Natural Gas Used in Ovens Qualifies for Manufacturing Exemption in Tennessee

Natural gas that is used in metered ovens at a food production facility producing food for resale qualifies for the sales and use tax manufacturing exemption on gas used in a manufacturing process in Tennessee. The natural gas is used directly and exclusively in the manufacturing process, and the ovens are metered separately from the rest of the facility. The gas satisfies the requirement of direct contact with the products being produced because each of the products is exposed to the chemical energy created by the gas. Additionally, the gas is expended in the course of contact with the taxpayer’s products. Any natural gas used in unmetered ovens at the facility does not qualify for the exemption because the taxpayer is unable to establish the precise amount of gas used in the ovens. (Letter Ruling No. 12-15, Tennessee Department of Revenue, August 2, 2012)

Posted on June 12, 2013