FACTS: Able Corporation, a Massachusetts vendor, manufactures widgets in its production facility in the Commonwealth. In connection with this operation, Able purchased pollution control equipment required by law to remove waste from water. The waste is then shipped out to dumps for disposal.

Able's production facility is an industrial plant within the meaning of G.L. c. 64H, § 6(s).

ISSUE: Is Able's purchase of the pollution control equipment exempt from the sales tax as machinery used directly and exclusively in the manufacture, conversion or processing of tangible personal property to be sold?

LAW: Under G.L. c. 64H, § 6(s), sales of machinery are exempt from sales tax if the machinery is used directly and exclusively in an industrial plant in the actual manufacture, conversion or processing of tangible personal property to be sold. Machinery qualifies for this exemption only if it is used solely during a manufacturing process to do one of the following:

1. effect a direct and immediate physical change on tangible personal property to be sold;

2. guide or measure such a direct and immediate physical change, if the guiding or measuring is an integral and essential part of tuning, verifying or aligning the components of the property to be sold;

3. test or measure the property itself, if that testing or measuring is an integral part of the flow of production or the production function;

4. store, transport, convey or handle the property during manufacturing, conversion or processing operations; or

5. package the property in the manner in which it will normally be sold to the ordinary consumer.

Unless the machinery is so used, it is not exempt under this provision even though it may otherwise be considered an integral part of the manufacturing process.

DISCUSSION: Only machinery which is used solely to perform at least one of the five functions listed in G.L. c. 64H, § 6(s) is exempt from the sales tax. The machinery in question does not perform any of these functions, and therefore does not qualify for the exemption. It does not matter that the machinery is required by law.

DIRECTIVE: Able's purchase of the pollution control equipment is not exempt from the sales tax as machinery used directly and exclusively in the manufacture, conversion or processing of tangible personal property to be sold.

REFERENCE: G.L. c. 64H, § 6(s).

/s/Stephen W. Kidder
Stephen W. Kidder
Commissioner of Revenue

November 30, 1987

DD 87-7

This Directive represents the official position of the Department of Revenue on the application of the law to the facts as stated. The Department and its personnel will follow this Directive, and taxpayers may rely upon it, unless it is revoked or modified pursuant to 830 C.M.R. § 62C.01(5)(e). In applying this Directive, however, the effect of subsequent legislation, regulations, court decisions, Directives, and TIRs must be considered, and Department personnel and taxpayers may rely upon this Directive only if the facts, circumstances and issues presented in other cases are substantially the same as those set forth in this Directive.