The Department of Revenue determined that the manufacturer’s use of acetone qualified for an exemption because it has an immediate effect on the article being produced, meaning the acetone is an essential and integral part of the integrated production process. The Department weighed several factors in making its determination. One, production operations are not paused or shut down during the cleaning process. Production continues as the machinery, tools and equipment are periodically cleaned. Second, the machinery, tools and equipment must be cleaned frequently to produce marketable parts. Third, the cleaning process occurs directly on the production lines. And fourth, the taxpayer simply cannot produce marketable products without the continuous use of the acetone. For these reasons, the Department determined that manufacturer’s use of acetone qualifies for exemption from sales and use tax.
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