A Tennessee food producer bolted storage racks into its freezer to freeze and hold its own packaged food before shipping. Are the freezer racks exempt from sales and use tax as 'industrial machinery'?

Plain-English summary

A Tennessee food producer asked whether the rack system it bolted into its freezer room is exempt from sales and use tax as "industrial machinery." The producer makes food products, chills and packages them, then moves them into a large freezer where the racks hold the product while it freezes to customer specifications and stays frozen for one to five days before shipping. (Fewer than 10% of the items in the freezer are bought-in frozen goods.)

The Department said yes — the freezer racks are exempt industrial machinery under Tenn. Code Ann. § 67-6-206(a). Tennessee taxes most equipment a business buys, but it fully exempts "industrial machinery" — machinery, apparatus, and equipment that is necessary to, and primarily for, a manufacturer's fabrication or processing of tangible personal property for resale. The producer already holds an industrial-machinery authorization and qualifies as a manufacturer (its principal business — more than 50% of its revenue at the location — is making products for resale).

The crux was a single question: is freezing "processing"? If freezing happened after manufacturing was finished, the racks would just be storage equipment and wouldn't qualify. The Department relied on the Tennessee Supreme Court's decision in Beare Co. v. Tennessee Department of Revenue, which held that blast-freezing food and maintaining it in a frozen state is "processing" — it changes the product's state and form — while the mere "preservation" of goods that were already frozen is not processing. Because this producer freezes and holds its own freshly made products (not someone else's pre-frozen goods), the freezing is part of its manufacturing, and the manufacturing process keeps running the entire time the product sits on the racks.

With that settled, the racks cleared all three tests:

• Equipment — "equipment" isn't defined in the tax code, so it takes its ordinary meaning ("physical resources serving to equip a person; the implements used in an operation"); the racks are physical implements used in the producer's freezing operation.
• Necessary — "necessary" means "absolutely needed." Without the racks, the producer's only option would be putting food packages on the floor; the racks let it freeze as much product as possible, separate items so cold air can circulate and freeze efficiently, and keep the food hygienic.
• Primarily — "primarily" means more than 50% of the equipment's use is in manufacturing. Here at least 90% of the racks' use is freezing the producer's own products, so they are primarily for processing — not storage.

Because this is a letter ruling, it binds the Department only for this taxpayer and these facts, and the taxpayer always carries the burden of proving an exemption (Tennessee construes exemptions strictly against the taxpayer, and any well-founded doubt defeats the claim).

What this means for you

Manufacturers and food processors

Tennessee's industrial-machinery exemption can reach far more than the obvious production line — including racks, equipment, and apparatus that are part of processing, when processing is read broadly. The two pivots are (1) whether the activity changes the product's state, form, or condition (here, freezing does), and (2) whether the equipment is necessary and used primarily (over 50%) in that process. Holding equipment that keeps a product in a changed state as part of making it can qualify; equipment used only before the process starts or after it finishes does not.

Cold-storage, warehousing, and distribution operators

Watch the processing-vs-storage line. Under Beare Co., freezing your own freshly produced goods (and maintaining that frozen state as part of finishing them) is processing — but simply storing already-frozen goods is "mere preservation," which is not processing and would not support the exemption. If your business is warehousing pre-frozen product rather than manufacturing it, the same racks could come out the other way.

Accountants and tax professionals

The analysis tracks the statutory definition (§ 67-6-102(44)(A)(i)) through three elements — equipment, necessary, primarily — each filled in by Tennessee case law (Tibbals Flooring for "equipment," Woods v. General Oils for "primarily" and the 50% test, Beare Co. for "processing"). Remember the burden and strict-construction rules: the taxpayer must prove entitlement, and any well-founded doubt defeats the exemption (Steele, American Airlines, Rogers Group, Tibbals Flooring, United Canners). The temporal limit in § 67-6-102(a)(44)(F) excludes equipment used before the start or after the completion of manufacturing.

Common questions

Q: Are storage racks taxable in Tennessee?
A: Not always. Racks bought by a qualifying manufacturer can be exempt "industrial machinery" if they are necessary to and used primarily (over 50%) in fabrication or processing. Here the freezer racks qualified because freezing the producer's own food is "processing" and at least 90% of the racks' use was in that process.

