Ch. 589                                         1993 LAWS OF MARYLAND

2.       use or incorporate the tangible personal property in a
production activity as a material or part of other tangible personal property to be
produced for sale;                                                           

3.       consume the tangible personal property directly and
predominantly in a production activity by destroying, using up, of wearing but the
property, other than through obsolescence, to the extent that the property cannot be
rendered fit for further use in a production activity, if the consumption occurs within 1
year after the property is first used in a production activity; or

4.       transfer the tangible personal property as part of a taxable
service transaction; or

(iii) an exercise of a right or power over a taxable service acquired by a
sale for use if the buyer intends to resell the taxable service in the form that the buyer
receives or is to receive the service.

11-210.

(b) 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 products ready for delivery or
storage, is used:

1.       in a production activity; or

2.       for research and development, as defined in § 11-217 of this
subtitle; and                                                                         

(iv) except for a foundation to support other machinery or equipment
or for an item required to conform to affair 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.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
July 1, 1993.                                   

Approved May 27, 1993.

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