Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
440.0000 PROPERTY USED IN MANUFACTURING—Regulation 1525
(b) PROPERTY BECOMING COMPONENT PART OF FINISHED PRODUCT
(4) Miscellaneous Specific Components
440.3115 Lignin Portion of Wood Chip. A paper manufacturer produces kraft paper from wood chips. All wood contains 20 to 30 percent lignin, which does not become a part of the kraft paper. The manufacturer burns the extracted lignin to produce process steam. The extraction of the lignin is an unavoidable result of the manufacturing process. The burning of the waste lignin does not constitute a taxable use of a portion of the wood chips since the primary purpose of the chips was to incorporate them into the paper. 4/5/73.