Q: Does freezing count as manufacturing or processing?
A: Under Beare Co., blast-freezing food and maintaining it frozen is "processing" — it changes the product's state and form. But the mere preservation of goods that were already frozen is not processing, so equipment used only to store pre-frozen product would not qualify.

Q: We just store frozen products we buy in — do our racks qualify?
A: Probably not on these grounds. The exemption turned on the producer making and freezing its own product. Storing already-frozen goods is "mere preservation," not processing, so racks used for that would generally not be exempt industrial machinery.

Q: Can I rely on this letter ruling?
A: No. A Tennessee letter ruling binds the Department only as to the specific taxpayer and facts it was issued to, and it can be revoked or modified. Whether your equipment qualifies is fact-specific, and you bear the burden of proving the exemption. Confirm your situation with a tax professional.

Citations and references

Tennessee statutes (Tenn. Code Ann.):

• § 67-6-206(a) (industrial-machinery exemption); § 67-6-206(b)(2) ("manufacturer" — principal business is fabricating/processing TPP for resale); § 67-6-206(b)(1) (reduced rate on energy fuels for manufacturers)
• § 67-6-102(44)(A)(i) (definition of "industrial machinery" — necessary to and primarily for fabrication or processing of TPP for resale)
• § 67-6-102(a)(44)(D)(ii) (includes equipment moving materials between storage and the process); § 67-6-102(a)(44)(F) (excludes equipment used before the start or after the completion of manufacturing)
• § 67-6-101 to -907 (Retailers' Sales Tax Act)

Tennessee cases cited by the ruling:

• Beare Co. v. Tenn. Dep't of Revenue, 858 S.W.2d 906 (Tenn. 1993) (blast-freezing and maintaining a frozen state is "processing"; mere preservation of already-frozen goods is not) — the controlling case
• Tibbals Flooring Co. v. Olsen, 698 S.W.2d 60 (Tenn. 1985) (ordinary meaning of "equipment"); Woods v. Gen. Oils, Inc., 558 S.W.2d 433 (Tenn. 1977) (meaning of "primarily"; over-50% test)
• Tenn. Farmers' Coop. v. State ex rel. Jackson, 736 S.W.2d 87 (Tenn. 1987) (more than 50% of revenue = principal business); Bryant v. Genco Stamping & Mfg. Co., 33 S.W.3d 761 (Tenn. 2000) and Tenn. Farmers Assurance Co. v. Chumley, 197 S.W.3d 767 (Tenn. Ct. App. 2006) (undefined terms take their usual meaning)
• Nuclear Fuel Servs., Inc. v. Huddleston, 920 S.W.2d 659 (Tenn. Ct. App. 1995) (temporal requirement — used during the manufacturing process)
• Burden / strict construction of exemptions: Steele v. Indus. Dev. Bd., 950 S.W.2d 345 (Tenn. 1997); Am. Airlines, Inc. v. Johnson, 56 S.W.3d 502 (Tenn. Ct. App. 2000); Rogers Grp., Inc. v. Huddleston, 900 S.W.2d 34 (Tenn. Ct. App. 1995); Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196 (Tenn. 1994); United Canners, Inc. v. King, 696 S.W.2d 525 (Tenn. 1985)

Source

• Landing page: https://www.tn.gov/revenue/tax-resources/legal-resources/tax-rulings.html
• Original PDF: https://www.tn.gov/content/dam/tn/revenue/documents/rulings/sales/13-02.pdf

Original ruling text

TENNESSEE DEPARTMENT OF REVENUE
LETTER RULING #13-02
WARNING
Letter rulings are binding on the Department only with respect to the individual taxpayer
being addressed in the ruling. This ruling is based on the particular facts and
circumstances presented, and is an interpretation of the law at a specific point in time. The
law may have changed since this ruling was issued, possibly rendering it obsolete. The
presentation of this ruling in a redacted form is provided solely for informational purposes,
and is not intended as a statement of Departmental policy. Taxpayers should consult with a
tax professional before relying on any aspect of this ruling.
SUBJECT
The applicability of the Tennessee sales and use tax industrial machinery exemption to racks
installed within a freezer of a [FOOD PRODUCTION] facility.
SCOPE
This letter ruling is an interpretation and application of the tax law as it relates to a specific set of
existing facts furnished to the Department by the taxpayer. The rulings herein are binding upon
the Department, and are applicable only to the individual taxpayer being addressed.
This letter ruling may be revoked or modified by the Commissioner at any time. Such revocation
or modification shall be effective retroactively unless the following conditions are met, in which
case the revocation shall be prospective only:
(A) The taxpayer must not have misstated or omitted material facts involved in
the transaction;
(B) Facts that develop later must not be materially different from the facts upon
which the ruling was based;
(C) The applicable law must not have been changed or amended;
(D) The ruling must have been issued originally with respect to a prospective or
proposed transaction; and
(E) The taxpayer directly involved must have acted in good faith in relying upon
the ruling; and a retroactive revocation of the ruling must inure to the taxpayer’s
detriment.
FACTS
[TAXPAYER] (the “Taxpayer”) is a [PRODUCER OF FOOD PRODUCTS]. The Taxpayer has
been granted an industrial machinery authorization by the Tennessee Department of Revenue.

