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The type 06 FFL is for ammunition manufacturing. A license to sell ammunition is not required. I make ammunition, I am licensed with a type 06 FFL. If you make bullets, powder, primers, or brass casings, you are manufacturing ammunition and you need an 06 FFL. If you cast lead alloy bullets and sell them, you are manufacturing them and need to be licensed. If you pick up range brass, clean it and sell it, you did not manufacture it so you don't need the FFL.
The ATF's position is that any exchange of goods or services in exchange for ammunition constitutes an attempt to make a profit and would require licensure. If you pay someone for the components, wear and tear on their machine, etc, they are in big trouble.
If you manufacture ammunition and sell only at gun shows, a license is not required.
If you use the customer's brass and give that EXACT brass back to them reloaded, there is no Federal Excise Tax due. Certain government agencies are also tax exempt, but not all Federal agencies are, even Federal LE agencies.
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