Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2014
Sales and Use Tax Annotations
440.0000 PROPERTY USED IN MANUFACTURING—Regulation 1525
(a) MANUFACTURING AIDS
(2) Thinners, Solvents, Reducers, Carriers
440.0163 Normal Methyl Pyrrolidine (NMP). In connection with a "solvent extraction" plant, a corporation purchases Normal Methyl Pyrrolidine (NMP) solution ex-tax from out-of-state retailers. Feed stock, a form of crude oil which has been refined somewhat through other separation processes, is termed "vacuum gas oil." The feed stock is combined with the NMP solution with the intention that the solution will assist in the removal of impurities from the oil and assist in the separation of the aromatic and nonaromatic oils. The primary intent is to use the NMP solution as a separation of the two types of oils and also as an agent for removal of impurities.
The NMP solution is being purchased with the dominate consideration being to make a use of the solution as a separator, not to incorporate the chemicals into the final product. The fact that the NMP solution may indirectly enhance the final product does not have any influence in making the decision to purchase the solution. The fact that 99.6% of the NMP solution is potentially recoverable for reuse and the fact that the corporation is constantly seeking to reduce the amount of solution which is absorbed into the final product lend support that the solution is purchased as a manufacturing catalyst, not to be incorporated into the final product. The major significance is the fact that the corporation purchases and uses the NMP solution for its separation qualities and its abilities to remove impurities from the feed stock oils. The corporation is thus the consumer of the NMP solution purchased for use in its refining processes and the use tax is due on the cost of the chemicals. 1/14/91.