1

The Taxpayer [HAS A] facility in [CITY], Tennessee. The [REDACTED] facility includes a
large freezer area (the “freezer area”), which is maintained at [TEMPERATURE]. The freezer
area is a single room that encompasses approximately [NUMBER] square feet.
The Taxpayer purchased and installed a rack system (the “Freezer Racks”) in the freezer area.
The Freezer Racks are bolted to the freezer area floor and are not used in any other part of the
warehouse and distribution facility.
Customers specify that a [FOOD PRODUCT] must be frozen to certain specifications. The
[FOOD PRODUCTS] are chilled, but not frozen, and packaged before they enter the freezer
area. Once frozen, the [FOOD PRODUCTS] typically remain in the freezer area for
approximately 1 to 5 days, and are then shipped to the Taxpayer’s customers. A small percentage
of purchased frozen goods may be kept in the freezer area; purchased frozen goods do not exceed
10% of the goods in the freezer area.
RULING
For purposes of the Tennessee sales and use tax, are the Freezer Racks exempt as industrial
machinery under TENN. CODE ANN. § 67-6-206(a) (Supp. 2012)?
Ruling: Yes. the Freezer Racks are exempt as industrial machinery under TENN. CODE
ANN. § 67-6-206(a) (Supp. 2012).
ANALYSIS
Under the Retailers’ Sales Tax Act, TENN. CODE ANN. §§ 67-6-101 to -907 (2011 and Supp.
2012), retail sales of tangible personal property in Tennessee are generally subject to sales and
use tax, unless an exemption applies. 1 TENN. CODE ANN. § 67-6-206(a) (Supp. 2012) exempts
“industrial machinery” from the sales and use tax, providing that “[a]fter June 30, 1983, no tax is
due with respect to industrial machinery.”
In order for an item to qualify as exempt industrial machinery, the Taxpayer must qualify as a
manufacturer. A manufacturer, for purposes of the industrial machinery exemption, is “one who
engages in . . . fabrication or processing as one’s principal business.” 2 Manufacturing is a

1

The burden is on the taxpayer to establish entitlement to an exemption from taxation. The Tennessee Supreme
Court has stated that “exemptions are strictly construed against the taxpayer, who has the burden of proving
entitlement to the exemption.” Steele v. Indus. Dev. Bd. of the Metro. Gov’t of Nashville & Davidson Cnty., 950
S.W.2d 345, 348 (Tenn. 1997); see also Am. Airlines, Inc. v. Johnson, 56 S.W.3d 502, 506 (Tenn. Ct. App. 2000)
(quoting Rogers Grp., Inc. v. Huddleston, 900 S.W.2d 34, 36 (Tenn. Ct. App. 1995)) (“Although the rule is wellestablished that taxing legislation should be liberally construed in favor of the taxpayer and strictly construed against
the taxing authority, it is an equally important principle of Tennessee tax law that ‘exemptions from taxation are
construed against the taxpayer who must shoulder the heavy and exacting burden of proving the exemption.’”). The
Tennessee Supreme Court has also recognized that any well-founded doubt is sufficient to defeat a claimed
exemption from taxation. See Tibbals Flooring Co. v. Huddleston, 891 S.W.2d 196, 198 (Tenn. 1994); United
Canners, Inc. v. King, 696 S.W.2d 525, 527 (Tenn. 1985)).
2

TENN. CODE ANN. § 67-6-102(44)(A)(i) (Supp. 2012); cf. TENN. CODE ANN. § 67-6-206(b)(2).

