Could a manufacturer buy clean-room air-purification machinery tax-free when the system was essential to growing gallium arsenide wafers?

Plain-English summary

Corporation X was building a plant to "grow" gallium arsenide wafers for laser diodes. The production process was extremely sensitive and required unusually clean and pure conditions. Its clean room therefore included air-purification machinery that trapped airborne particles and pollutants and protected the wafer-growing process.

DRS ruled that the machinery was used directly in manufacturing. Because the clean room was essential to the production process, Corporation X could purchase the air-purification machinery tax-free by giving the supplier a certificate of exemption for machinery, materials, tools, and fuel.

What this means for you

The ruling treated environmental-control machinery as direct-production equipment because the stated manufacturing process could not achieve the required cleanliness without it. The result was tied to the system's essential role in growing the wafers, not merely to improving the general plant environment.

Common questions

What did the manufacturer produce? Gallium arsenide wafers used in a laser-diode business. A two-inch wafer could potentially yield 1,500 finished diodes.

Why did the air system qualify? It trapped airborne particles and pollutants, and the ruling says the clean room was essential to the extremely sensitive wafer-growing process.

How could the company claim the exemption? The ruling instructed it to issue the supplier a certificate of exemption for purchases of machinery, materials, tools, and fuel.

Citations and references

The published ruling does not cite a statute or regulation number. It grounds the result in its finding that the air-purification machinery was used directly in the manufacturing production process.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 90-49

Original ruling text

Ruling 90-49, Manufacturing

Ruling 90-49

Manufacturing

You have inquired as to whether the clean room air purification system machinery purchased by your client (Corporation X) is exempt from the sales and use tax.

FACTS:

Corporation X is constructing a manufacturing plant for the "growing" of gallium arsenide wafers to be used in a laser diode line of business. A two inch diameter wafer can potentially yield 1,500 finished diodes. The "growing" of wafers involves an extremely sensitive production process which requires a very high level of cleanliness and purity of materials.

A clean room is required to achieve and maintain the cleanliness required for the "growing" of the wafers. This clean room will include an air purification system designed to trap airborne particles and pollutants in order to protect the "growing" of the wafers. The clean room is essential in this manufacturing process.

RULING:

Based on the facts recited herein, the air purification machinery is used directly in the manufacturing production process of "growing" gallium arsenide wafers. Corporation X may purchase the air purification machinery tax exempt by issuing its supplier a certificate of exemption for purchases of machinery, materials, tools and fuel.

LEGAL DIVISION

May 17, 1990