The purchase of a copier/printer by a pet food manufacturer used for printing labels affixed to the manufacturer’s products was exempt from Indiana sales and use tax. Indiana law states that purchases of machinery, tools, and equipment to be directly used by the purchaser in processing or refining are exempt from tax – as long as the machinery, tools, and equipment are directly used in the production process. They must also have an immediate effect on the tangible personal property being processed or refined. Indiana law further elaborates that transactions involving labels are exempt if the labels are affixed to other tangible personal property sold by the retail merchant or if the labels are a requirement of a state or federal statute/regulation. The copier/printer was considered an integral piece of manufacturer’s the production process as it was solely used for printing labels. The labels were affixed to pet food bags and included product names and ingredients. With all of this in consideration, the copier/printer qualified for the exemption.
However, the lease of a freezer truck that was a non-mobile trailer did not qualify for either the manufacturing exemption or as real property. Since the freezer was used to store finished goods, it does not qualify as an integral part of the manufacturing process. It also did not qualify as real property as it was on a trailer. Even though it had not moved in the two years of the lease, it could be moved. In order to be considered real property it must be permanently affixed to real property. (Memorandum of Decision Nos. 04-20170988R and 04-20170989R, Indiana Department of Revenue, February 28, 2018, ¶402-865).