2

taxpayer’s principal business if more than 50% of its revenues at a given location are derived
from fabricating or processing tangible personal property for resale. 3
Under the facts presented, the Taxpayer qualifies as a manufacturer. The Taxpayer has in fact
been granted an industrial machinery authorization by the Tennessee Department of Revenue.
The term “industrial machinery” is generally defined in pertinent part 4 as
[m]achinery, apparatus and equipment with all associated parts,
appurtenances and accessories, including hydraulic fluids, lubricating
oils, and greases necessary for operation and maintenance, repair parts
and any necessary repair or taxable installation labor therefor, that is
necessary to, and primarily for, the fabrication or processing of tangible
personal property for resale and consumption off the premises . . .
where the use of such machinery, equipment or facilities is by one who
engages in such fabrication or processing as one’s principal business.
TENN. CODE ANN. § 67-6-102(44)(A)(i) (Supp. 2012).
Therefore, the Taxpayer’s Freezer Racks will be exempt from the Tennessee sales and use tax as
industrial machinery if the following requirements are met: 1) the Freezer Racks are properly
considered machinery, apparatus, and/or equipment, or their associated parts, appurtenances or
accessories; 2) the Freezer Racks are necessary to the fabrication or processing of the products
sold by the Taxpayer; and 3) the Freezer Racks are primarily for the fabrication of the products
sold by the Taxpayer.
An initial consideration is whether the freezing of the Taxpayer’s food products is part of the
“fabrication or processing” of those products. If the freezing occurs after the fabrication or
processing of the products is completed, then the Freezer Racks cannot qualify as exempt
industrial machinery.
In Beare Co. v. Tenn. Dept. of Revenue, 858 S.W.2d 906 (Tenn. 1993), the Tennessee Supreme
Court considered whether the freezing and preservation of food products constituted
“processing” for purposes of TENN. CODE ANN. § 67-6-206. 5 Specifically, the court considered
whether The Beare Company engaged in the business of preserving food products through
freezing and cold storage and was entitled to the reduced sales tax rate under TENN. CODE ANN.
§ 67-6-206(b)(1) for retail sales of certain energy fuels, when sold to or used by manufacturers.
In making its determination, the court examined the definition of “manufacturer” under TENN.
CODE ANN. § 67-6-206(b)(2), which states that a manufacturer is “one whose principal business
is fabricating or processing tangible personal property for resale.”
3

Tenn. Farmers’ Coop. v. State ex rel. Jackson, 736 S.W.2d 87, 91-92 (Tenn. 1987); see also Beare Co. v. Tenn.
Dep’t of Revenue, 858 S.W.2d 906, 908 (Tenn. 1993).

4

The definition of “industrial machinery” is extensive; this letter ruling will discuss only that portion of the
definition that is applicable to the Taxpayer.

5

The court did not consider whether the taxpayer in Beare Co. fabricated products, because the company did not
produce the food products that it blast froze and maintained in a frozen state.

3

The Beare Company’s revenues derived from four types of activities: “blast freezing,”
“handling,” “preservation,” and “special services.” 6 “Blast freezing” was performed on food
products received by the company in a fresh or raw condition; these goods were frozen by
lowering the temperature of the products to zero degrees Fahrenheit or below within a period of
72 hours. 7 “Preservation” was the storage of previously frozen goods in holding freezers, where
the products were maintained in a frozen state. Id. The purpose of preservation storage was to
maintain the low temperature of the products to prevent deterioration or spoilage. Id.
The Tennessee Supreme Court examined different definitions of “processing” as put forth by
courts in other states, all of which required a change in the state, form, or condition of the
original material in order for “processing” to occur. 8 The court concluded that the change in form
of the raw food products to a frozen condition, and the maintenance of such frozen condition,
could be considered “processing.” 9 Specifically, the court held that the initial blast freezing,
together with the maintenance of that frozen condition, constituted “processing” for purposes of
TENN. CODE ANN. § 67-6-206(b)(2). 10 Conversely, the court held that, with respect to the
“preservation” service whereby the taxpayer stored already frozen goods in holding freezers,
“the mere preservation of the prefrozen condition” did not constitute “processing.” 11
The Taxpayer’s facts differ slightly from those of Beare Co., in that The Beare Company did not
produce the food products that it blast froze and maintained in a frozen state. Rather, The Beare
Company received packaged food products from its customers, and then froze those products and
maintained them in a frozen state. Here, the Taxpayer produces the [FOOD PRODUCTS],
packages them, and then freezes and maintains them in a frozen state. Nonetheless, this
difference in the relevant facts is not enough to distinguish Beare Co. from the Taxpayer’s
situation. If the activity of freezing a food product that was fabricated and packaged by a
taxpayer’s customer qualifies as processing, then it follows that the freezing of a food product
that was fabricated and packaged by the taxpayer should also qualify as processing.
Accordingly, the freezing of [FOOD PRODUCTS] and the maintenance of those products in a
frozen state is properly considered part of the Taxpayer’s [FOOD PRODUCT] fabrication or
processing operation.

