Connecticut Administrative Code › Title 12 - Taxation › 412(34) - Manufacturing › Section 12-412(34)-1 - Machinery used directly in a manufacturing production process

Current through July 10, 2024
(a)
In General
. Section
			 12-412(34)
			 of the general statutes exempts from the sales and use taxes the sale, and the
			 storage, use or other consumption, of machinery used directly in a
			 manufacturing production process. Subsection (b) of this regulation defines the
			 term "machinery." Subsection (c) of this regulation defines the term
			 "manufacturing." Subsection (d) of this regulation defines the term
			 "manufacturing production process." Subsection (e) of this regulation defines
			 the term "manufacturing plant." Subsection (f) of this regulation provides
			 examples of when machinery is "used directly" in a manufacturing production
			 process. Said section
			 12-412(34)
			 does not exempt the sale, and the storage, use or other consumption of, all
			 machinery, and subsection (g) of this regulation provides examples of "office
			 equipment or data processing equipment," the sale, and the storage, use or
			 other consumption, of which are not exempt under said section
			 12-412(34),
			 and also provides examples of "numerically controlled machinery used directly
			 in the manufacturing process," the sale, and the storage, use or other
			 consumption, of which are exempt under said section
			 12-412(34).
			 Subsection (h) prescribes the procedure to be followed in claiming the
			 exemption from sales and use taxes provided by said section
			 12-412(34).
			 The term "predominantly" when used in this regulation means more than fifty
			 percent. While this regulation pertains, for purposes of supplementary
			 interpretation, as the phrase is used in section
			 12-2
			 of the general statutes, to said section
			 12-412(34),
			 the promulgation of this regulation is authorized by section
			 12-426(1)
			 of the general statutes.
(b)
Machinery
. As used in this regulation, the term "machinery" has
			 the meaning ascribed to it in section
			 12-412(34)
			 of the general statutes. It is a device composed of solid, fluid or electrical
			 parts assembled into a unit for the purpose of transmitting forces, motion and
			 energy. While said section
			 12-412(34)
			 exempts from the sales and use taxes the sale, and the storage, use or other
			 consumption, of machinery used directly in a manufacturing production process,
			 it exempts from the sales and use taxes the sale, and the storage, use or other
			 consumption, of component parts and contrivances of machinery used directly in
			 a manufacturing production process if and only if those component parts and
			 contrivances are sold in the same transaction with the basic machine. The term
			 "component parts and contrivances" has the meaning ascribed to it in said
			 section
			 12-412(34).
			 Such component parts and contrivances must be directly connected with, or be an
			 integral part of, machinery.
(c)
Manufacturing
. As used in this regulation, the term
			 "manufacturing" means an operation or an integrated series of operations that
			 substantially transform, by physical, chemical or other means, the form,
			 composition or character of raw or finished materials into a product possessing
			 a new name, nature and use which is intended for sale, whether by the
			 manufacturer or by another on whose behalf the manufacturer has undertaken the
			 manufacture. The transformation cannot be a mere natural process, whether or
			 not expedited by the use of machinery. If the transformation is not
			 substantial, the process may only constitute fabrication. In such event the
			 sale, and the storage, use or other consumption, of machinery used directly in
			 such process will not be exempt from sales and use taxes. However, the sale,
			 and the storage, use or other consumption, of materials, tools or fuel used
			 directly in such fabrication in an industrial plant will be exempt from sales
			 and use taxes. In determining whether a process constitutes manufacturing, the
			 commissioner will examine the facts and circumstances of each case, using the
			 following principles as guidelines:
(1) The
			 process must occur at a manufacturing plant.
(2) If the process involves chemical change
			 to property rather than only physical change, it is more likely to be
			 manufacturing. For example, the mere sorting of recyclable materials is not
			 manufacturing, while using heat and chemicals to eliminate impurities, increase
			 density and change the composition of recyclable materials so that they will
			 meet certain metallurgical or chemical tolerances is manufacturing.
(3) The process must be commonly regarded as
			 manufacturing. For example, the operation of supermarkets and restaurants is
			 not commonly regarded as manufacturing, while the operation of a bakery, where
			 the baking of flour-and yeast-based foods is primarily for other than on-site
			 sale, is commonly regarded as manufacturing.
(4) If the process involves only physical
			 change to property, the greater the degree of physical change, the more likely
			 the process is to be manufacturing. For example, the process of cleaning,
			 cutting and flash-freezing vegetables does not involve a sufficient degree of
			 physical change to be considered manufacturing, while the process of quarrying
			 and cutting brownstone into blocks of a size usable by building contractors
			 does involve a sufficient degree of physical change to be
			 manufacturing.
(5) If the process
			 involves production in standardized sizes and qualities and in multiple
			 quantities, it is more likely to be manufacturing.
(6) The generation of steam or electricity is
			 not manufacturing.
(7) The
			 furnishing of gas, water, steam, electricity, telephone or community antenna
			 television service is not manufacturing.
(8) The development of software programs is
			 not manufacturing.
(9) The sale,
			 and the storage, use or other consumption, of equipment used directly in the
			 production and transmission of finished radio, television or cable television
			 programming may be exempt from sales and use taxes under section
			 12-412(44),
			 but not under section
			 12-412(34).