S.C. Code Regs. 117-302.1 — Ingredients and Component Parts and Items Used Directly

Purchases of tangible personal property are not subject to the tax under Code Section 12-36-120 if
the tangible personal property:
(a) becomes an ingredient or component part of tangible personal property manufactured or
compounded for sale; or,
(b) is used directly in manufacturing, compounding or processing tangible personal property for
sale. By ''used directly'' is meant that the materials or products so used come in direct contact with
and contribute to bring about some chemical or physical change in the ingredient or component
properties during the period in which the fabricating, converting or processing takes place. It is not
necessary that such materials or products be used up or entirely consumed, provided there is a
compliance with the requirements set forth herein.
These exclusions apply to:
(a) odorants purchased by gas companies and used in compounding gas for sale.
(b) chemicals, such as soda, ash, alum, chlorine, etc., used in treating water for sale by municipalities
and others engaged in the business of processing or compounding water for sale.
(c) refrigerants used by manufacturers to produce ice for sale.
(d) acetylene, oxygen, and other gases sold to manufacturers or compounders which enter into and
become an ingredient or component part of the tangible personal property or products which he
manufactures or compounds for sale, or which are used directly in fabricating, converting, or
processing the materials or products being manufactured or compounded for sale.
(e) plates attached by the manufacturer to his product for identification purposes and which become
a part of the product.
These exclusions do not apply to sales of acetylene, oxygen, and other gases for use by repairman,
welders, dentists, junk dealers, and others are subject to the sales or use tax, whichever applies.