6

Beare Co., 858 S.W.2d at 907.

7

Id.

8

Id. at 908. The court considered the following cases: Comm'r of Carroll Cnty. v. B.F. Shriver Co., 146 Md. 412,
126 A. 71 (1924) (corn husked, sorted, washed, cut from the cob, and canned); Stokely–Van Camp, Inc. v. State, 50
Wash.2d 492, 312 P.2d 816 (1957) (vegetables sorted, cleaned, cut, blanched, packaged, and frozen); Bornstein Sea
Foods, Inc. v. State, 60 Wash.2d 169, 373 P.2d 483 (1962) (filleting, packaging, and freezing fish); Perdue Foods,
Inc. v. State Dept. of Assessments, 264 Md. 672, 288 A.2d 170 (1972) (chickens slaughtered, dressed, packaged, and
cooled); Bain v. Dept. of Revenue, 293 Or. 163, 646 P.2d 12 (1982) (production of fish using “mechanical, chemical
and electronic processes”); Fischer Artificial Ice & Cold Storage Co. v. Iowa State Tax Comm'n, 248 Iowa 497, 81
N.W.2d 437, 441 (1957).
9

Id. at 909.

10

Id.

11

Id.

4

For the reasons explained below, the Freezer Racks qualify as exempt industrial machinery for
Tennessee sales and use tax purposes.
The first requirement is met because the Freezer Racks are properly considered equipment. The
Tennessee Code Annotated has not defined the term “equipment” for purposes of Tennessee
sales and use taxation. When a word or phrase is not defined, the Tennessee Supreme Court has
looked to its “usual and accepted meaning” to determine the Legislature’s intent. 12 In applying
an earlier version of the industrial machinery exemption,13 the Tennessee Supreme Court in
Tibbals Flooring Co. v. Olsen, 698 S.W.2d 60, 62 (Tenn. 1985), consulted WEBSTER’S THIRD
NEW INTERNATIONAL DICTIONARY (1976), which defined the term “equipment” in pertinent part
as “‘the physical resources serving to equip a person, [such as] the implements . . . used in an
operation or activity.’” The Freezer Racks are “equipment” for purposes of the industrial
machinery exemption because they are properly characterized as physical resources or
implements used in the Taxpayer’s [FOOD PRODUCT] processing operation.
The second requirement is met because the Freezer Racks are necessary to the processing of the
products sold by the Taxpayer. The term “necessary” is not defined by the Tennessee Code
Annotated or the Tennessee courts for Tennessee sales and use tax purposes. A common
definition of the term “necessary” is “absolutely needed; required.” 14 Thus, in order for a piece
of machinery, equipment, or apparatus to be “necessary” to the taxpayer’s fabrication or
processing operation, it must be absolutely needed for that process to work. Stated conversely,
for the machinery, equipment, or apparatus to be considered “necessary,” the Taxpayer’s
fabrication or processing operation must not be able to function as required in the item’s absence.
For the Freezer Racks to be considered “necessary,” the Taxpayer must be unable to effectuate
its fabrication or processing operation in the racks’ absence. It is difficult to conceptualize how
the Taxpayer could effectively freeze the [FOOD PRODUCTS] and maintain them in a frozen
state in the absence of the Freezer Racks. The racks allow the Taxpayer to freeze as much
product as possible. The racks also separate the products, permitting cold air to circulate and
freeze the products in the most time and energy efficient manner possible. In the absence of the
Freezer Racks, the Taxpayer’s only option would be to place packages of [FOOD PRODUCTS]
on the floor; the racks are therefore also essential to the production of hygienic, edible food
products. The totality of the circumstances indicates that the Freezer Racks are necessary to the
Taxpayer’s fabrication or processing operation.
The third requirement is also met because the Freezer Racks are used primarily for the
processing of the products sold by the Taxpayer. The Tennessee Supreme Court, in applying the
industrial machinery exemption, found that the term “primarily” means “‘first of all; principally;
or fundamentally.’” 15 The Court also noted that the term has been held to mean “‘first in rank or
12

