Connecticut Administrative Code › Title 12 - Taxation › 412(18) - Manufacturing › Section 12-412(18)-1 - Materials, tools and fuel used directly in an industrial plant in the actual fabrication of finished products to be sold

Current through July 10, 2024
(a)
In general
. Section
			 12-412(18)
			 of the general statutes exempts from the sales and use taxes the sale, and the
			 storage, use or other consumption, of materials, tools and fuel used directly
			 in an industrial plant in the actual fabrication of finished products to be
			 sold. Subsection (b) of this regulation defines the term "materials" and
			 provides examples of when such materials are "used directly" in an industrial
			 plant in the actual fabrication of finished products to be sold. Subsection (c)
			 of this regulation defines the term "tools" and provides examples of when such
			 tools are "used directly" in an industrial plant in the actual fabrication of
			 finished products to be sold. Subsection (d) of this regulation defines the
			 term "fuel" and provides examples of when such fuel is "used directly" in an
			 industrial plant in the actual fabrication of finished products to be sold.
			 Subsection (e) of this regulation defines the term "industrial plant."
			 Subsection (f) of this regulation defines the term "actual fabrication."
			 Subsection (g) prescribes the procedure to be followed in claiming the
			 exemption from sales and use taxes provided by said section
			 12-412(18).
			 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(18),
			 the promulgation of this regulation is authorized by section
			 12-426(1)
			 of the general statutes.
(b)
Materials
(1) Section
			 12-412(18)
			  of the general statutes exempts from the
			 sales and use taxes the sale, and the storage, use or other consumption, of
			 materials used directly in an industrial plant in the actual fabrication of
			 finished products to be sold. This regulation addresses whether materials are
			 "used directly" in an industrial plant in the actual fabrication of finished
			 products to be sold. As used in this regulation, the term "materials" means
			 such items as lubricants, chemicals, solvents, anodes, catalysts, dyes and
			 refrigerants. Said section
			 12-412(18)
			 also exempts from the sales and use taxes the sale, and the storage, use or
			 other consumption, of materials that become an ingredient or component part of
			 tangible personal property to be sold; however, this regulation does not
			 address whether materials become an ingredient or component part of tangible
			 personal property to be sold.
(2)
			 In determining whether materials are used directly in an industrial plant in
			 the actual fabrication of finished products to be sold, the commissioner will
			 examine the facts and circumstances of each case, using the following
			 principles as guidelines:
(A) Materials that
			 are used to clean or lubricate machinery that is used directly in the actual
			 fabrication of finished products to be sold are used directly in such actual
			 fabrication.
(B) Materials that are
			 used to remove impurities from raw materials being fabricated into finished
			 products to be sold are used directly in such actual fabrication.
(C) Materials that are used to make molds
			 into which molten steel will be poured to make parts being fabricated into
			 finished products to be sold are used directly in such actual
			 fabrication.
(3)
			 Example: Company C, a manufacturer of widgets sold by it in the regular course
			 of business, purchases (1) grease which will be used to lubricate assembly line
			 machinery; (2) solvent which will be used to clean assembly line machinery; (3)
			 muffles which will be used inside a blast furnace (used in the manufacture of
			 steel for widgets) to reduce atmospheric volume; (4) chemicals which will be
			 used to remove impurities from raw materials being fabricated into widgets; and
			 (5) safety goggles which will be worn by assembly line personnel. The materials
			 used for the purposes described in (1), (2), (3) and (4) are exempt from tax;
			 and the materials used for the purpose described in (5) are subject to
			 tax.