Opinion ID: 2450045
Heading Depth: 1
Heading Rank: 16

Heading: Expand Existing Manufacturing

Text: An exemption is also provided under § 144.030.2(5) for manufacturing machinery and equipment purchased and used ... to expand existing manufacturing. In the present case the AHC found that the equipment was purchased by Cape and Concord to increase their production because it was used to expand SEMO's publication from six days a week to seven. AHC opinion at 17. The Director argues that this exemption is provided only to those who physically expand their manufacturing plants, and not merely for an increase in production volume. Her argument is contrary to the department's own regulations which define expansion to also include increased production volume. 12 CSR 10-3.320(4)(A), (B). She urges us to find this regulation erroneously interprets the expansion exemption. The Director cites Ozark Lead and Dravo Corp., supra, as authority for her argument. Both of these cases allow an exemption for machinery purchased and used to physically increase the size of a production process but neither case limits the exemption solely to physical expansion. We have previously allowed the exemption for items purchased without evidence of physical expansion. Noranda, 599 S.W.2d at 4 (laboratory equipment); Bridge Data, 794 S.W.2d at 206 (computer hardware). Furthermore, such a limited interpretation would unduly restrict the legislature's purpose in passing the exemption. The legislature did not intend to fill the Missouri landscape with towering industrial plants, but to increase the number of products on which sales tax could be assessed. We hold that machinery that increases production volume qualifies for the § 144.030.2(5) exemption. Because Cape and Concord purchased and used the equipment at issue to increase the production volume of SEMO, now printing more pages and producing newspapers seven days a week instead of six, the equipment is exempt under § 144.030.2(5). [11]