Could a penicillin producer buy corn steep liquor and crude milk sugar for resale?

Plain-English summary

A redacted penicillin producer used corn steep liquor and crude milk sugar, or lactose, in production. Its submitted information showed that both materials supplied essential ingredients and became component parts of the penicillin.

Purchases used to produce penicillin for resale therefore were not subject to sales or use tax.

The letter also explained that a recently issued determination apparently taxed those purchases. Because the earlier inquiry predated the determination, it could not count as a petition; the producer was advised to file a petition for redetermination before the stated August 8, 1954 finality date.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/440-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/440-3260.pdf

Original ruling text

440.3260

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
July 30, 1954
REDACTED TEXT
Attention:

REDACTED TEXT

Gentlemen:
reply.

Your letter of May 24, 1954, to Mr. Harry L. Say has been referred to me for

The information which you present indicates that corn steep liquor and crude milk sugar (lactose) purchased by you for the production of penicillin become component parts of the penicillin. It also appears that these items are purchased for the purpose of providing essential ingredients for the production of penicillin. Accordingly, sales or use tax should not apply to your purchases of these articles when used in the production of penicillin for resale. An examination of our file shows that on July 9, 1954, we mailed to you a notice of determination under the Sales and Use Tax Law which apparently includes in the measure of tax, as self-consumed merchandise, your purchases of corn steep liquor and crude milk sugar during the period of the audit. This determination will become final August 8, 1954. We suggest that you file a petition for redetermination before that date. This petition may be in letter form and should be addressed to this Board. Your letter of May 24, since it was mailed prior to the issuance of the notice of determination cannot be considered as a petition for redetermination. Yours very truly, John H. Murray Associate Tax Counsel JHM:ja Cc:

Oakland – Auditing