the State Board. (Oral Argument Tr. at 14.) A review of its tax return and invoices, however, reveals no mention of the value of application software let alone any mention of application software. (See Pet’r Exs. 9 – 11.)
    Standard Plastic admits that the invoices did not contain the value of the application software (Pet’r Trial Br. at 18, Trial Tr. at 58.) Instead, Standard Plastic submitted a copy of a fax that its tax representative sent to Mike Caudill at Cincinnati Milacron. (Pet’r Ex. 12.) The fax stated:
Thank you for taking time to discuss the . . . software components on the Cincinnati Milacron injection molding machines owned by Standard Plastics Corp. Per our discussion, we identified the . . . application software contained in the control system to be 10% of the total cost of the machine. The machines included in our conversation were the T-75-8, T-150-14, T-200-14, and 200 Ton oz pc-3. Please initial and fax this notice back to confirm our conversation[.]

(Pet’r Ex. 12.) The fax contained the initials “M.C.” handwritten on the bottom of the page. (Pet’r Ex. 12.)
    The State Board rejected Standard Plastic’s fax as evidence that established that the value of its application software was contained in its books and records. This Court agrees that the fax is not probative evidence to meet the requirement of the regulation that the value of the application software be recorded on Standard Plastic’s books and records. See 50 IAC 4.2-4-3(g). Unless the value is recorded on the books and records, it is irrelevant what anyone discussed. Therefore, Standard Plastic has not met its burden of establishing a prima facie case. Accordingly, this Court AFFIRMS the State Board’s final determination on this issue.