See Byrant v. Genco Stamping & Mfg. Co., 33 S.W.3d 761, 765 (Tenn. 2000); Beare Co., 858 S.W.2d at 908; see
also Tenn. Farmers Assurance Co. v. Chumley, 197 S.W.3d 767, 782 (Tenn. Ct. App. 2006).
13

The court applied a version of the industrial machinery exemption that has since been amended. However, the
amendment does not affect the court’s finding as to the meaning of the term “equipment.”
14

MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 828 (11th ed. 2007).

15

Woods v. Gen. Oils, Inc., 558 S.W.2d 433, 436 (Tenn. 1977) (quoting WEBSTER’S THIRD NEW INTERNATIONAL
DICTIONARY (1961)).

5

importance, chief, principal, basic or fundamental.’” 16 The machinery, equipment, or apparatus
satisfies this test if more than 50% of its use is in the manufacturing operation. Here, the
manufacturing operation includes the freezing of the [FOOD PRODUCTS] and their
maintenance in a frozen state. The facts indicate that at least 90% of the use of the Freezer Racks
is in conjunction with this phase of the manufacturing operation. 17 Thus, the Freezer Racks are
primarily for the manufacturing process.
One could argue that the Freezer Racks are used primarily for storage, not for the processing of
the products sold by the Taxpayer. This argument, however, cannot be reconciled with the
Tennessee Supreme Court’s holding in Beare Co., which states that the freezing of food
products, together with the maintenance of that frozen condition, constitutes “processing” for
purposes of TENN. CODE ANN. § 67-6-206(b)(2). 18 In the Taxpayer’s case, when the [FOOD
PRODUCTS] enter the freezer area and are placed on the Freezer Racks, the manufacturing
process is not yet completed. Instead, the products undergo further processing, which under the
holding of Beare Co. includes both the freezing of the [FOOD PRODUCTS] and their
maintenance in a frozen state. The maintenance of the products in a frozen state – and thus the
manufacturing process – continues until the products are removed from the Freezer Racks. In
other words, the use of the Freezer Racks cannot be characterized as being for storage, because
the racks are used at least 90% of the time during the manufacturing process. 19
Because the Freezer Racks meet each requirement set forth above, the racks qualify for the
industrial machinery exemption under TENN. CODE ANN. § 67-6-206(a).
Kristin Husat
General Counsel
APPROVED:

Richard H. Roberts
Commissioner of Revenue

DATE:

1/9/2013

16

Id. (quoting Breen v. Indus. Accident Bd., 436 P.2d 701 (Mont. 1968); 20th Century Mfg. Co. v. United States, 444
F.2d 1109 (Ct. Cl. 1971)).
17

The facts indicate that a small percentage of purchased frozen goods may be kept in the freezer area; purchased
frozen goods do not exceed 10% of the goods in the freezer area.
18

Beare Co., 858 S.W.2d at 909.

19

The Tennessee Court of Appeals has observed that the legislature imposed a temporal requirement that the
equipment in question must be used during the manufacturing process. Nuclear Fuel Servs., Inc. v. Huddleston, 920
S.W.2d 659 (Tenn. Ct. App. 1995). By definition, industrial machinery includes equipment used to transport raw
materials from storage to the manufacturing process, and equipment used to transport finished goods from the end of
the manufacturing process to storage. TENN. CODE ANN. § 67-6-102(a)(44)(D)(ii). Specifically excluded from the
definition of industrial machinery is “machinery, apparatus and equipment used prior to or after equipment
exempted by subdivision (a)(44)(D)(ii).” TENN. CODE ANN. § 67-6-102(a)(44)(F). This limitation effectively
excludes from the definition of “industrial machinery” any equipment that is used prior to the beginning, or after the
completion, of the manufacturing process. Here, however, the Freezer Racks are not used prior to or after the
completion of the manufacturing process.

6