The Kentucky Board of Tax Appeals has determined that machinery purchased to be used directly in the manufacturing process by a manufacturer and retailer of German meats and sausages in order to expand its operations to include wholesale production is exempt from sales and use tax. Since the new machinery was installed next door to the retail operation, the two operations were found to be substantially segregated from each other. Further, since the retail operation continued to use the same machinery used prior to the purchase, the new machinery was determined to be purchased for a “new and expanded industry”, not to replace the machinery used in the retail operation. Therefore, the manufacturer’s purchase of the machinery meets all of the requirements for exemption from sales and use tax. (German Cuisine, LLC v. Commonwealth of Kentucky Finance and Administration Cabinet, Department of Revenue, Kentucky Board of Tax Appeals, File No. K07-R-03 (Order No. K-20214), February 5, 2009)