WILLIAM DONALD SCHAEFER, Governor                       Ch. 2

THE SALES AND USE TAX DOES NOT APPLY TO A SALE OF:

(1)  MACHINERY OR EQUIPMENT USED TO PRODUCE BITUMINOUS
CONCRETE; OR

(2)  ELECTRICITY, FUEL, AND OTHER UTILITIES USED TO
OPERATE THAT MACHINERY OR EQUIPMENT.

(B) MANUFACTURING, RESEARCH, OR DEVELOPMENT.

THE SALES AND USE TAX DOES NOT APPLY TO A SALE OF:

(1)  MACHINERY OR EQUIPMENT, A REPLACEMENT PART OF
MACHINERY OR EQUIPMENT, OR A SERVICE FOR THE ASSEMBLY OR
FABRICATION OF MACHINERY OR EQUIPMENT OR REPLACEMENT PART THAT:

(I)  IS CAPITALIZED TO CLAIM DEPRECIATION, USING
ACCEPTABLE AND CONSISTENT ACCOUNTING STANDARDS;

(II)  IS NOT USED IN ADMINISTRATION, MANAGEMENT,
SALES, OR ANY -OTHER NONOPERATIONAL ACTIVITY;

(III)  AT ANY STAGE OF OPERATION FROM THE
HANDLING OF RAW MATERIAL OR COMPONENTS ON THE PRODUCTION ACTIVITY
SITE TO THE TIME THE PRODUCT IS READY FOR DELIVERY OR STORAGE, IS
USED:

1.   IN A PRODUCTION ACTIVITY; OR

2.  FOR RESEARCH AND DEVELOPMENT, AS
DEFINED IN § 11-216 OF THIS SUBTITLE; AND

                        (IV) EXCEPT FOR A FOUNDATION TO SUPPORT OTHER

MACHINERY OR EQUIPMENT OR FOR AN ITEM REQUIRED TO CONFORM TO AN
AIR OR WATER POLLUTION LAW AND NORMALLY CONSIDERED PART OF REAL
PROPERTY, IS NOT INSTALLED SO THAT IT BECOMES REAL PROPERTY; OR

(2)  A MELTING, SMELTING, HEATING, OR ANNEALING COKE
OVEN, ALUMINUM FURNACE, ANODE BAKE OVEN, ELECTROLYTIC POT,
CATHODE, REFRACTORY, OR OTHER MATERIAL USED IN RELINING AND
REBUILDING A FURNACE OR OVEN.

REVISOR'S NOTE: This section is new language derived
without substantive change from former Art. 81, §
324(s), § 326(mm) and (eee) and, as it extended the
exemptions under the former retail sales tax to the
former use tax, § 375(b).

In subsection (b)(1)(iii)1. of this section, the
defined term "production activity" is substituted for
the former references to "manufacturing, assembling,
processing or refining products for sale" and the
"generation of electricity", for clarity and brevity.

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