Cost of Production Defined (Rescinded December 11, 1980)

AUTHORITY: section 144.270, RSMo 1978. Previously filed as rule no. 85 Jan. 22, 1973, effective Feb. 1, 1973. S.T. regulation 030-58 was last filed Oct. 28, 1975, effective Nov. 7, 1975. Rescinded: Filed Aug. 13, 1980, effective Dec. 11, 1980. State ex rel. Union Electric Co. v. Goldberg, 578 SW2d 921 (Mo. banc 1979). Section 144.030.3(11) exempts from state sales tax “electrical energy used in the actual primary manufacture, processing, compounding, mining or producing of a product or electrical energy used in the actual secondary processing or fabricating of the product, if the percent of the total cost of production, either primary or secondary, exclusive of the cost of electrical energy so used.” Appellant mining company sought a refund of taxes paid on electrical energy purchased for use in its beneficiation process. Although the cost of the electrical energy used in the beneficiation did exceed ten percent of the total cost of that process, the total cost of electrical energy used in the combined operations of mining and processing did not exceed ten percent of the total cost of production. Held, the exemption may apply to individual processes and beneficiation is a “process” in contemplation of the statute. Since the cost of electrical energy used during that process exceeded ten percent of the total cost of that process, the electrical energy used during beneficiation is exempt from state sales tax.