The North Carolina Department of Revenue ("Department") recently ruled that a manufacturer's purchase of HVAC equipment was exempt. North Carolina exempts mill machinery bought by a manufacturer for use in the production process. "Mill machinery" includes air conditioning systems that are necessary for the manufacturing process.
Air conditioning systems are necessary for the manufacturing process when they impact the temperature and humidity of the production phase and the manufactured product. The Department determined that the HVAC equipment's effect on temperature and humidity was needed during production. So, the exemption applied.