Illinois recently ruled that use tax was due on purchases of metallurgical coke. The taxpayer was a business that recycled electric arc furnace dust (EAF Dust) generated by steel producers. The taxpayer purchased metallurgical coke and combined it with the EAF Dust to create pellets which were then super-heated in a kiln. The whole process was done to create crude zinc oxide and iron oxide materials that were then sold to third parties.
The ruling determined that that the use of metallurgical coke for this process was taxable because it did not meet the requirements of the manufacturing exemption. To qualify for the exemption, the chemicals used to produce crude zinc oxide must have caused a "direct and immediate change" on the product being manufactured for sale. Because the metallurgical coke did not react directly with either the zinc oxide or the iron oxide, its use did not qualify for the manufacturing exemption.